UK: The Sanctions and Anti-Money Laundering Act 2018 (Commencement No. 2) Regulations 2020

The Sanctions and Anti-Money Laundering Act 2018 (Commencement No. 2) Regulations 2020 were made yesterday: see here or here (pdf). The Regulations bring into force certain provisions of the Sanctions and Anti-Money Laundering Act 2018 when the transition period ends; they also bring into force, today, section 51 ("Public registers of beneficial ownership of companies registered in British Overseas Territories"). Section 51 requires, amongst other things, that the Secretary of State should, no later than 31 December 2020, prepare a draft Order in Council requiring the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so. Other provisions are brought into force on IP completion date.

Europe: company law and corporate social responsibility

The European Commission has recently published a study - commissioned by the Policy Department for Citizen's Rights and Constitutional Affairs - that provides an overview of national CSR policies and legislation within several Member States (France, Germany, Italy, the Netherlands, Poland and Spain) with a particular focus on due diligence. The study - available on the European Parliament's Think Tank (contract, commercial and corporate law) - can be downloaded directly here (pdf).

UK: Government consultations: corporate directors; the companies register and registrar powers

As part of the Government's corporate transparency and register reform programme, three consultations were published last week: [1] information on the register; [2] the powers of the registrar; and [3] prohibiting corporate directors. With the third consultation paper, the Government has said that it intends to implement the framework within section 87 of the Small Business, Enterprise and Employment Act 2015 which provides for a prohibition, with certain exceptions, on corporate directors. The consultation seeks views on the scope of these exceptions.

UK: England and Wales: fiduciary liability - account of profits and causation

Judgment was given by the Court of Appeal yesterday in Gray v Global Energy Horizons Corporation [2020] EWCA Civ 1668. The decision is noteworthy because of what is said about the equitable claim for an account of profits and the extent to which - if at all - causation is an essential element.  The court unanimously observed (paras. [126] and [127]):  

.... the basic equitable rule is indeed a stringent one which requires an errant fiduciary to account to his principal for all unauthorised profits falling within the scope of his fiduciary duty. The rule is intended to have a deterrent effect, and to ensure that no defaulting fiduciary can make a profit from his breach of duty. It does not matter if the result is to confer a benefit on the principal which the principal would otherwise have been unable to reap ... It follows, in our view, that the doctrine of unjust enrichment has, at best, only a subsidiary role to play in limiting the liability of a fiduciary to account.  We are here concerned with the obligation of a defaulting fiduciary to account for unauthorised profits, not with compensation for an equitable wrong, and still less with an independent cause of action in restitution to reverse an unjust enrichment of the defendant at the expense of the claimant ... the liability of a defaulting fiduciary to account for unauthorised profits is a strict one, which has always been jealously enforced by courts of equity. There needs to be some link or nexus between the breach of duty proved and the profits for which an account is ordered, such that there is a “reasonable relationship” between them (as Lewison J said in the Ultraframe case).  But the link or nexus does not need to be of a causal character. It will normally be sufficient if the profit arose within the scope of the defaulting fiduciary’s conduct in breach of duty". 

UK: The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020 were laid before Parliament yesterday and come into force on 31 December: see here or here (pdf). The accompanying explanatory memorandum, available here (pdf), explains the purpose of the Regulations as follows: "to extend the duration of the temporary measures restricting the use of statutory demands and winding up petitions introduced by the Corporate Insolvency and Governance Act 2020 [as amended by the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020/1031] ... beyond their current expiration date of 31 December 2020. This instrument extends these measures to 31 March 2021". 

Canada: CSA consultation on activist short-selling

The Canadian Securities Administrators have published a consultation paper on the topic of activisit short-selling: see here (pdf). Activist short-selling is defined for the purposes of the paper as "instances where an individual or entity takes a short position in a security and then makes a public statement, issues a report, or otherwise publicly shares information or analysis that is likely to have a negative effect on the price of the security". The paper seeks views on a wide range of matters, including perceptions of activity short-selling: consultees are asked, for example, to provide examples of conduct associated with activist short-selling campaigns regarded as problematic, and to identify any perceived weaknesses in regulation and enforcement.

UK: Government consultation on corporate liability for economic crime - an update

In January 2017, the Government published a call for evidence in respect of the law on corporate liability for economic crimes: see here (pdf). Last month, the Government published its response: see here (pdf). The Government has concluded - in the light of insufficiently strong evidence of the need for reform in consultee responses, and the need to take account of more recent reforms - that it is not appropriate to proceed with legislative reform immediately. Instead, as already noted on this blog, the Law Commission has been asked to review the law on corporte criminal liability.

Canada: companies, the Charter of Rights and protection from cruel and unusual treatment or punishment

It is, I hope, not too late to note a judgment of the Supreme Court handed down at the start of last month: Quebec (Attorney General) v. 9147-0732 Québec inc., 2020 SCC 32. The court held that section 12 of the Canadian Charter of Rights and Freedoms, which provides that "Everyone has the right not to be subjected to any cruel and unusual treatment or punishment" did not apply to companies.  The Court of Appeal had, by majority, held that section 12 did apply to companies. A summary of the Supreme Court's judgment is available here. 

UK: Treasury consultation: a special administration regime for payment and electronic money institutions

HM Treasury has, today, published a consultation paper in respect of a proposal to introduce a special administration regime for payment institutions (PIs) and electronic money institutions (EMIs): see here (pdf). To quote directly from the consultation paper (paras. 1.4 and 1.5):

.... there is evidence that the existing insolvency process for PIs and EMIs is suboptimal with regards to consumers. Recent administration cases involving PIs and EMIs have taken years to resolve in some cases, with customers left without access to their money for prolonged periods and receiving reduced monies after the cost of distribution. In six recent cases of PIs and EMIs in insolvency proceedings (of which three started in 2018), only one has so far returned funds to customers.  The Government is therefore proposing to introduce changes that will help protect customers in the event of a PI or EMI being put into insolvency. As these changes can be delivered relatively quickly and could mitigate harms from any future insolvencies, the Government believes it is appropriate to progress these changes before the conclusion of the Payments Landscape Review is published".

UK: FRC research - audit committee chairs and audit quality

The Financial Reporting Council has published the results of qualitative research exploring audit committee chairs' views on, and approach to, audit quality: see here (pdf). The accompanying press release, available here, carries the headline "New research supports introduction of standards for Audit Committees" but readers of the report might think that other findings are more significant, including, for example, one of the key themes to emerge: that audit committee chairs had different views on, and approaches to, audit quality. Another theme was a lack of shareholder interest in audit matters (other issues, such as remuneration, were identified as being more important). 

UK: Court of Appeal considers Part VII insurance business transfers

The Court of Appeal has, for the first time, considered the approach that should be taken when considering whether to sanction the transfer of an insurance business under Part VII of the Financial Services and Markets Act 2000: see Re Prudential Assurance Company Ltd and Rothesay Life Plc [2020] EWCA Civ 1626, handed down today and for which a summary (prepared by the court) is available here (pdf).