Singapore: Court of Appeal considers reflective loss principle

In one of the most important company law decisions of the year - Miao Weiguo v Tendcare Medical Group Holdings Pte Ltd [2021] SGCA 116 (pdf) - the Court of Appeal has considered the reflective loss principle, exploring the significance of the majority (and minority) positions in the UK Supreme Court decision Sevilleja v Marex Financial Ltd (Rev 1) [2020] UKSC 31. Andrew Phang Boon Leong JCA delivered the decision of the court and stated, by way of a summary near the start of his written judgment, the following (para. [6], emphasis in the original):

...we are of the view that the reflective loss principle is one that relates to the specific sphere of company law and we therefore endorse the majority decision in Marex. To the extent that it is undergirded by principle, inasmuch as it has a specific purpose and rationale, the reflective loss principle is one that ought to be retained and we therefore do not agree with the minority decision in Marex. It follows that the approach in Townsing [[2007] 2 SLR(R) 597 (pdf)] (which was, in fact, rendered by way of obiter dicta) is no longer the law in Singapore. In our respectful view, the court in Townsing, inadvertently perhaps, conflated a specific principle of company law with the general principle proscribing double recovery – resulting in the dilution or undermining of what was an otherwise clear and specific rule that had a clear and coherent rationale in the context of company law".

UK: Climate-related financial disclosures - FCA confirms final rules and guidance

The Financial Conduct Authority has published final rules and guidance in respect of the climate-related financial disclosures required by (a) the issuers of standard listed shares and (b) FCA regulated asset managers and asset owners: see, respectively, here (pdf) and here (pdf).

The new rules come into effect on 1 January 2022, with asset managers and asset owners subject to a phased period of implementation based on firm size. Issuers will be required to disclose, in their annual financial reports, whether - and if not, why - their disclosures meet the recommendations of the Taskforce on Climate-related Financial Disclosures.

UK: The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021

The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 received Royal Assent last week and became law: see here. A copy of the Act is available here or here (pdf). Amongst other things, the Act extends the investigatory powers of the Insolvency Service to the directors of dissolved companies.

UK: A new regime for insolvency practitioner regulation - consultation begins

A consultation was launched by the Government today seeking views on a new regime for the regulation of insolvency practitioners: see here. The proposed new regime would see the creation of a new regulator, within the Insolvency Service, in place of the current four recognised professional bodies, with a remit extended also to firms offering insolvency services.

UK: England and Wales: unfair prejudice claims - personal acts and a causal connection

Judgment was given earlier today in Primekings Holding Ltd v King (Re Kings Solutions Group Ltd) [2021] EWCA Civ 1943. The court was required to consider whether, and if so in what circumstances, it was permissible to include in a statement of case in a section 994 petition allegations of personal conduct by the respondents which were not, of themselves, within the scope of Section 994 of the Companies Act 2006. Lord Justice Snowden, with whom Lords Justice Nugee and Green agreed, stated (at paras. [66]-[67]):

Although designed to overcome some of the limitations which beset the oppression remedy under section 210 of the Companies Act 1948, neither section 459 of the Companies Act 1985 nor Section 994 were drafted on the basis that a shareholder could simply complain, for example, that "a course of conduct in relation to the company" had unfairly prejudiced his interests. The potential breadth of what is now Section 994 has been limited and kept within manageable bounds by the express statutory requirements that the acts complained of must either (i) be an act or omission of the company, or (ii) be conduct of the company's affairs rather than acts done in the conduct of a shareholder's personal affairs.

Satisfaction of these requirements should not be overlooked or minimised. Petitions and statements of case in unfair prejudice cases should make it clear which limb of Section 994 is being relied upon and should contain a concise statement of the facts upon which the petitioner relies to make out that requirement. On the basis of the majority judgments in Graham v Every [2015] 1 BCLC 41, it may be legitimate for a concise statement of personal acts of the respondents which are causally connected to an act or omission of the company, or causally connected to conduct of the company's affairs, to be included to support the primary allegation. There is, however, no such justification for allowing other allegations of personal conduct of the respondents, which are not causally connected to an act or omission of the company, or not causally connected to conduct of the affairs of the company, to be included in a statement of case under Section 994. "

UK: Common Framework Agreement on Company Law between the UK Government and the Northern Ireland Executive

A provisional version of a common framework agreement on company law, between the UK Government and the Northern Ireland Executive, was published earlier this week: see here (pdf).

UK: England and Wales: the duties of non-executive directors

A recent judgment of the High Court - Secretary of State for Business, Energy And Industrial Strategy v Selby [2021] EWHC 3261 (Ch) - is of interest because of the discussion it contains regarding the duties and expectations placed on non-executive directors (NEDs) and the message it sends about what NEDs are expected to know, and concern themselves with, in respect of their companies. The NED in the case was disqualifed from acting as director for four years. ICC Judge Prentis found that the NED had, amongst other things, failed to investigate thoroughly the reasons for an "extraordinary uplift" in the company's turnover, something the judge said was a "reprehendable abrogation of duty ... whether the uplift was owing to business which was legitimate or not" (para. [234]).

UK: Nat West sentencing at Southwark Crown Court for money laundering breaches

The first bank, Nat West, to face a criminal conviction for breaches of the Money Laundering Regulations 2007 was sentenced today at Southwark Crown Court. The sentencing remarks of Mrs Justice Cockerill are available here (pdf).

A fine of just over £264 million was imposed, Mrs Justice Cockerill stating that the case was one where, notwithstanding the bank's regret and its commitment to improvement, it was necessary to pass a sentence that would be felt by management and shareholders. In addition to the fine, and a confiscation order of approximately £460,000, the bank was ordered to pay the costs of the Financial Conduct Authority - a little under £4.3 million.

UK: HMT, HMRC and BEIS call for evidence - the umbrella company market

A joint call for evidence - from HM Treasury, HMRC and the Department for Business, Energy and Industrial Strategy - has been made in respect umbrella companies: see here (pdf). An umbrella company is, for the purposes of the call for evidence, defined as a "business which employs a worker with a view to that worker being supplied to work for, and under the control of, the end-client". The call for evidence seeks views on the role that such companies play in the labour market and the interactions they have with the tax and employment rights systems. It does so noting that concerns have been made about the risks to workers and taxpayers associated with the umbrella company model. 

UK: Takeover Code - Takeover Panel consults on miscellaneous changes

Earlier this week the Takeover Panel published a consultation paper seeking views on various amendments to the Takeover Code - miscellaneous amendments to adopt the Panel's own description of the paper: see here (pdf).

France: AMF publishes annual corporate governance report

AMF - Autorité des Marchés Financiers, the financial market regulator - has published the latest edition of its annual report exploring listed companies' corporate governance, including executive remuneration. A copy of the report, in French, is available here (pdf). A summary of the report, in English, is available here.

UK: Listing Rule amendments - FCA policy statement - dual class shares, free float and minimum capitalisation

New Listing Rules come into force today, following a consultation by the Financial Conduct Authority and, before that, the publication of the UK Listings Review report and recommendations. Further information about the changes now in place can be found in the FCA's policy statement, available here (pdf). The principal changes include: (1) permitting dual class share structures within the premium listing segment; (2) lowering the minimum free float from 25% to 10%; and (3) for ordinary commercial companies listed on the premium or standard segments, increasing the minimum market capitalisation threshold from £700,000 to £30 million (so, lower than the £50 million originally proposed).