Ireland: a new legislative framework for co-operative societies

Rather belatedly, given that the consultation period ended a couple of days ago (so, perhaps a little belatedly, to be generous on myself), I note that the Department of Enterprise, Trade and Employment is close to completing the drafting of a new legislative framework for co-operative societies: see here. The following overview, taken from the most recent consultation paper (here, pdf), explains what is planned:

The legislation will be substantive and complex in nature and likely to contain in the region of 250 heads. It will bring together, in a single statutory framework, existing provisions that are currently spread over a number of different Acts and introduce new provisions that will regulate co- operative societies in the future. It will preserve provisions which are still useful and expand and modernise other provisions to align them with the realities of the 21st century business and regulatory environment. It will also introduce new concepts, the most significant being that the co-operative model will receive specific legislative recognition and societies registering under the legislation will be required to adhere to the co-operative ethos"

Canada: updated guidance on virtual shareholder meetings

The Canadian Securities Administrators have published updated guidance on virtual shareholder meetings: see here.

Jersey: amending insolvency law

The Companies (General Provisions) (Amendment No. 6) (Jersey) Order 2022 was made yesterday and amends an existing one - the Companies (General Provisions) (Jersey) Order 2002 - by, amongst other things, inserting a new provision concerning liquidator's qualifications. At the head of the new Order it is said that it comes into force on 1 February. This would appear to be a mistake because, under Article 5, the Order comes into force at the same time as the Companies (Amendment No. 8) (Jersey) Regulations 2022, and these Regulations - worth noting in their own right because of the changes they make to insolvency law - come into force on 1 March 2022.

UK: England and Wales: does a statutory trust arises in respect of segregated monies?

Judgment was given last Thursday by ICC Judge Burton in Re Allied Wallet Ltd [2022] EWHC 402 (Ch). The case concerned an application by liquidators for the directions of the court in respect of the interpretation and operation of the Payment Services Regulations 2017 and the Electronic Money Regulations 2011. More specifically: did a statutory trust arise in respect of certain monies held by a company where the Regulations required their segregation?  Yes was the answer. 

Update (9 March): While ICC Judge Burton found that a trust arose, he noted at the end of his judgment that his view was in conflict with Ipagoo LLP, Re (Electronic Money Regulations 2011 and Insolvency Act 1986) [2021] EWHC 2163 (Ch), the judgment in which arose between hearing the application and the circulation of his draft judgment, and which was binding on him. The Court of Appeal has now expressed its position: no trust arises (see Baker v Financial Conduct Authority (Re Ipagoo LLP) [2022] EWCA Civ 302).

Australia: The Corporations Amendment (Meetings and Documents) Bill 2021 becomes law

The Corporations Amendment (Meetings and Documents) Bill 2021 received Assent a couple of days ago: see here. The Act - as it has now become - amends the Corporations Act 2001 to provide a permanent mechanism for companies to (a) hold hybrid (remote and in-person) meetings; and (b) make use of technology to execute, sign and share company and meeting related documents.

UK: The Wates Corporate Governance Principles - assessing the extent, coverage and quality of reporting

In the introduction he wrote in 2018 for the Wates Corporate Governance Principles for Large Private Companies (here, pdf), James Wates - now Sir James Wates - stated: "My hope is that a wide range of companies – and not just those included in the new legislative requirement to report on their corporate governance arrangements – will use the Wates Principles" (p. 1). Today we can begin to judge the extent to which that hope has been met because the Financial Reporting Council has published research it commissioned to explore the extent, coverage and quality of corporate governance reporting under the Wates Principles: see here (pdf). 

The authors of this research identified 1,815 companies believed to be within the scope of the new Regulations, and, after removing from this group those companies that had not submited an annual report by the date chosen by the researchers, were left with 1,206. Of these, 858 were found not to be using the Wates Principles - or, to put this another way, less than a third (approximately 350) had adopted the Principles. Nevertheless, the FRC was able to note, in its press release, that the Principles were the most widely adopted corporate governance code used by large private companies. 

The authors concluded that "disclosure practices are still in their infancy" (p. 40) and that while there were positive aspects in respect of the adoption of the Wates Principles in the first year, there was "much room" for improvement.  In particular, it is recommended that companies provide more detailed information in respect of their application of the Principles so that readers receive a more comprehensive understanding of the chosen governance arrangements.

UK: climate-related financial disclosure - guidance on new mandatory requirements

The Government has published guidance for those companies and limited liability partnerships subject to the new climate-related financial disclosure requirements introduced by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022: see here (pdf).

UK: FTSE Women Leaders Review - first report published

The first report published by the FTSE Women Leaders Review was published today: see here (pdf). The accompanying press release is available here (.docx). The report notes that 39.1% of UK FTSE100 board positions are now held by women; with 36.8% in the FTSE250 and 37.6% in the FTSE350.  New voluntary targets have been proposed by the Review, including, for FTSE350 boards, that (a) at least 40% of positions should be held by women by the end of 2025; and (b) also by the end of 2025, there should be (i) at least one woman occupying the position of chair or senior independent director and/or (ii) one woman in the chief executive or finance director role. The Review has also recommended that its scope should be widened to include the largest 50 private companies, by sales, in the UK.

Hong Kong: Court of Final Appeal declines permission in shareholder remedies case

Earlier this month, the Court of Final Appeal declined to give permission to appeal in a case concerning shareholder remedies: Dennis Kwok Hon Ming v Poon Sui Cheong Albert [2022] HKCFA 2. The case concerned a claim brought by a minority shareholder - under section 168A of the Companies Ordinance (Cap 32), now found in section 724 of the Companies Ordinance (Cap 622) - alleging unfair prejudice. The minority shareholder had been removed from office as a director in several companies by the majority shareholders. At first instance, the court found unfair prejudice and ordered that the minority be bought out by the majority, but the Court of Appeal ([2019] HKCA 461) reversed this decision.

Amongst the arguments made by the minority shareholder - and rejected as not being reasonably arguable by the Court of Final Appeal - was the position that the majority shareholders, in seeking to avoid a finding of unfair prejudice, could only rely on information about the minority known to them at the time of his removal. Mr Justice Ribeiro PJ stated, referring to several English authorities (including O'Neill v Phillips [1999] 1 WLR 1092 and Dinglis v Dinglis [2019] EWHC 1664 (Ch)):

It is wholly implausible that the court should adopt ... an all-encompassing, “nothing is off-limits” approach when deciding what relief fairness requires while assessing whether there was conduct unfairly prejudicial to the interests of the petitioner in a blinkered fashion, excluding from its consideration matters that are relevant but were unknown to those having conduct of the company’s affairs. The court applies an objective standard of fairness in both inquiries and is entitled to take into account all relevant factors of which it is aware." (para. 40).

UK: The Money Laundering and Terrorist Financing (Amendment) Regulations 2022

The Money Laundering and Terrorist Financing (Amendment) Regulations 2022 were made earlier this week and come into force on 9 March 2022: see here or here (pdf). The explanatory memorandum, available here (pdf), states: "These Regulations update the existing United Kingdom anti-money laundering legislation to make minor amendments concerning the UK’s register of express trusts. The main changes are made in order to extend the deadlines imposed on trustees for registering and updating information on the register, and also to amend the categories of trusts which are required to register" (paras. 2.1 and 2.2).

FSB warns of cryptoasset market risks

The Financial Stability Board has today warned of the risks to global financial stability posed by crypto-asset markets: see here.

Australia: mandatory examination under s596A of the Corporations Act 2001

The High Court gave judgment today in Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) [2022] HCA 3. The case concerned the operation of section 596A ("Mandatory examination") of the Corporations Act 2001. To quote directly from the summary of the judgment (available here, pdf) the court held (by majority):

The purpose and concern of s 596A is not confined to the interests of the corporation, its creditors, or its contributories, or to the bringing of criminal or regulatory proceedings in connection with the affairs of the corporation. Examining an officer of a corporation for the purpose of pursuing a claim against the corporation in external administration or one of its officers or advisers for the enforcement of the law can be a legitimate use of the power conferred by s 596A, irrespective of whether it is in the interests of the corporation or whether the claim relates to all or only some of the corporation's creditors or contributories"

UK: Takeover Panel consultation - anonymous order book dealings

The Code Committee of the Takeover Panel has published a consultation paper in which it seeks views on the proposal to remove from the Code the restriction, found in rule 4.2(b), on an offeror purchasing shares in the offeree company through an anonymous order book: see here (pdf). The Committee believes the costs imposed by the restriction on share purchasing operations are disproportionate to the benefits.

UK: Government white paper - "Restoring trust in audit and corporate governance" - update

The Government white paper Restoring Trust in Audit and Corporate Governance was published last March with the consultation period ending in July: see here. Today, FT.COM has reported: "Ministers will set out plans to overhaul the regulation of UK auditors and boardrooms in the coming weeks, ending a long wait for the reforms that were first proposed more than three years ago. The proposals have been circulated to government departments for final sign-off, according to two government officials. But they cautioned of possible further delays to the implementation of the new rules as there was no guarantee they would be included in the government’s next legislative programme".

Australia: the power of the court in cases of oppression

Judgment was given by the Supreme Court of Victoria (Court of Appeal) yesterday in Parker v Auswild; Bergmuller v Auswild [2022] VSCA 8. Of interest is what the court said about the breadth of the court's power, under section 233 of the Corporations Act 2001, in remedying oppressive conduct: that section 233 "should be given a liberal construction in order that the oppression with which ss 232 and 233 of the Act are concerned may be more fully relieved" (para. [138]).

Isle of Man: call to replace 1934 Winding-up Rules with "modern, workable code"

In a recent judgment - Ltd Liability Companies Act 1996 and Companies Act 1931 and Broadsheet LLC and Roger Harper (CHP21/038, 31 January 2022) (here, pdf) - the court described the Companies (Winding-up) Rules 1934 (here, pdf) as "archaic" and called (again) for them to be replaced with a "modern, workable code".

Germany: DCGK consults on revisions to corporate governance code

The German Corporate Governance Commission, DCGK, is consulting on proposed changes to the German Corporate Governance Code. Further information is available in the DCGK's press release: see here (pdf). A copy of the revised code, in English and with the proposed changes highlighted, is available here (pdf).