Malaysia: the conduct of directors of listed companies and their subsidiaries

The Securities Commission yesterday published guidelines on the conduct of directors of listed companies and their subsidiaries: see here (pdf). The Commission explains, in the accompanying press release, that the new guidelines "take into account the evolving Malaysian corporate governance landscape, lessons learnt from the [Commission's] regulatory work in enforcing corporate governance breaches and the need to ensure that Malaysia’s framework remains relevant and effective".

UK: BIS consults on options for reforming various company filing requirements

The Department for Business, Innovation and Skills has published a consultation paper setting out various reform options concerning the annual return, register of members, statements of capital and the disclosure of information in respect of subsidiaries: see here (pdf).

UK: FTSE350 companies and their subsidiaries

In a speech delivered in July this year, the Secretary of State for Business, Innovation and Skills said that he was examining how FTSE350 companies meet the legal requirement to identify their subsidiaries in their accounts and/or annual return: see here. Yesterday it was announced, following a review by Companies House, that 124 companies had failed to provide a full list of their subsidiaries: see here (pdf).

UK: SFO proceedings against Olympus and subsidiary

There is much in the news today about the decision of the Serious Fraud Office to start criminal proceedings against Olympus and its UK subsidiary Gyrus Group Ltd: see here. The charges relate to one of the offences contained in the Companies Act 2006: the offence within section 501 of making - whether knowingly or recklessly - a misleading, false or deceptive statement to an auditor. Gyrus Group faces four charges and Olympus faces one charge. The first hearing will take place at Westminster Magistrates' Court on 10 September 2013. A statement issued by Olympus states that the charges concern representations made to the auditors of the subsidiary in documents relating to its financial accounts for the fiscal years 2009 and 2010: see here (pdf).

UK: England and Wales: company did not have a parent company

Judgment was given yesterday in Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2013] EWHC 2688 (TCC). The judge held, amongst other things, that a company was not the parent of another company. Whilst the two companies had shareholders and directors in common, there was no dominant influence by the alleged parent and the two companies were not managed on a unified basis. This issue arose in the context of a claim for an outstanding parent company guarantee.

Singapore: a new framework for financial holding companies

Last year the Monetary Authority of Singapore published for comment a draft of the Financial Holdings Bill, following an earlier consultation: see here (pdf). The purpose of the Bill is to introduce a new regulatory framework for financial holding companies (i.e., companies that have a bank or an insurance company as a subsidiary but which do not undertake such activities or other commercial activities). This week MAS a feedback statement containing its responses to the matters raised by those responding to the consultation: see here (pdf).

UK: the financial reporting framework - new standards published by the FRC

The Financial Reporting Council yesterday published two new financial reporting standards concerning the overall financial reporting framework. The first standard, FRS100: Application of Financial Reporting Requirements, contains the financial reporting requirements for UK and Republic of Ireland entities. The second standard, FRS101: Reduced Disclosure Framework, contains disclosure exemption for the individual financial statements of subsidiaries, including intermediate parents, and ultimate parents that otherwise apply the recognition, measurement and disclosure requirements of EU-adopted International Financial Reporting Standards.

UK: England and Wales: holding company could be 'trader'

The Court of Appeal gave judgment in Surrey Trading Standards, R (on the application of) v Scottish and Southern Energy Plc [2012] EWCA Crim 539 earlier this month. This is an interesting case in which the court held that a holding company could be regarded as a trader, and therefore liable, in respect of the actions committed by employees in a subsidiary company contrary to regulation 9 of the Consumer Protection from Unfair Trading Regulations 2008. Lord Justice Davis, delivering the court's unanimous opinion, observed (paras. [33] to [35]):

... it is too narrow an approach to the 2008 Regulations to say that because the sales force were directly employed and directly trained by LTD [the subsidiary company] (which had the licence) therefore there could not be any designation of PLC [the holding company] as "trader" under the 2008 Regulations.

It is important to bear in mind that "trader", for the purpose of the 2008 Regulations, extends to any person who in relation to a commercial practice is acting for purposes relating to his business. The words "any", "in relation to", "acting" and "relating to" are all words of width and elasticity. As to the definition of "commercial practice" that is likewise broadly framed. It is amply sufficient to cover involvement in or supervision or control of training, in appropriate circumstances, as being directly connected with the promotion or sale or supply of a product; and it is also to be noted that the definition of "commercial practice" carefully avoids saying that the promotion or sale or supply has to be made by the trader itself.

Given the circumstances of this case, and given the breadth of the definitions of "trader" and "commercial practice", we therefore conclude that the Judge's ruling was a justified one. The evidence was there, in the circumstances of this case, to show that PLC was capable of being a "trader" for the purpose of the 2008 Regulations. Such a conclusion does not ... do a disservice to the language of the 2008 Regulations or drive a coach and horses through conventional corporate structures or wrongly rend corporate veils. On the contrary, it gives effect to the broad wording of, and purposive approach required to be applied to, the 2008 Regulations".

A summary of the decision has been provided by the ICLR as part of its free WLR Daily service: see here.

UK: Audit Exemptions and Change of Accounting Framework - BIS consultation paper published

The Department for Business, Innovation and Skills has published a consultation paper titled Audit Exemptions and Change of Accounting Framework - see here (pdf) - in which it proposes, amongst other things, making the exemption from audit available to a larger number of SMEs and certain subsidiary companies. The impact assessments accompanying the consultation paper are available here.