USA: SEC guidance on proxy rules and proxy voting responsibilities

Earlier this week the Securities and Exchange Commission published two document concerning proxy voting: [1] guidance regarding the proxy voting responsibilities of investment advisers (here, pdf); [2] interpretation and guidance regarding the applicability of the proxy rules (here, pdf).

Vietnam: Corporate Governance Code of Best Practices

Last week, the publication of the Vietnamese Corporate Governance Code of Best Practices was noted: see here. At the time, a copy of the Code in English was not available. It is now: see here (pdf).

Australia: Financial Services Royal Commission implementation roadmap published

The final report and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, led by the Hon Kenneth Hayne AC QC, was published in February: see here. At the same time, the Australian Government published a response: see here (pdf). More recently - a couple of days ago, in fact - the Government published an implementation roadmap: see here (pdf).

Amongst the report's recommendations were those concerning the culture, governance and remuneration of regulated entities (see, in particular, chapter 6). In this regard, the roadmap notes, amongst other things, that the APRA is reviewing its work programme in this area and will publish a statement of its approach by the end of 2019.

UK: Companies House - changes to the late filing penalties manual

Companies House has made several changes to its late filing penalties manual, taking effect from 1 October 2019: see here.

UK: FTSE100 remuneration - preview of forthcoming report from Deloitte

Deloitte today published a preview of some of the findings from its forthcoming review of directors' remuneration in FTSE100 companies, due to be published in October: see here. These findings include: the median CEO package is £3.4 million; approximately one third of FTSE100 companies have reduced pensions for new executive appointments; and a reduction in the number of companies receiving low votes (below 80% in favour) on remuneration.

UK: Upper Tribunal decides that public censure appropriate sanction for breach of integrity principle

The Upper Tribunal (Tax and Chancery Chamber) decision Andrew Tinney v The Financial Conduct Authority [2019] UKUT 0227 (TCC), given in May this year, has now been published: see here. It appears on the same day as the FCA's publication of its final notice in the case: see here (pdf). The Tribunal found that Mr Tinney had acted without integrity - in breach of (what is now) APER Statement of Principle 1 - and that the appropriate sanction was public censure. The Tribunal decision is noteworthy because of the discussion it contains concerning the meaning of integrity. The Tribunal observed (para. [13]):

A lack of integrity does not necessarily equate to dishonesty.  While a person who acts dishonestly is obviously also acting without integrity, a person may lack integrity without being dishonest.  One example of a lack of integrity not involving dishonesty is recklessness as to the truth of statements made to others who will or may rely on them or wilful disregard of information contradicting the truth of such statements".

India: report and recommendations on corporate social responsibility

The committee formed last year by the Ministry of Corporate Affairs to review the corporate social responsibility framework has published its report and recommendations: see here (pdf).

Among the recommendations are those concerning section 135 of the Companies Act 2013, which introduced, for companies of a certain size, mandatory spending on corporate social responsibility activities and the formation of a corporate social responsibility committee. The report recommends, for example, that the section 135 obligation should not apply to newly incorporated companies. It also recommends extending the current CSR regime to limited liability partnerships and, for smaller companies, relaxing the requirement to form a separate corporate social responsibility committee (for such companies the board would carry out the functions of the committee).

Vietnam: launch of the Corporate Governance Code of Best Practices

It's almost three years since I posted a note to say that the International Finance Corporation, part of the World Bank Group, was working with the State Securities Commission in Vietnam to develop a corporate governance code. That code has now been published, according to a tweet from the IFC (although I have yet to locate a copy online*):

“As Vietnam moves ahead to deepen its capital markets, good corporate governance will be a vital part of that journey”--IFC CEO Philippe Le Houérou in Ho Chi Minh City at the launch of #Vietnam’s Corporate Governance Code of Best Practices.

cc @HoSE_exchange @Hanoi_Exchange pic.twitter.com/tM73Vv06e4

— IFC (@IFC_org) 13 August 2019

* - update (21 August 2019): a copy of the code in English can be found here (pdf).

New Zealand: Supreme Court considers insolvent transaction provision of the Companies Act 1993

Last Friday the Supreme Court gave judgment in Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86, in what is now the leading authority on
section 292 ("Insolvent transaction voidable") of the Companies Act 1993. The court unanimously rejected the argument that for a transaction to be voidable under section 292 it was necessary, in addition to the requirements within section 292 itself, to prove that the payment diminished the assets of the company. Further information is available in the media release published by the court: see here (pdf).

UK: England and Wales: conduct of general meetings and the role of the chairman

Judgment was given yesterday by Deputy High Court Judge Lance Ashworth QC in Kaye v Oxford House (Wimbledon) Management Company Ltd [2019] EWHC 2181 (Ch). The decision is an important and interesting one exploring the operation of general meetings and, in particular, the role of the chairman in conducting the business and in closing the meeting. It would also appear to be the first authority to consider the operation of section 303(5) of the Companies Act 2006, which provides that a resolution may be moved at a meeting unless (to quote directly): (a) it would, if passed be ineffective (whether by reason of inconsistency with any enactment or the company's constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious.

Here is an extract:

It is the duty and function of the chairman to preserve order and to take care that the proceedings are conducted in a proper manner and that the sense of the meeting is properly ascertained with regard to any question which is properly before the meeting. However, he does not have power to stop the meeting at his own will and pleasure ... the chairman is not running the general meeting for his own benefit, but for the benefit of the company as a whole. The chairman must therefore act at all times in good faith and for proper purposes, remembering at all times that the authority to preside over the meeting does not confer dictatorial power" (para. [106]).  

USA: SEC proposes amendments to disclosure requirements under Regulation S-K

Yesterday the Securities and Exchange Commission published proposals to amend the disclosure requirements under Regulation S-K in respect of business (item 101(a) and (c), legal proceedings (item 103) and risk factors (item 105). These amendments are intended, according to the SEC, "to improve the readability of disclosure documents, as well as discourage repetition and disclosure of information that is not material". For further information see here and here (pdf).

UK: Establishing the Financial Services Contracts Regime

HM Treasury has published a draft of the statutory instrument that will establish the Financial Services Contracts Regime (FSCR): see here (pdf). The FSCR is intended to provide run-off mechanisms for several temporary regimes that have been put in place by EU exit statutory instruments. Further information is available here.

India: SEBI report on proxy advisors

At the end of last month, SEBI published a report from the Working Group on Issues Concerning Proxy Advisors: see here. Public comment is now invited in respect of the report and the recommendations it contains. The report recommends that SEBI "may" consider drafting a code of conduct for proxy advisors. It also recommends that SEBI "should" make a stewardship code, operating on the basis of 'comply or explain', mandatory for all institutional shareholders.

Ghana: Companies Act 2019 receives President's assent

It is now over sixty years since Professor Gower was appointed to chair a commission on company law reform in Ghana, the product of which was the Companies Act 1963. A new company law framework, to replace the 1963 Act, was placed before Parliament last year: the Companies Bill 2018. In May this year, it was reported in the media that the Bill had been passed and the new company law framework - the Companies Act 2019 - would become law on receiving the President's assent: see here.

The Ghana Presidency website reports that the President gave his assent earlier this month: see here. A copy of the new Act has not yet been published on the Parliament website.

UK: England and Wales: sentencing fraudulent trading

Last month, in Ali, R v [2019] EWCA Crim 1263, the Court of Appeal heard three appeals against a sentence - 28 months' imprisonment - imposed on three individuals for fraudulent trading under section 993 of the Companies Act 2006. One of the grounds of appeal concerned what was said to be the sentencing judge's undue or excessive reliance on the Sentencing Council Guideline for Fraud, Bribery and Money Laundering Offences, in the absence of a specific guideline for fraudulent trading.

The appeals were dismissed, the court finding that the sentences were neither wrong in principle nor manifestly excessive. The sentencing judge had stated that it was appropriate to pay "more than some regard" to the Guideline for Fraud, an observation noted by the court and not - as far as I can tell - explicitly accepted or rejected. It should, however, be noted that since the court's judgment was given, the Sentencing Council has published a new General Guideline for sentencing offences not covered by a specific sentencing guideline: see here. The General Guideline requires, as part of step 1 ("Reaching a provisional sentence"), that the court should take account (if applicable) of the definitive sentencing guidelines for analogous offences.

USA: All S&P500 boards now contain at least one female director

The Wall Street Journal reports - in an article titled "The Last All-Male Board on the S&P500 Is No Longer" - that Copart Inc. has appointed Diane M. Morefield to its board: see here.

UK: England and Wales: relief for unfair prejudice, buy-out orders and tax avoidance

Last year, in Estera Trust (Jersey) Ltd v Singh [2018] EWHC 1715 (Ch), Mr Justice Fancourt ordered that two shareholders - the petitioners - should have their shares bought out by the company and another shareholder, following the finding that the company's affairs had been conducted in an unfairly prejudicial manner within section 994 of the Companies Act 2006.

At a subsequent trial, the purchase price and time for payment were fixed (see [2019] EWHC 873 (Ch)), only after which the petitioners appreciated the tax consequences of the proposed order: purchase by the company of their shares would be regarded as an income distribution and taxed more heavily than a capital transaction. With this knowledge, the petitioners made an application requesting that the final order not be sealed until a further hearing had taken place. They sought a change in the proposed order: they wanted a company structure to be created the aim of which was to minimise their tax liability.

Could, and if so should, the court order that the petitioners' shares be bought in the manner they now requested?  The answer was given several days ago in Estera Trust (Jersey) Ltd v Singh [2019] EWHC 2039 (Ch). Mr Justice Fancourt held that while he had the jurisdiction to make the order he would decline to do so. The proposed buy-out structure could, he stated, be reasonably regarded by HMRC and others as aggressive tax avoidance. The parties did not agree and, moreover, the order sought by the petitioners provided in his view "relief that is wholly out of the ordinary - if not unprecedented - for the Court to grant on a section 994 petition, despite the breadth of the jurisdiction to grant relief" (para. [32]). Fancourt J. further observed (paras. [33] and [41]):

[33] There are undoubtedly circumstances in which the Court will order a reluctant party to enter into a transaction for the purpose of saving tax for another party ... [41] In my judgment, in a purely commercial context such as this, there is no compelling reason why the Court should force reluctant parties to enter into a transaction solely for the purpose of saving tax for another party, even if there is no possible harm to them. There is no public policy interest in favour of making such an order. This is a case of an offshore trust, which will incur a tax liability on the receipt of an enormous sum of money, which it can very likely mitigate so that only the same tax has to be paid as would be paid by a private person resident in the UK. The public interest seems to me to be served by the payment of that tax, not by the avoidance of the substantial majority of the tax payable".

UK: FCA guidance on crypto-asset regulatory remit

The Financial Conduct Authority has today published final guidance in respect of those crypto-assets activities which fall within its regulatory remit: see here (pdf).

Sweden: Amending the Swedish Code of Corporate Governance

The Swedish Corporate Governance Board has announced that it will, in September, publish proposed amendments to the Swedish Code of Corporate Governance: see here or here (pdf). The Board has also announced that, in October, it will publish a new recommendation on remuneration.

ECGI publishes video presentations from Global Corporate Governance Colloquia

The European Corporate Governance Institute has uploaded to its YouTube channel video recordings of some of the presentations that were delivered at the recent Global Corporate Governance Colloquia held in Frankfurt: see here.

UK: Takeover Panel publishes annual report for 2018/19

The Takeover Panel has published its annual report for the year ending March 2019: see here (pdf). The report notes a higher number of hostile offers being launched than in previous years and an increase in the number of cases featuring an interplay between the Takeover Code and the insolvency regime. The report notes, as well, the end of the case that saw it, for the first time, seek an order under section 955 ("Enforcement by the court") of the Companies Act 2006 (about which, see [2017] CSOH 156 and [2018] CSIH 30).

UK: England and Wales: did the company receive a fair trial?

Judgment was handed down yesterday in Alstom Network UK Ltd, R. v (Rev 1) [2019] EWCA Crim 1318. The court was required to consider whether a company that had been found guilty of conspiracy had received a fair trial where the individual - the company's directing mind and will, in respect of whose actions the company's liability was based - had not been indicted as a co-conspirator and was not available to give evidence at the company's trial.

The court unanimously rejected the argument that the trial had been unfair, noting that although counsel for the company "was at pains to distance himself from any suggestion that a corporate conspirator could never be tried in the absence of a [directing mind and will], it is plain that, if well-founded, his principal submission would have wide and untoward ramifications .... it can only be in a very rare case that the absence of a [directing mind and will] would itself be determinative of the question whether a corporate defendant could receive a fair trial. " (paras. [53] and [58]).

UK: The new chair of the Financial Reporting Council (ARGA)

The Department for Business, Energy and Industrial Strategy has today announced that Simon Dingemans is to become the new chair of the Financial Reporting Council and its successor organisation (the Audit, Reporting and Governance Authority): see here. Mr Dingemans will replace Sir Winfried Bischoff.

Mr Dingemans' appointment was subject to a pre-appointment hearing before the BEIS Committee in Parliament several days ago: see here. The Committee's report was published yesterday: see here. The Committee endorsed Mr Dingemans' appointment but noted its concern that he had "not fully appreciated the scale of the challenge ahead, and the degree of commitment required for an organisation in need of root-and-branch reform". The Committee also recommended that he should not take on any additional roles that could be perceived to compromise his independence.

NB: The Secretary of State at the BEIS Department announced, in a speech several days ago, that the new chief executive of the FRC/ARGA will be Sir Jonathan Thompson: see here.

UK: A new edition of the 'Orange Book' (risk management principles for government departments)

A new edition of the Government's risk management principles for government departments (including arm's length public bodies with responsibility derived from central government for public funds) - better known as the Orange Book - has been published: see here (pdf). The Orange book contains main and supporting principles and operates on the basis of 'comply or explain' in conjunction with the corporate governance code for central government departments.

New edition of The Best Practice Principles for Shareholder Voting Research and Analysis

The new edition of The Best Practice Principles for Shareholder Voting Research and Analysis was published yesterday by the Best Practice Principles Group: see here (pdf). Further information about the new edition, the changes made and the rationale for each of the principles can be found in the accompanying report: see here (pdf).

UK: The Financial Services Future Regulatory Framework Review

Earlier this year the Chancellor announced, in his Spring Statement, that a review of the regulatory framework for financial services would begin in the summer: see here. That review - The Financial Services Future Regulatory Framework Review (a mouthful, I admit) - has now started with the publication, last Friday, of a call for evidence document: see here (pdf). The document introduces the Review and seeks views on its first phase: the coordination of regulatory activities by HM Treasury and the other UK regulators, including how firms and the regulators can work together to make authorisation, supervision and enforcement more efficient.

UK: The Draft Registration of Overseas Entities Bill

At this time last year, give or take a day or two, the Government published the draft Registration of Overseas Entities Bill: see here. A Joint Parliamentary Committee was subsequently formed for the purpose of scrutinising the Bill and it reported in May: see here. Yesterday, the Government's response to the Committee's report was published: see here (pdf).

UK: Government consults on CMA statutory audit market recommendations

Earlier this year, the Competition and Markets Authority published its report and recommendations in respect of the statutory audit market: see here. The recommendations are now the subject of an initial consultation by the Department for Business, Energy and Industrial Strategy that opened yesterday: see here (pdf).

Views are being sought on the core remedies proposed by the CMA, including the enhanced regulatory oversight of audit committees; the introduction of mandatory joint audits of FTSE 350 firms; proposals to mitigate the effects of the distress or a failure of a 'Big Four' firm; and the operational split between audit and non-audit practices of ‘Big Four’ firms. Views are also sought on other proposals that did not form part of the CMA's core remedies.

UK: England and Wales: a new liability on forfeiture of shares?

Judgment was given yesterday by Chief Master Marsh in Zavarco Plc v Yusof [2019] EWHC 1837 (Ch). It is noteworthy because of the analysis provided in respect of the effect of a provision in the Articles of Association on the consequences of the forfeiture of shares.

The company's Articles contained a provision stating that forfeiture extinguished all interests in the shares and all other rights relating to them; it also provided that where a person's shares had been forfeited, that person remained liable to the company for all sums payable by that person under the Articles (whether accrued before or after the date of forfeiture). The question for Master Marsh was the effect of this provision: did it - as the editors of Palmer's Company Law had stated - create a new obligation as debtor? The answer is of wide interest given the prevalence of such provisions (see, for example, the model articles for public companies: here, .doc).

Master Marsh disagreed with the position adopted in Palmer's Company Law and explained that in his view the position was as follows. Forfeiture changed the nature of the relationship but the sum owed remained the same. This sum remained, and was always, a contractual debt by virtue of section 33(2) of the Companies Act 2006. It was wrong to see the liability as a contributory transformed into a different liability. The preservation of the liability, arising from the articles of association, did not create a new liability or a new cause of action.

UK: England and Wales: when will directors owe a fiduciary duty to shareholders?

Judgment was handed down today in Vald. Nielsen Holding A/S Newwatch Ltd v Baldorino & Ors [2019] EWHC 1926 (Comm). The decision is noteworthy because of the analysis it provides of the circumstances in which directors will owe fiduciary duties towards shareholders.

The claimants' argument that fiduciary duties were owed, which relied heavily on the Australian decision Brunninghausen v Glavanics [1999] NSWCA 199, was rejected and, at the end of his analysis, the trial judge (Jacobs J) stated (at para. [746]):

Overall, it seems to me that the circumstances in which a fiduciary duty will usually be held to exist are well-summarised by Nugee J. at [13] of [Sharp v Blank [2015] EWHC 3220 (Ch)]: the cases where such duty has been held to exist mostly concern companies which are small and closely held, where there is often a family or other personal relationship between the parties, and where, in almost all cases, there is a particular transaction involved in which directors are dealing with the shareholders".

UK: England and Wales: directors' duties and an unauthorised profit

Judgment was delivered yesterday in Parr v Keystone Healthcare Ltd [2019] EWCA Civ 1246, the Court of Appeal having given its decision at the end of the hearing on July 9. The court dismissed the appeal and upheld the trial judge's finding (at [2018] EWHC 1509 (Ch)) that Mr Parr, a former director and shareholder of a company, Keystone, was liable to disgorge half the proceeds he had received when he sold his shares in the company to another company. Mr Parr received the full proceeds in circumstances where, had he disclosed his breach of duty (participating in a fraud and failing to disclose his own misconduct) he would have received only half.

The court's decision represents a strong affirmation of the 'bright line' nature of the prohibition against profits imposed on company directors as part of their general duties under the Companies Act 2006. The court made clear that Keystone was entitled to recover from Mr Parr the unauthorised profit even though Holdings had suffered the loss and regardless of whether Keystone itself could have made the profit. 

UK: CIC Regulator publishes 2018/19 annual report

The annual report of the Office of the Regulator of Community Interest Companies has been published: see here (pdf). The report covers the year in which online incorporation became available and it notes that there are now over 15,700 CICs on the register.

UK: Risk Coalition consults on new risk guidance for financial services sector

The Risk Coalition - a network of not-for-profit professional bodies and membership organisations committed to raising standards of risk governance and risk management in the UK - has published for consultation its Principles and guidance for board risk committees and risk functions in the UK financial services sector: see here. The consultation closes on 20 September and the final guidance is expected in December 2019.

UK: APPG on Whistleblowing - report and recommendations published

The All-Party Parliamentary Group on Whistleblowing has published the first of three reports on the UK's whistleblowing framework: see here (pdf). This report, which focuses on the experience and concerns of whistleblowers themselves, contains ten recommendations including the adoption of a new definition of whistleblowing (it should include any harmful violation of integrity and ethics, even if not criminal or illegal, and the focus should be on the harm, or risk of harm to the public).

UK: FRC consults on revised Ethical and Auditing Standards

Last November, the Financial Reporting Council sought feedback as part of a post-implementation review of the 2016 Ethical and Auditing Standards: see here. A position paper followed earlier this year, culminating in the publication today, for consultation, of the amendments the FRC proposes to make to its Ethical and Auditing Standards. The proposed changes include simplifying and restructuring the Ethical Standard; enhancing the authority of the Ethics Partner function with audit firms; and requiring the auditors of all UK listed entities to include in their published auditor's report the performance materiality threshold used in the audit.

Further information is available in the FRC's press release and in the other documents published today: Feedback statement and impact assessment (pdf) | Revised Ethical Standard 2019 - Exposure Draft (pdf) | Changes to the International Standards on Auditing (UK) (ISAs (UK)) and International Standard on Quality Control (UK) (ISQC (UK)) - Exposure Drafts (pdf) | Glossary of Terms (Auditing and Ethics) - Exposure Drafts (pdf) |.

UK: CIIA consults on draft Internal Audit Code of Practice

The Chartered Institute of Internal Auditors has today published for consultation a draft of its new Internal Audit Code of Practice: see here (pdf).  The Code is intended to become a benchmark of best practice for boards, audit committees and regulators.

The Code contains 30 recommendations, the first of which sets out the primary role of internal audit: "to help the board and executive management to protect the assets, reputation and sustainability of the organisations". The second states that the scope of the internal audit should be unrestricted: "There should be no aspect of the organisation which internal audit should be restricted from looking at as it delivers on its mandate".

There are seven consultation questions; the first question seeks views on the scope of the Code: should it focus primarily on publicly listed companies or should large private companies and third sector organisations be included?

This is not the first Code the CIIA has published. In 2013 it published guidance on effective internal audit in the financial services sector, the latest edition of which was published in 2017: see here.

UK: Insolvency Service call for evidence on the regulation of insolvency practitioners

The Insolvency Service has published a call for evidence concerning the regulatory framework for insolvency practitioners, in particular the introduction of regulatory objectives and other changes made by Part 10 of the Small Business, Enterprise and Employment Act 2015: see here (pdf).

UK: Companies House independent adjudicators' annual report published

The Companies House independent adjudicators have published their annual report for the year to 31 March 2019: see here (pdf). The report contains data on the appeals heard by the adjudicators as well as recommendations for improving Companies House procedures.

Prominent in this year's report is the adjudicators' concern - expressed to Companies House for some time - with the high number of appeals they receive from newly incorporated companies and from dormant companies. The adjudicators argue that more needs to be done to improve compliance amongst such companies, particularly because directors often (wrongly) assume that the Companies House filing obligations are identical to those imposed for tax purposes and filing with HMRC.

UK: The Government's Economic Crime Plan 2019-2022

The Government has published its Economic Crime Plan 2019-2022: see here (pdf). The plan contains seven "strategic priorities", including "Transparency of Ownership". This part of the plan explains what the Government has already done, or what is subject to on-going consultation (including, for example, proposals to reform Companies House in the consultation Corporate Transparency and Register Reform - see here, pdf). With regard to the introduction of the new register of the beneficial owners of legal entities owning property in the UK, the plan states that a Bill will be introduced "early in the next Parliamentary session when Parliamentary time allows". The draft Bill received pre-legislative scrutiny earlier this year.

The UK's implementation of the Fifth Money Laundering Directive ((EU) 2018/843)), also known as 5MLD and the subject of a consultation earlier this year, is discussed as part of a strategic priority titled "Powers, Procedures and Tools". The plan states that the Directive will be transposed into national law by January 2020 and that the Government intends to go beyond the requirements of 5MLD by bringing a wider range of crypto-asset businesses within the anti-money laundering regime. The paper also states that those wanting access to the beneficial ownership information held on the expanded trusts register will need to demonstrate a "legitimate interest".

UK: England and Wales: the effect of administrative restoration on contract termination

Judgment was delivered yesterday by Mrs Justice Cockerill in Bridgehouse (Bradford No.2) v BAE Systems Plc [2019] EWHC 1768 (Comm). The decision is an important one on the consequences that flow from a company's return to the Register of Companies under section 1024 of the Companies Act 2006.

The Registrar of Companies dissolved a company, BB2, and struck it off the Register on 31 May 2016, in exercise of a power given by section 1000 ("Power to strike off company not carrying on business or in operation") of the Companies Act 2006. This was done following BB2's failure to submit accounts on time and its failure to respond to a notice from the Registrar sent to its registered office (the address had not been updated by BB2, meaning that the notice was sent to an address no longer functioning as its registered office).

A contract between BAE and BB2 contained a clause - number 20 - providing BAE with the right to terminate the agreement should BB2 suffer an event of default including "being struck off the Register of Companies or being dissolved or ceasing for any reason to retain its corporate existence". On 2 June 2016, BAE served BB2 notice of contract termination.  An application was then made for the administrative restoration of BB2 to the Register under section 1024 of the Companies Act 2006. This was successful and BB2 returned to the Register on 28 July 2016.

What effect did restoration have on BAE's termination of the contract?  This question was first answered by an Arbitrator and the answer given - with reference to section 1028 of the 2006 Act, which provides that the "general effect" of administrative restoration is that the company "is deemed to have continued in existence as if it had not been dissolved or struck off the register" - was that BB2's restoration to the Register did not undo or reverse the termination of the contract.

BB2 appealed, pursuant to section 69 ("Appeal on point of law") of the Arbitration Act 1996 and with the agreement of BAE, and this was heard by Mrs Justice Cockerill. Her Ladyship agreed with the Arbitrator. Restoration did not undo the termination. Section 1028 was not mandatory and of universal application. It was necessary, she stated, to make a distinction between direct and indirect consequences. To quote directly (paras. [115] and [116]):

..... The deeming provision [section 1028] will have very wide application indeed. It will be (as it has been in the authorities) taken to undo the automatic consequences of a removal from the register or dissolution which is later undone in circumstances to which the deeming provision applies. But there will be situations where consequences arise which are not automatic. A lease will become forfeit not because of the fact of the dissolution, but because, either consequent on that dissolution or independently of it, the lessee does not pay its rent. A contract will be repudiated for a similar reason and that repudiation will be accepted – as happened in Contract Services. Or, as in this case, a contractual party will have a choice as to whether to terminate a contract simply because of the removal from the register. The termination will not flow from, or be automatically a consequence of dissolution. It will occur where the party decides to make that decision and takes the step necessary to bring about that termination. Such consequences are, in my view, outwith the deeming provision."

[The reference to Contract Services in this quotation is a typographical error in the judgment as it appears on BAILII; it ought to read Contract Facilities - shorthand for Contract Facilities Ltd v Rees [2002] EWHC 2939 (QB), one of the decisions cited in the judgment].

Update (19 July 2019) - a summary of the decision has been published by the ICLR: see here.