UK: a long-term focus for corporate Britain - GC100 response to BIS consultation

The Association of General Counsel and Company Secretaries of the FTSE 100 (the GC100) has published its submission to the Department for Business, Innovation and Skills call for evidence A Long-Term Focus for Corporate Britain: see here.

USA: Financial Crisis Inquiry Commission publishes report

The Financial Crisis Inquiry Commission yesterday published its report into the causes of the financial crisis in the USA: see here (pdf). The Commission's conclusions are available separately here (pdf) and identify, amongst other things, "widespread failures in financial regulation" and "dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis".

UK: equity underwriting and associated services - OFT study published

The Office for Fair Trading has published its equity underwriting and associated services study: see here (pdf). The OFT states that it does not have significant concerns regarding the number of available providers of equity underwriting services but notes that there has been a significant increase in fees since the onset of the financial crisis but that fees and discounts have been slow to fall in line with subsequent reductions in risk. The report notes that there is little competitive tension between investment banks during the equity raising process and that companies raising equity capital are not focused principally on reducing underwriting fees. In this regard, the OFT provides several options that companies and institutional shareholders could consider for applying greater pressure on underwriting fees and discounts.

Netherlands: compliance with the Corporate Governance Code

A copy, in English, of the Dutch Corporate Governance Monitoring Committee report concerning compliance with the Netherlands Corporate Governance Code is now available: see here (pdf).

UK: responses to the Independent Banking Commission's issues paper

Responses to the issues paper published last year (here, pdf) by the Independent Commission on Banking have been published together with a short summary: see here.

Switzerland: 'say on pay' at the largest companies

Ethos, the Swiss Foundation for Sustainable Development, reports that 33 of the 100 largest Swiss listed companies will provide a shareholder advisory vote on the remuneration report at their annual general meeting this year: see here.

USA: Dodd-Frank - 'say on pay' rules adopted by SEC

The Securities and Exchange Commission yesterday adopted rules regarding shareholder approval of executive compensation and 'golden parachute' compensation arrangements: see here. The SEC's rules state that 'say on pay' votes required under the Dodd-Frank Act must occur at least once every three years beginning with the first annual shareholders' meeting taking place on or after January 21, 2011. Companies are also required to hold a 'frequency' vote at least once every six years in order to allow shareholders to decide how often they would like to be presented with the 'say on pay' vote.

China: the governance framework and OECD Principles

Earlier this month the OECD published a report containing an assessment by the China Securities Regulatory Commission of China's compliance with the OECD Principles of Corporate Governance: see here (pdf). This provides, in English, a very useful overview of the governance framework in China.

Europe: country by country reporting by multinationals - responses to Commission consultation

Last year the European Commission sought views - see here - on financial reporting by multinationals and, in particular, country-by-country reporting which would require multinationals to disclose financial information on their operations in 'third countries' (i.e., countries that are not Member States of the European Union and the European Economic Area) in their annual financial statements. Responses have now been published: see here.

Belgium: gender diversity and listed company boards

The Belgium Corporate Governance Committee has published a recommendation stating that a minimum of 30% of the directors of listed company boards should, within 7 years, be from each gender: see here.

Europe: inaugural meeting of the ESRB general board

The general board of the European Systemic Risk Board held its inaugural meeting last week. Rules of procedure were adopted: see here (pdf).

UK: voting disclosure and the Stewardship Code

PIRC reports, on the basis of its own research, that just under half of the asset managers making a statement on compliance with the UK Stewardship Code do not make any voting data public: see here. The Guidance accompanying Principle 6 of the Code states that "Institutional investors should disclose publicly voting records and if they do not explain why".

Europe: financial supervision framework - additional legislative proposals

The European Commission has published additional legislative proposals to complete the framework for financial supervision in Europe which came into force on January 1: see here.

UK: before the Supreme Court today - a subsidiary company?

The Supreme Court hears argument today in Farstad Supply A/S v Enviroco Limited, on appeal from [2009] EWCA Civ 1399. The Supreme Court's case summary reports that the principal issue before the court is whether a company whose parent company pledged its controlling shares in the alleged subsidiary to a bank as security remained a subsidiary of that parent company within the meaning of section 736 of the Companies Act (1985) (see, now, section 1159 and Schedule 6 of the Companies Act (2006)). Further details are available here.

UK: FRC/FSA Memorandum of Understanding - information sharing and audit issues

The Financial Reporting Council and Financial Services Authority have published a Memorandum of Understanding with regard to information sharing in respect of authorised firm audit issues: see here (pdf).

China: CBRC Guidance on Performance Appraisal of Commercial Bank Directors

At the end of last month the China Banking Regulatory Commission published Guidance on the Commercial Bank Directors’ Performance Appraisal: see here. Earlier in 2010, the CBRC published Supervisory Guidelines on Compensation Practices of Commercial Banks: see here.

Hong Kong: Companies Bill published

The Companies Bill has been published and is available here. A press release from the Companies Registry, available here, states that the Bill is scheduled to receive its first reading in the Legislative Council on 26 January. A summary of some of the notable changes in the Bill is available here (pdf). For background information concerning the review of the law leading to the publication of the Bill, see here.

UK: the Companies (Reporting Requirements in Mergers and Divisions) Regulations 2011 - draft published

The Department for Business, Innovation and Skills has published a draft of the Companies (Reporting Requirements in Mergers and Divisions) Regulations 2011: see here (Word). The purpose of the Regulations is to implement EU Directive 2009/109/EC which makes amendments to four earlier Directives: the Second, Third and Sixth Company Law Directives as well as the Cross-Border Merger Directive. Further information is provided in the explanatory text accompanying the Regulations: see here (pdf).

UK: the audit of friendly societies - draft Practice Note issued by APB

The Auditing Practices Board has published for consultation a draft of Practice Note 24 (Revised) - 'The Audit of Friendly Societies in the United Kingdom': see here (pdf). According to the APB - see here - the core guidance in the draft remains largely unchanged but there is new, enhanced or revised guidance regarding auditing accounting estimates, materiality, evaluation of misstatements identified during the audit, illustrative examples of various regulatory auditor's reports and corporate governance.

Singapore: MAS publishes revised Corporate Governance Regulations and Guidelines for Banks and Insurers

In March 2010, the Monetary Authority of Singapore published a consultation paper setting out proposed amendments to the Banking (Corporate Governance) Regulations 2005 and Insurance (Corporate Governance) Regulations 2005 and Guidelines on Corporate Governance (see here, pdf). MAS published its response to the consultation last month - see here (pdf) - as well as the final Regulations and Guidelines: see here (pdf), here (pdf) and here (pdf).

Canada: Ontario Securities Commission consults on shareholder democracy

The Ontario Securities Commission is seeking views on the appropriateness and scope of work it is conducting concerning shareholder democracy: see here. The Commission is considering whether:

• it would be appropriate to introduce a mandatory 'say on pay' vote;
• reform is needed to facilitate majority voting for director elections and voting in respect of individual directors;
• the proxy voting system is effective.

Taiwan: Corporate Governance Best Practice Principles for TSEC/GTSM Listed Companies

Towards the end of last year an updated edition of the Taiwan Stock Exchange Corporation and GreTai Securities Market Corporate Governance Best Practice Principles was published: see here.

UK: FRC publishes 'Enhancing Corporate Reporting and Audit' discussion paper

The Financial Reporting Council has today published a discussion paper titled Effective Company Stewardship: Enhancing Corporate Reporting and Audit. The report, available here (pdf), outlines the following recommendations, including some relating to the role and powers of the FRC:

• Directors should take full responsibility for ensuring that an Annual Report, viewed as a whole, provides a fair and balanced report on their stewardship of the business. In this regard, the FRC proposes that the Accounting Standards Board should issue a Narrative Reporting Standard which would set out the principles governing the preparation of Annual Reports (including narrative reports) and establish the responsibility of directors for ensuring that Annual Reports are balanced and fair.
  
• Directors should describe in more detail the steps that they take to ensure: [a] the reliability of the information on which the management of a company, and therefore directors’ stewardship of the company, is based; and [b] transparency about the activities of the business and any associated risks.
• The growing strength of Audit Committees in holding management and auditors to account should be reinforced by greater transparency through: [a] fuller reports by Audit Committees explaining, in particular, how they discharged their responsibilities for the integrity of the Annual Report and other aspects of their remit (such as their oversight of the external audit process and appointment of external auditors); and [b] an expanded audit report that: [i] includes a separate new section on the completeness and reasonableness of the Audit Committee report; and [ii] identifies any matters in the Annual Report that the auditors believe are incorrect or inconsistent with the information contained in the financial statements or obtained in the course of their audit.
• Companies should take advantage of technological developments to increase the accessibility of the annual report and its components.
• There should be greater investor involvement in the process by which auditors are appointed.
• The FRC’s responsibilities should be developed to enable it to support and oversee the effective implementation of its proposals. In the context of this recommendation, the FRC states that consideration should be given to how, in the event of a corporate failure, a review might be carried out of that company's governance, accounts, and audit to ensure lessons, where appropriate, are learned and to ascertain whether further investigations or regulatory actions are necessary.
  
• The FRC should establish a market participants group to advise it on market developments and international initiatives in the area of corporate reporting and the role of assurance and on promoting best practice.

Greece: SEV consults on revised corporate governance code

The Hellenic Federation of Enterprises (SEV) has published for consultation a revised edition of its 2001 corporate governance code: see here (pdf).

UK: FSA quarterly consultation published - some changes to the Listing Rules

The Financial Services Authority published its quarterly consultation paper yesterday: see here (pdf). The paper contains, amongst other things, proposed changes to the Listing Rules designed to make it clearer how the Rules are applied in areas such as major shareholder disclosure in the accounts and rights issue subscription periods.

Pakistan: Senate Finance Committee considers Code amendments

Last year the Securities and Exchange Commission of Pakistan (SECP) published for comment a revised edition of its 2002 Corporate Governance Code: see here (pdf). The proposed changes were discussed this week by the Senate Standing Committee on Finance. In a report of the Committee's meeting - available here - it is noted that the SECP may reconsider its recommendation that not less than one third, or three, whichever is higher, of the board should be independent directors.

Ireland: the Irish Corporate Governance Annex

Shortly before Christmas the Irish Stock Exchange published Listing Rules requiring Irish listed companies to comply or explain in respect of provisions found in a new Irish Corporate Governance Annex. Irish listed companies are also subject to the UK Corporate Governance Code on a comply or explain basis. For further information see here (pdf). The comply or explain requirement in respect of the Annex applies to companies with accounting periods commencing on or after 18 December 2010.

UK: an auditor's ceasing to hold office and section 519 of the Companies Act (2006)

Under Section 519 of the Companies Act (2006), an auditor ceasing to hold office in respect of a quoted company is required to deposit at the company's registered office a statement of the circumstances connected with his ceasing to hold office. An illustration of such a 'statement of circumstances' is provided in connection with KPMG Audit plc's decision not to seek reappointment as auditor for TUI Travel plc. The statement, published at the end of December and available here (pdf), explains how the auditor's relationship with some of the company's directors became "increasingly strained".

UK: listed company board diversity and the Davies review

Lord Davies will make recommendations next month designed to address the low proportion of women on listed company boards. A few days ago, on the Guardian newspaper website, he provided an update on his work and set out his thoughts on various matters: see here. For example, with regard to quotas, he noted that their use had proved successful in other countries and whilst he had not ruled them out as a recommendation he stated that he was not, at the moment, convinced that they were the right method to adopt.