Tuesday 31 May 2011

The OECD's Guidelines on Insurer Governance

The OECD has published a revised edition of its Guidelines on Insurer Governance: see here (pdf). For further information about the new edition see here.

UK: the Manifest/MM&K Total Remuneration Survey 2011

A short summary of the results of the Manifest/MM&K Total Remuneration Survey 2011 has been published: see here. Amongst the findings reported is a shift from long-term incentives (e.g., those over three years) towards annual bonuses and a 32% increase in the median of FTSE100 chief executive remuneration.

Monday 30 May 2011

UK: gender diversity and new FTSE100 non-executive directors

Yesterday's Independent newspaper reported - see here - that in the past six months, women accounted for 23 per cent of new FTSE100 non-executive director appointments (in 2010, just under 10 per cent of new appointments were women).

Friday 27 May 2011

Finland: the 2010 corporate governance code

The codes and principles directory maintained by the European Corporate Governance Institute has this week been updated to include a copy, in English, of the Finnish Corporate Governance Code 2010 published by the Securities Market Association: see here

USA: rewards for whistleblowing - SEC publishes rules

The Securities and Exchange Commission has published final rules regarding its new whistleblowing programme: see here (pdf). Further information is available here.

Singapore: the duty to maintain a system of internal accounting control

The Court of Appeal gave judgment in Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd [2011] SGCA 22 earlier this month: see here. This is an important decision on the law of agency, with much analysis of the English Court of Appeal's decision First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194, The Independent, 19 April 1993. Section 199(2A) of Singapore's Companies Act was briefly considered; this provision requires public companies (and their subsidiaries) to maintain a system of internal accounting control in order, amongst other things, to safeguard assets and ensure that transactions are properly authorised. The court held that no common law duty arose under Section 199(2A) and that it had been enacted "to safeguard the assets of a company and, hence, was enacted for the company's benefit, and not for the benefit of any third party who might deal with the company's officers and employees" (para. [98]).

Thursday 26 May 2011

The OECD's Guidelines for Multinational Enterprises - revised edition published

The OECD has published an updated edition of its Guidelines for Multinational Enterprises: see here (pdf). Background information regarding the update is available here.

Wednesday 25 May 2011

Australia: CAMAC publishes report on remuneration

The Corporations and Markets Advisory Committee has today published its report regarding various aspects of the executive remuneration setting framework and remuneration reporting: see here (pdf). The report endorses the view that the structure and size of remuneration are matters for the boards of companies, with shareholder input being exercised through communication with boards and voting. Recommendations are, however, made with regard to companies' reporting of remuneration but major legislative changes are not proposed.

UK: England and Wales: de facto directorship considered by Court of Appeal

Judgment was given yesterday by the Court of Appeal in Re Mumtaz Properties Ltd. [2011] EWCA Civ 610: see here. Lady Justice Arden delivered the only reasoned opinion (with which Aikens and Patten LJJ agreed). The principal issue before the court was whether the trial judge had erred in finding that an individual (Mr Zafar Ahmed) was a de facto director of the company. Arden LJ held that the judge had not erred and stated that Mr Ahmed was part of the company's corporate governance structure and "one of the nerve centres from which the activities of the Company radiated" (para. [47]).

Tuesday 24 May 2011

UK: the governance of FTSE100 companies - a very short debate in Parliament

Late last night in the House of Commons, Eric Joyce MP secured a short debate on the governance of FTSE100 companies. The debate was very short indeed, with two MPs speaking: Mr Joyce and, in response, a minister (Rt. Hon. David Willetts) from the Department for Business, Innovations and Skills. The debate is published in Hansard, the official record, here, and Mr Joyce's primary purpose was to highlight the governance issues raised by companies controlled by overseas individuals, with particular reference to Eurasian Natural Resources Corporation. In response, the minister stated:

... the UK already has a robust corporate governance framework. We are not complacent and recognise that it always needs to be reviewed and updated, and we realise that there will always be individual cases that test those guidelines and that framework ... our principles on which we will approach this and all cases are clear—that it is in the long-term interests of British companies to support the work we are doing to bolster corporate governance, and we encourage every company to meet the standards of the best. We have specific powers, including the powers relating to the listing rules, which are for the Financial Services Authority. As we work through the issues of the correct structure of corporate governance in the UK, our conclusions will be based on the principles that motivate our desire to have a world-class corporate governance framework. However, we are not in the business of weighing companies and investors down with more regulation and higher costs. We believe in improving accountability and transparency. Those are important principles which we expect all companies, large or small, multinational or solely domestic, to live up to. We believe that following those principles is essential for securing long-term, sustainable economic growth for Britain".

Monday 23 May 2011

UK: Government consults on companies' reporting of greenhouse gas emissions

Section 85 of the Climate Change Act (2008) provides that the Government must, no later than 6 April 2012, [a] make regulations under Section 416(4) of the Companies Act (2006) requiring the directors' report to contain information about the greenhouse gas emissions from activities for which the company is responsible or [b] lay before Parliament a report explaining why such regulations have not been made. The Government has not yet decided whether to introduce such regulations but it has recently published a consultation paper, setting out various options (including a voluntary approach), in order to inform its final decision: see here (pdf). Accompanying the consultation paper is an impact assessment (here, pdf) and a consultee's letter (here, pdf).

UK: England and Wales: no administration order in respect of club that was not a company

The High Court gave judgment last week in Panter v Rowellian Football Social Club [2011] EWHC 1301 (Ch) - see here - and held that a club was not a company within the definition provided by para. 111(1A), Schedule B1 of the Insolvency Act (1986). The court did not, therefore, have jurisdiction to make an administration order, for which one of the club's creditors had made an application.

Friday 20 May 2011

USA: credit rating agencies - amendments and new rules proposed by SEC

The Securities and Exchange Commission has published proposed new rules, and amendments to existing rules, regarding credit rating agencies: see here (pdf). An overview of the proposals is available here.

Thursday 19 May 2011

UK: the new Prudential Regulation Authority

The Bank of England and Financial Services Authority published a paper today providing further information about the manner in which the new Prudential Regulation Authority (PRA) will operate: see here (pdf). Further background information is also provided in speeches delivered today at the PRA conference by Hector Sants (the chief executive designate of the PRA) and Andrew Bailey (the deputy chief executive designate of the PRA): see, respectively, here and here (pdf). In his speech Mr Sants explained that central to the new supervisory model was the presumption that regulators could not rely on the judgement of firms' management and needed, therefore, to reach their own view about the significant issues affecting firms' safety and soundness. A video recording of the conference will be available here.

Europe: the future of EU company law - report and recommendations

Earlier this week the European Commission held a conference on the future of EU company law. A report was prepared for the conference, by a 'reflection group' formed for the purpose, in which current problems were identified and initiatives suggested. The report has been published - see here (pdf) - and makes recommendations regarding [a] cross-border mobility, [b] the contribution of corporate governance and investors to the long-term viability of companies and [c] groups of companies.

Wednesday 18 May 2011

UK: Scotland: liquidator's remuneration and the court's discretion

Lord Glennie delivered his opinion yesterday in Spicer and Cork, Noters, for remuneration [2011] CSOH 87 - see here - and considered the discretion of the court when determining the remuneration of liquidators. With reference to authorities in England, New Zealand and Australia, Lord Glennie held that where remuneration is not fixed by a liquidation committee the court has a general discretion to fix the remuneration payable to a liquidator and, when setting the level of that remuneration, to reflect a sanction for any breach by the liquidator of his duties.

Tuesday 17 May 2011

UK: OFT provisionally decides that there are competition problems in the audit market

In a statement published earlier today - see here - the Office of Fair Trading announced that it had provisionally decided that there are competition problems in the audit market (e.g., features of the market that restrict, distort or prevent competition) which pass the statutory test for a referral to be made to the Competition Commission under Section 131 of the Enterprise Act (2002). However, the OFT has not decided whether it should exercise its discretion to make such a referral because it needs to consider further whether there is a reasonable chance that there will be appropriate remedies available to the Commission.

The Financial Reporting Council has welcomed the OFT's announcement, noting in a statement issued today - see here - that "it has become clear to us that the competition authorities are better placed than audit regulators to tackle competition concerns".

Australia: High Court grants ASIC appeal in James Hardie case

ASIC notes on its website - see here - that the High Court has granted leave for it to appeal the decision of the New South Wales Court of Appeal in James Hardie Industries NV v Australian Securities and Investments Commission [2010] NSWCA 332. ASIC is seeking to uphold the finding of the trial judge (see [2009] NSWSC 287) that the directors approved an ASX announcement made by the company and in doing so were in breach of duty.

Monday 16 May 2011

UK: High Pay Commission publishes interim report

An interim report - titled More for Less: what has happened to pay at the top and does it matter? - was published today by the High Pay Commission: see here (pdf). The Commission will publish detailed policy proposals later this year; its interim reports identifies serious weaknesses in the current framework, including ineffective shareholders and remuneration committees, as well as a lack of meaningful disclosure.

Germany: Code Commission announcement

The Commission of the German Corporate Governance Code has announced that it is not proposing amendments to the code this year: see here (pdf, German) or here (pdf, English). In its announcement the Commission also notes that in the past eighteen months, twelve supervisory board positions in DAX 30 companies have been filled by women, many more than in preceding years.

UK: remuneration votes at William Hill plc and Ladbrokes plc

Annual general meetings for William Hill plc and Ladbrokes plc took place last week and at both there were sizeable votes against (or withheld) in respect of the remuneration report: see, respectively, here (pdf) and here. There's further discussion here (from The Guardian newspaper).

UK: the Sharman enquiry - call for evidence

Earlier this year the Financial Reporting Council began an inquiry, led by Lord Sharman, to identify lessons for companies and auditors addressing going concern and liquidity risks: see here. A call for evidence was published last week: see here (pdf).

UK: the Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011

The Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011 was made on 11 May and published last Friday on the legislation.gov.uk website: see here (pdf). An explanatory memorandum is available here (pdf) and this explains that the Order's purpose is to make consequential amendments to primary and secondary legislation which contains references to the provisions of earlier enactments which have now been superseded, repealed or revoked by the Companies Act (2006). The Order also make three corrections to the 2006 Act.

Saturday 14 May 2011

Missing entries, an old update and other Blogger problems

The web host of Corporate Law and Governance - Blogger.com - has had problems over the past few days (about which see here). Thursday's entries disappeared and I could not add an update on Friday. The automated e-mail update was, however, sent on Friday but it was an old update from last month. Perplexing, strange and a little annoying. However, and to keep things in perspective, this is the first major problem I have had since starting to use Blogger in January 2008.

I intend to post the next updates on Monday and hope that these are properly included in the automated e-mail update sent out later that day. Blogger's current status report, available here, suggests that some users may still experience problems.

Thursday 12 May 2011

UK: Scotland: criminal liability of partnerships and partners - Law Commission consultation published

The Scottish Law Commission published a discussion paper yesterday regarding the criminal liability of partnerships in which it proposed that it should be possible to prosecute partnerships which have been dissolved: see here (pdf) or here (html). Views are also sought on whether it should be easier to prosecute individual partners for offences committed by a partnership.

Wednesday 11 May 2011

Hong Kong: review of governance code - responses published

In December last year the Hong Kong Stock Exchange published a consultation paper reviewing its corporate governance code and associated listing rules (here, pdf). Responses have now been published: see here.

UK: Short-termism in capital markets

Last year, Andrew Haldane, an executive director and member of the Financial Policy Committee at the Bank of England, delivered a paper titled "Patience and Finance" at the Oxford China Business Forum in Beijing (see here, pdf). Mr Haldane returns to this topic today in a lecture at the 29th Société Universitaire Européene de Recherches Financières Colloquium: New Paradigms in Money and Finance in Brussels.

In the lecture - titled "The short long" and available here (pdf) - Mr Haldane notes the (relative) paucity of studies on short-termism in capital markets. He argues, on the basis of his empirical research, that short-termism is statistically and economically significant in capital markets and appears to be increasing. In response to this finding of market failure, Mr Haldane identifies possible public policy responses including those concerning transparency, governance, contract design and taxation.

Tuesday 10 May 2011

USA: short selling disclosure studies - SEC seeks comments

The Securities and Exchange Commission is seeking comments in respect of the short selling studies it is required to undertake under Section 417(a)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010: see here (pdf).

Monday 9 May 2011

Europe: EFAMA's Code for External Governance

The European Fund and Asset Management Association (EFAMA) has published what it describes as a "Code for External Governance" setting out principles for the exercise of ownership rights in investee companies: see here. The purpose of the code is explained on page 2:

... to provide a framework of high‐level principles and best practice recommendations which should act as a catalyst for engagement between Investment Management Companies (IMC) and the companies in which they invest. Adherence to this code should support interaction between the IMC and companies and ensure a strong link between governance and the investment process. The code is “principles” based in that it relies upon good judgement rather than prescription. As such, the recommendations recognise that the 'best' approach for many issues depends on the circumstances. The Code is not designed to supersede applicable law and regulations".

Australia: NSW Court of Appeal on corporate governance and care and diligence

The New South Wales Court of Appeal gave judgment last Friday in Morley v Australian Securities and Investments Commission (No 2), Shafron v Australian Securities and Investments Commission (No 2) [2011] NSWCA 110, further James Hardie litigation: see here. There is much of interest in this decision regarding the disqualification of directors and the circumstances in which directors should be relieved from liability for breach of duty under Sections 1317S and 1318 of the Corporations Act (2001).

Amongst the decisions reached by the court was the rejection of the argument that two individuals (a former director and former secretary/general counsel of a public company) should be relieved from liability under Section 180 ("care and diligence") of the Corporations Act (2001), the court stating: "Proper corporate governance and business activity depend on business leaders adhering to standards not only of honesty but also of care and diligence..." (para. [52]).

Friday 6 May 2011

ECGI annual lecture: governance and regulation in crisis - addressing the next one

The European Corporate Governance Institute annual lecture was delivered last month by Professor Colin Mayer. Titled Governance and Regulation in Crisis - Addressing the Next One, the lecture and accompanying panel discussion and Q&A session can be viewed here.  The presentation slides are available here (pdf).

Ireland: draft code for captive insurance and captive reinsurance undertakings

The Central Bank has published for consultation a draft Corporate Governance Code for Captive Insurance and Captive Reinsurance Undertakings: see here (pdf). The Code sets out minimum requirements for such undertakings, non compliance with which is subject to the sanctions at the disposal of the Central Bank. So-called 'captives' include, for the purposes of the Code, those falling within the definition provided by Article 13(2) of the Solvency II Directive (2009/138/EC).

Thursday 5 May 2011

UK: gender diversity of boards - FRC consultation

Earlier this year, in his report Women on Boards (here, pdf), Lord Davies recommended that the Financial Reporting Council should amend the UK's Corporate Governance Code to require listed companies to establish a policy regarding boardroom diversity, including measurable objectives for the implementation of this policy, and that this policy and progress towards achieving the objectives should be disclosed annually.

The Financial Reporting Council has today published a consultation paper in which it seeks views on Lord Davies' recommendation and in which it suggests proposed amendments to the Code: see here (pdf). The FRC's consultation notes that the Department for Business, Innovation and Skills will be consulting separately on the recommendation that quoted companies should be required to disclose annually the proportion of women on the board, women in senior executive positions and female employees in the whole organisation.

Wednesday 4 May 2011

Europe: Directive 2011/35/EU on the mergers of public limited liability companies (codification)

A copy of the codifying Directive 2011/35/EU concerning the mergers of public limited liability companies has been published in the Official Journal of the EU: see here (pdf).

Tuesday 3 May 2011

UK: Hammerson plc agm - general meeting notice resolution not passed

A couple of interesting blog posts regarding the annual general meeting last week at Hammerson plc at which, most unusually, the company failed to secure the votes needed to hold general meetings with 14 days' notice: see here (Manifest) and here (Labour and Capital).

South Africa: Companies Act 2008 comes into force

The Department of Trade and Industry has announced that following President Jacob Gedleyihlekisa Zuma's signing of the Companies Amendment Act of 2010 into law (see here, pdf), the Companies Act (2008) came into force on 1 May: see here (pdf).