Friday 31 May 2013

Jersey: Royal Court authorises winding-up and pre-pack sale

The Royal Court (Samedi Division) has, for the first time, authorised liquidators to enter into a pre-pack sale under article 155 of the Companies (Jersey) Law 1991: see Representation of the Collections Group [2013] JRC 96. In doing so the court noted the risks involved with pre-pack sales and stressed that it was not directing the liquidators to enter the pre-pack sale but authorising them to do so.

South Africa: Supreme Court of Appeal considers concept of 'business rescue'

The Supreme Court of Appeal gave judgment earlier this week in Oakdene Square Properties (Pty) Ltd v Farm Bothasfontein (Kyalami) (Pty) Ltd (609/2012) [2013] ZASCA 68: see here or here (pdf). The case is noteworthy because it provided the court with its first opportunity to consider the concept of 'business rescue' as introduced by chapter 6 of the Companies Act 2008. A summary of the decision is available here (pdf).

UK: Scotland: director disqualified following abdication of responsibility

Lord Malcolm, in the Court of Session (Outer House), gave his opinion today in HM Secretary of State For Business, Innovation and Skills, Re A DISQ Order in Terms of the Companies Directors Disqualification [2013] CSOH 86. He held that a director should be disqualified from acting as such for a period of two years and rejected the argument that her conduct, which was not dishonest, was insufficient to justify disqualification. The director had, over a period of 18 years, left the management of the company's affairs to her husband and had failed to discharge her responsibilities. Lord Malcolm stated (paras. [17] and [19]): "If someone accepts a directorship and then abdicates all responsibility for the affairs of the company, on any common sense view they have demonstrated unfitness for the office to a high degree ... The public interest demands that directors of companies take an active interest in the affairs of the company, and are mindful of their personal responsibilities for the proper running of the business".

Australia: CAMAC publishes Administration of Charitable Trusts report

The Corporations and Markets Advisory Committee has published its report Administration of charitable trusts: see here (pdf). A press release is available here. The report is concerned with charitable trusts managed by licensed trustee companies (LTCs) and recommends, amongst other things, that the Australian Charities and Not-for-profits Commission conduct, or coordinate, stewardship audits of a cross-section of charitable trusts administered by LTCs. The purpose of the audits would be to obtain a clearer picture of the administration of charitable trusts, including the extent to which each trustee has assumed its responsibilities and exercised its powers for the purpose of achieving the primary intent of the donor.

Thursday 30 May 2013

Europe: corporate governance and company law conference presentations now available to view

Presentations from the 12th European Corporate Governance and Company Law Conference, held earlier this month in Dublin, are now available to view: see here. Presentations were given on a range of topics, including board diversity and short-termism.

Australia: resignation, removal and replacement of auditors - ASIC consults on consent framework

The Australian Securities and Investments Commission has published a consultation paper in which it seeks views on whether fundamental change is needed in respect of the consent it provides for the resignation, removal and replacement of auditors: see here (pdf). Further background information is available here.

Wednesday 29 May 2013

UK: FRC publishes audit quality inspection report for 2012/13

The Financial Reporting Council today published its Audit Quality Inspection Annual Report for 2012/13: see here (pdf). The report notes an improvement in the overall standard of audit work, but raises concerns with the quality of audits of companies outside of the FTSE350. It also stresses the need for firms to maintain, and in some cases reinforce, professional scepticism. The important role to be performed by the audit committee in respect of professional scepticism is also emphasised.

Europe: Alternative Investment Fund Managers Directive - ESMA publishes guidelines on key concepts

The European Securities and Markets Authority has published its final report Guidelines on key concepts of the AIFMD: see here (pdf).

UK: The Financial Conduct Authority's corporate governance framework

The Financial Conduct Authority has published a document setting out its corporate governance framework: see here (pdf). The document sets out the way in which the FCA is constituted, directed and controlled by its governing body, the Board. It also explains the role of the Board's committees and its directors. The document explains that the FCA's Board has decided to comply where relevant with the UK Corporate Governance Code although not formally required to do so.

Tuesday 28 May 2013

UK: HPC reports on remuneration developments in the UK and internationally

The High Pay Centre has today published a report titled Leading or lagging? Where does the UK stand in the international debate on top pay?: see here (pdf). The report notes that whilst the UK was a pioneer when the'say on pay' advisory vote was first introduced over ten years ago, other countries have now gone further in introducing mechanisms to deal with the problems associated with levels of executive pay.

UK: FCA decision notice published following unsuccessful attempt to prevent publication

Last week the Financial Conduct Authority published a decision notice explaining its intention to fine and prohibit an individual - a former non-executive director - from performing any function in relation to any regulated activity carried on by any authorised person, exempt person or exempt professional firm: see here (pdf). The individual concerned had sought to prevent the FCA's publication of the decision notice, arguing amongst other things that publication would destroy her livelihood. The Upper Tribunal held that the effect of publication was not so severe that it was out of proportion to the public interest in the principle of open justice that would be served by publication: see here (pdf).

Monday 27 May 2013

Europe: ESMA's final report - Guidelines on key concepts of the Alternative Investment Fund Managers Directive

The European Securities and Markets Authority has published its final report Guidelines on key concepts of the Alternative Investment Fund Managers Directive: see here (pdf).

Friday 24 May 2013

South Africa: financial regulation and the meaning of 'intermediary service'

The Supreme Court of Appeal gave judgment last week in Tristar Investments v The Chemical Industries National Provident Fund (455/12) [2013] ZASCA 59: see here or here (pdf). The court considered the meaning of 'intermediary service' and unanimously held that a company had not provided such services in breach of section 7 ("Authorisation of financial services providers") of the Financial Advisory and Intermediary Services Act 37 of 2002.

Europe: country by country reporting for large companies and groups

Earlier this week the European Council agreed, as part of discussion concerning taxation, that the European Commission's current proposal to improve non-financial reporting by companies should be reviewed with a view to requiring country by country reporting by large companies and groups: see here (pdf). Yesterday, Michel Barnier, the internal market commissioner, referred to the Council's conclusion in a speech on sustainability and reporting: see here. He stated that large companies and groups would be subject to country by country reporting obligations of the kind to which banks will be subject under CRD IV as approved by the European Parliament last month.

Europe: the governance and transparency of occupational pension funds

Michel Barnier, the internal market commissioner, issued a statement yesterday indicating that a proposal for a directive to improve the governance and transparency of occupational pension funds would be published later this year: see here.

Thursday 23 May 2013

Germany: updated corporate governance code - copy now available in English

A copy, in English, of the recently updated corporate governance code published by the Government Commission on the German Corporate Governance Code is now available: see here or here (pdf). A copy of the Code, with the amendments highlighted, is available here (pdf).

Ireland: Central Bank publishes annual performance statement in respect of financial regulatory activities

The Central Bank has published an annual performance statement in respect of the financial regulatory activities it undertook in 2012 and those planned for 2013: see here (pdf). The document notes that a review of the Corporate Governance Code for Credit Institutions and Insurance Undertakings will be carried out this year. It's also noted that the Bank will continue to lobby the European Commission for the introduction of a corporate governance code for  MiFID firms.

UK: NHS clinical commissioning groups - draft governance code published

A draft code of governance for National Health Service clinical commissioning groups has been published for comment by ICSA: see here (pdf). Further background information is available here.

Wednesday 22 May 2013

UK: England and Wales: assisting a foreign court and section 426 of the Insolvency Act 1986

The Court of Appeal judgment HSBC Bank Plc v Tambrook Jersey Ltd [2013] EWCA Civ 576 was published today, following a decision earlier this month to overturn a decision of Mann J given last month in the High Court (see [2013] EWHC 866 (Ch)). At issue was the interpretation of section 426 of the Insolvency Act 1986 and the circumstances in which English courts were able to accede to a request for assistance from a foreign court (here, the Royal Court of Jersey). The trial judge held that assistance could not be given because there was no existing or planned insolvency proceeding in Jersey. The Court of Appeal disagreed. Lord Justice Davis (Longmore and McFarlane LJJ concurring) held that Mann J had adopted an approach and interpretation of section 426 that was unduly and unnecessarily restrictive.

UK: Breach of confidence - Supreme Court gives judgment in Vestergaard

The Supreme Court gave judgment today in Vestergaard Frandsen A/S v Bestnet Europe Ltd. [2013] UKSC 31: see here or here (pdf). Lord Neuberger, delivering the opinion of the court, held that an action for breach of confidence was based ultimately on conscience and that in order for the recipient's conscience to be affected, he must have information which he agreed, or knew, was confidential, or he must be party to some action which he knew involved the misuse of confidential information. A summary of the decision, prepared by the court, is available here (pdf). A summary was also delivered in court this morning by Lord Neuberger:

Tuesday 21 May 2013

Singapore: the legal framework governing the approval and responsibilities of insurers' directors and other executives

Last year, the Monetary Authority of Singapore published for consultation proposed changes to the legal framework governing the approval and responsibilities of insurers' directors and the holders of other executive positions: see here (pdf). A statement was published today, in which MAS responded to consultees' views and set out several changes to its proposals: see here (pdf).

UK: The Financial Conglomerates and Other Financial Groups (Amendment) Regulations 2013

The Financial Conglomerates and Other Financial Groups (Amendment) Regulations 2013 were made and laid before Parliament yesterday and come into force on 10 June: see here (pdf). An explanatory memorandum is available here (pdf). The Regulations implement, in part, Directive 2011/89/EU and make various amendments to the Financial Conglomerates and Other Financial Groups Regulations 2004, the Capital Requirements Regulations 2006, the Financial Services and Markets Act 2000, the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001.

Monday 20 May 2013

Japan: financial regulatory reforms

The Financial Services Agency has published, in English, a policy statement delivered by Taro Aso, Minister of Finance and Minister of State for Financial Services, which includes some measures concerning the financial regulatory framework: see here.

Friday 17 May 2013

UK: Constraining discretion in bank regulation - a speech by Andy Haldane

Last month, at the Federal Reserve Bank of Atlanta Conference on ‘Maintaining Financial Stability: Holding a Tiger by the Tail(s)', the Executive Director for Financial Stability at the Bank of EnglandAndy Haldane, delivered a speech titled Constraining discretion in bank regulation: see here (pdf). Amongst other things, Mr Haldane repeated his call for reform of the regulatory system and advocated the greater use of simple, prudent regulatory metrics. A video recording of an interview Mr Haldane gave at the conference is available below (or see here).

Thursday 16 May 2013

UK: Supreme Court to give judgment in Vestergaard next week

The Supreme Court has announced that it will give judgment next week in Vestergaard Frandsen A/S (now called mvf3 Apps) v Bestnet Europe Limited: see here. At issue before the court, to quote directly from its summary, was "[w]hether or not a party who is the subject of an admitted duty or obligation of confidence must have actual or objective knowledge that the acts complained of constitute a breach of that duty or obligation".

UK: New edition of the Takeover Code published

A new edition of the Takeover Code has been published and takes effect on 20 May: see here (pdf). The new edition contains amendments made by Instrument 2013/3 (herepdf), resulting from the consultation recently undertaken by the Code Committee of the Takeover Panel in respect of companies subject to the Code (about which see herepdf).

Wednesday 15 May 2013

Germany: Updated Corporate Governance Code published

Earlier this year the Government Commission on the German Corporate Governance Code published for consultation proposed changes to the German Corporate Governance Code: see here. Yesterday the Commission confirmed the amendments that will be made to the Code: see here (pdf). A copy of the updated Code was also published: see here (pdf). A copy of the Code with the changes highlighted was also published: see here (pdf). A copy of the Code, in English, will be available here soon.

UK: Scotland: Law Commission publishes report on the consolidation of bankruptcy legislation

The Scottish Law Commission yesterday published its report on the consolidation of bankruptcy legislation in Scotland: see here (pdf). The report contains a draft of the Bankruptcy (Scotland) Bill 2013 (to be passed by the Scottish Parliament) and also identifies legislative changes (including some to the Companies Act 2006) that would fall to the UK Parliament.

UK: The Prospectus Regulations 2013

The Prospectus Regulations 2013 were laid before Parliament last week and come into force on 31 May: see here or here (pdf). An explanatory note for the Regulations, which amend section 86 ("Exempt offers to the public") of the Financial Services and Markets Act 2000 Act, is available here.

Denmark: Recommendations on Corporate Governance

Following the conclusion of a consultation earlier this year, the Committee on Corporate Governance has now published its revised Recommendations on Corporate Governance: see here (English, pdf) or here (Danish, pdf). 

Tuesday 14 May 2013

Guernsey: reviewing the regulatory framework for financial services

The Commerce and Employment Department has begun a review of the regulatory framework for financial services, starting with the publication of a consultation paper concerning the role and objectives of the Financial Services Commission: see here (pdf).

South Africa: relief for unfairly prejudicial conduct

The Supreme Court of Appeal gave judgment last Friday in Grancy Property Limited v Manala (665/12) [2013] ZASCA 57: see here or here (pdf). The case concerned the operation of section 163 of the Companies Act 71 of 2008, which provides that a shareholder or director may apply to the court for relief in respect of oppressive or unfairly prejudicial conduct. The Supreme Court held that the Western Cape High Court (Cape Town) had erred in deciding that a shareholder had failed to make out a case for relief and in doing so considered, amongst other things, the scope of relief that could be provided. In the course of his judgment, Petse JA observed "... there is much to be said for the proposition that s 163 must be construed in a manner that will advance the remedy that it provides rather than limit it." (para 26). A summary of the decision is available here (pdf).

Iceland: Guidelines on Corporate Governance (fourth edition)

The codes and principles directory maintained by the European Corporate Governance Institute has recently been updated to include the fourth edition of the Guidelines on Corporate Governance published by the Iceland Chamber of Commerce, NASDAQ OMX Iceland hf. and Confederation of Icelandic Employers: see here.

Monday 13 May 2013

UK: Transposition of the Alternative Investment Fund Managers Directive

The Government has published its response in respect of the consultation that took place earlier this year regarding the transposition of the Alternative Investment Fund Managers Directive: see here (pdf). A copy of the Alternative Investment Fund Managers Regulations 2013 has also been published - see here (pdf) - together with a set of questions and answers: see here (pdf).

Europe: The European Corporate Governance Codes Network

The European Corporate Governance Codes Network - an informal network of the organisations responsible for writing and/or monitoring the implementation of national corporate governance codes in European Union and European Economic Area countries, and which exists primarily for the sharing of views, experiences and practice - has launched a new website: see here. In addition to providing links to relevant codes and guidance, the website contains a very useful section with links to monitoring reports for the codes.

UK: Taxing companies in the global economy - evidence before the Economic Affairs Committee

Earlier this year the House of Lords Economic Affairs Committee began in inquiry exploring the taxation of companies an the global economy: see here. A transcript of oral evidence given at the first evidence session, at which Professor Steve Bond and Malcolm Gammie CBE QC appeared, is now available: see here (pdf).

Friday 10 May 2013

UK: Financial Services (Banking Reform) Bill - update

The Financial Services (Banking Reform) Bill, which was introduced in the 2012-13 session of Parliament, has been carried over into the new session which began this week following the State Opening of Parliament. The Bill provides the framework for ring-fencing banks' activities. A copy of the Bill, as reintroduced, is available here or here (pdf). Explanatory notes are available here or here (pdf). The Bill will next be considered at report stage in the House of Commons.

Thursday 9 May 2013

UK: Supreme Court gives judgment in BNY Corporate Trustee Services appeals

The Supreme Court gave judgment today in the BNY Corporate Trustee Services Limited appeals: see here (pdf). A summary is available here (pdf). Amongst other things, the court considered the practical effect of section 123 ("Definition of inability to pay debts") of the Insolvency Act 1986. In this regard, Lord Walker (with whom Lords Mance, Sumption Carnwath agreed) observed (para. [37]):

[T]he provisions of section 123(1) and (2) should in my view be seen ...  as making little significant change in the law. The changes in form served, in my view, to underline that the “cash-flow” test is concerned, not simply with the petitioner’s own presently-due debt, nor only with other presently-due debt owed by the company, but also with debts falling due from time to time in the reasonably near future. What is the reasonably near future, for this purpose, will depend on all the circumstances, but especially on the nature of the company’s business. ... The express reference to assets and liabilities is in my view a practical recognition that once the court has to move beyond the reasonably near future (the length of which depends, again, on all the circumstances) any attempt to apply a cash-flow test will become completely speculative, and a comparison of present assets with present and future liabilities (discounted for contingencies and deferment) becomes the only sensible test. But it is still very far from an exact test, and the burden of proof must be on the party which asserts balance-sheet insolvency"

A summary of the court's decision was delivered by Lord Hope and can be watched here:

UK: England and Wales: delay and the issue of a pre-merger certificate

The ICLR has provided a summary for the recent High Court decision Re House-Clean Ltd [2013] WLR (D) 165: see here. The summary's headnote reads: "Delay was not relevant to the court’s consideration of whether the pre-merger requirements within Part 2 of the Companies (Cross-Border Mergers) Regulations 2007 had been satisfied and the court was obliged to issue a pre-merger certificate to a United Kingdom-based merging company if those requirements had been carried out." The decision is not, at present, available on the BAILII database.

India: Companies Bill 2012 not passed as Parliamentary session ends two days early

The Indian Parliament's current term was brought to end yesterday, two days early. The Companies Bill 2012, which was passed by the Lok Sabha last December (see here, pdf), was not passed by the Rajya Sabha. The chairman of the Rajya Sabha, in his valedictory remarks (see here, pdf), observed:

The experience of this Session, particularly of its second half, should induce cogitation on a number of matters arising out of the situation in which the House finds itself in its daily functioning. Three questions in particular need to be addressed. One, has the balance between deliberation, legislation and accountability been lost due to regular disruptions of the proceedings? Two, has the time not come to bridge the growing gap between the rules of procedure and the need felt by different sections of the House to voice opinion on matters of concern? This, needless to say, has to be done in an orderly manner to preserve the dignity of the House. Three, has the membership of this august body assessed the impact of disruptive behaviour on public opinion?"

Wednesday 8 May 2013

UK: England and Wales: the power to give directions under section 1032 of the Companies Act 2006

A decision of the High Court from last year, Rloans LLP v The Registrar of Companies [2012] EWHC B33 (Comm), was added to the BAILII database earlier this week. The case concerned, amongst other things, the power of the court to give directions under section 1032 ("Effect of court order for restoration to the register") of the Companies Act 2006.

UK: England and Wales: dissolution of a partnership by an accepted repudiation?

Earlier this week the ICLR published a summary for the recent High Court decision Golstein v Bishop [2013] EWHC 881 (Ch): see here. To quote from the summary's headnote: "The dissolution of a partnership could not be brought about by an accepted repudiation." A copy of the decision has not yet been added to the BAILII database.

Tuesday 7 May 2013

Ireland: Corporate Manslaughter Bill 2013 to begin second stage

The Corporate Manslaughter Bill 2013, a private member's bill, was introduced in the Seanad √Čireann on 2 May and completed the first stage: see here. Second stage debate has been scheduled to begin today: see here (pdf). A copy of the Bill is available here (pdf). An explanatory memorandum is available here (pdf).

UK: England and Wales: High Court considers 'material adverse change' clause

Judgment was given late last month by Mr Justice Blair in Grupo Hotelero Urvasco SA v Carey Value Added SL & Anor [2013] EWHC 1039 (Comm). Of particular interest is the discussion concerning a "material adverse change" clause, about which the trial judge observed (para. [364]):
The interpretation of a "material adverse change" clause depends on the terms of the clause construed according to well established principles. In the present case, the clause is in simple form, the borrower representing that there has been no material adverse change in its financial condition since the date of the loan agreement. Under such terms, the assessment of the financial condition of the borrower should normally begin with its financial information at the relevant times, and a lender seeking to demonstrate a MAC should show an adverse change over the period in question by reference to that information. However the enquiry is not necessarily limited to the financial information if there is other compelling evidence. The adverse change will be material if it significantly affects the borrower's ability to repay the loan in question. However, a lender cannot trigger such a clause on the basis of circumstances of which it was aware at the time of the agreement. Finally, it is up to the lender to prove the breach."

Monday 6 May 2013

India: company law reform - Companies Bill tabled (again) in the Rajya Sabha

The Companies Bill 2012, which was passed by the Lok Sabha last December (see here, pdf), was tabled for consideration and passing by the Rajya Sabha last week but this did not happen. The Bill has been scheduled for consideration and passing today: see here (pdf).

Singapore: company law reform - draft Companies Amendment Bill 2013 published

Last October, the Ministry of Finance published its response to the recommendations made by the steering group formed to review the Companies Act 1967: see here (pdf). A draft Bill - the Companies Amendment Bill 2013 - has now been published for consultation: see here (pdf). The Bill is accompanied by two supporting documents in which further questions are asked and more information provided about the Ministry's response to the steering group's recommendations: see here (pdf) and here (pdf). The steering group's report is available here (pdf).

Friday 3 May 2013

Bermuda: the common law discretion to assist foreign liquidators

The Supreme Court gave judgment last month in In the Matter of Saad Investment Co. [2013] SC (Bda) 28 Com: see here (pdf). This is an important and interesting decision exploring the scope of the common law discretion to assist foreign liquidators in Bermuda, and one that considers much English case law.

Jersey: Royal Court gives directions under article 46 of the Foundations (Jersey) Law 2009

The Royal Court (Samedi Division) has, for the first time, given directions under a power given to it by article 46 the Foundations (Jersey) Law 2009: see A Ltd. v B Ltd and others [2013] JRC075. In doing so it has provided some important analysis of the scope and operation of article 46 and of the differences between trusts and foundations.

Thursday 2 May 2013

UK: Enterprise and Regulatory Reform Act 2013 published

The Enterprise and Regulatory Reform Act 2013 received Royal Assent last month: see here. The Act contains, amongst other things, some of the provisions necessary to introduce the new regime for shareholder approval of quoted company directors' remuneration. A copy of the Act was published today on the website: see here (pdf).

UK: Supreme Court to give judgment next week in BNY Corporate Trustee Services

The Supreme Court has announced that it will hand down its judgment next Wednesday in BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL PLC (on appeal from [2011] EWCA Civ 227). At issue, to quote the court's summary, was the "... proper interpretation of section 123(2) of the Insolvency Act 1986 as incorporated into a securitisation agreement, in particular whether a company is to be deemed 'unable to pay its debts' by reason of the fact that on an examination of its balance sheet its liabilities exceed its assets, or whether some further test is involved ...".