Europe: European Supervisory Authorities' joint position - product oversight and governance processes

The European Supervisory Authorities - EBA, ESMA and EIOPA - have jointly published high-level principles on product oversight and governance processes within financial institutions: see here (pdf).

Singapore: MAS consults on changes to the Banking Act

The Monetary Authority of Singapore has published a consultation paper setting out proposed changes to the Banking Act: see here (pdf). MAS is proposing, amongst other things, to codify what it expects from banks with regard to risk management.

UK: The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) (No.4) Order 2013

The Financial Services Act 2012 (Consequential Amendments and Transitional Provisions) (No.4) Order 2013 was laid before Parliament yesterday and comes into force on 19 December 2013. An explanatory memorandum is available here (pdf). The Order makes, amongst other things, amendments to the Open-Ended Investment Companies (Amendment) Regulations 2011 (S.I. 2011/3049) in connection with the new financial regulatory regulatory regime introduced earlier this year.

UK: Scotland: The Employers' Liability (Compulsory Insurance) Act 1969 and director liability

In Richardson v Pitt-Stanley [1985] QB 123 a majority of the Court of Appeal in England concluded that the Employers' Liability (Compulsory Insurance) Act 1969 did not give rise to civil liability on the part of the employer or of a director of the employing company for the failure to have in place insurance covering bodily injury or disease sustained by employees in the course of their employment. Earlier this week, sitting in the Court of Session (Outer House), Lord Glennie delivered his opinion in Campbell v Peter Gordon Joiners Ltd. [2013] CSOH 181 and declined to follow Richardson. Noting that it was undesirable for the courts in England and Scotland to reach a different view on the effect of UK wide legislation, Lord Glennie nevertheless held that the Act not only created an obligation on the part of the directors of the employing company to ensure that insurance was in place but also gave a right to a person affected to sue the directors for a breach of that obligation. He also considered, but rejected, arguments for such a right based on the common law (and in doing so briefly touched upon directors' statutory duties under the Companies Act 2006).

UK: Financial Servies (Banking Reform) Bill - peers support annual validation of approved persons' competence as part of licensing regime

The Financial Services (Banking Reform) Bill began the first day of report stage in the House of Lords yesterday: see here. Peers voted (222 votes for; 217 against) to introduce an amendment to the Bill requiring all approved persons exercising controlled functions to undergo an annual validation of their competence, as part of a licensing regime based on training and competence. Report stage debate continues today.

UK: Financial Services (Banking Reform) Bill - report stage today in the House of Lords

The Financial Services (Banking Reform) Bill begins its report stage in the House of Lords today. The amendments tabled for consideration are available here and here. These include proposed new clauses, including one requiring the regulator to raise standards of professionalism in financial services by mandating a licensing regime based on training and competence; another new clause would impose a duty on authorised persons with regard to employees' compliance with rules of conduct.

UK: FCA consults on changes to its rules and guidance concerning the use of dealing commission

The Financial Conduct Authority has published a consultation paper setting out proposed changes to the use of dealing commission rules in the Conduct of Business Sourcebook (COBS 11.6): see here (pdf). The FCA is proposing, amongst other things, that investment managers should not pay for corporate access with dealing commissions. Further information is available here.

Australia: Financial system inquiry - draft terms of reference published

Draft terms of reference for an inquiry into the Australian financial system have been published for comment by the Government: see here (pdf). Included for consideration are corporate governance structures and their affect on what is described as 'stakeholder interests'. Corporate law is also included where it impacts on the effective allocation of capital.

Switzerland: 1:12 pay ratio limit rejected in referendum vote

Electors in Switzerland, in yesterday's referendum, rejected a proposal that would have set a limit on executive pay within companies to twelve times that of the lowest paid worker: see here and here.

South Africa: Nominee non-executive director not entitled to fees and bonuses

The Supreme Court of Appeal gave judgment last Friday in Public Investment Corporation v Bodigelo (128/2013) [2013] ZASCA 156: see here (pdf). The case concerned an employee, Mr Bodigelo, appointed by his (former) employer (PIC) to act as a non-executive director of four companies in which it had invested. The non-executive directors of these companies were paid directors' fees and bonuses but in Mr Bodigelo's case these were paid to PIC. Mr Bodigelo argued that he was entitled to the fees and bonuses. His claim was upheld by the North Gauteng High Court but rejected by the Supreme Court of Appeal. In doing so the court held, amongst other things, that the fact that Mr Bodigelo was required to exercise his discretion as a director of the four companies unfettered by the interests of PIC, did not mean that it was impossible for his functions as a director to be carried out in the context of his employment with PIC.

UK: England and Wales: good faith and section 44 of the Companies Act 2006

Judgment was given yesterday in LNOC Ltd v Watford Association Football Club Ltd [2013] EWHC 3615 (Comm). The operation of section 44 of the Companies Act 2006 was considered. The trial judge, His Honour Judge Mackie QC, held that in order to establish a lack of good faith on the part of a purchaser it was necessary to show a dishonest or irrational belief in the authority of the relevant section 44(3) signatory.

Switzerland: A referendum on remuneration - the 1:12 ratio

In Switzerland on Sunday a referendum is taking place over proposals to introduce a cap on executive pay within companies: see here or here. Electors will decide if remuneration within individual companies should be subject to a maximum limit of twelve times the pay of the lowest paid employee.

Europe: MEPs endorse 40% 'procedural quota' for non-executive director positions on listed company boards

On Wednesday this week, in the European Parliament, a resolution was passed by MEPs in support of legislation proposed by the Commission to increase the proportion of women occupying non-executive positions on listed company boards: see here. The proposed legislation, in the form of a Directive, will require those listed companies where women (or men) hold less than 40% of the non-executive positions to adjust their recruitment, pre-selection, selection and appointment procedures in order to contribute to the attainment of the 40% target by 1 January 2020 (a so-called 'procedural quota'). Where male and female candidates are equally qualified, priority is to be given to the candidate from the under-represented gender.

Australia: ASX consultation on changes to the corporate governance principles and recommendations - responses published

Earlier this year the ASX Corporate Governance Council published a consultation paper in which it set out proposed changes to its corporate governance principles and recommendations: see here. The deadline for responses passed several days ago; the responses received have since been published: see here.

India: Company law reform - MCA publishes further rules for comment

The Ministry of Corporate Affairs has published for consultation further rules that it proposes to make under the Companies Act 2013: see here (pdf). These rules concern winding-up and responses are invited by 19 December.

USA: Audit Committee Collaboration calls for improvements in the audit committee report

Several organisations, known collectively as the Audit Committee Collaboration, have published a report in which they call for improvements in the audit committee report: see here (pdf).

UK: The Nuttall Review recommendations - progress report, a call for evidence and share buy back guidance

The Department for Business, Innovation and Skills (BIS) has published a progress report in respect of the 28 recommendations made last year by the Nuttall Review of employee ownership: see here (pdf). In respect of one of these recommendations - exempting employee benefit trusts from the 125 year perpetuity period in the Perpetuities and Accumulations Act 2009 to enable perpetual ownership of shares in employee owned companies by employee benefit trusts - BIS has this week published a call for evidence: see here (pdf). It has also published a guide to the changes made to the share buy back rules by the Companies Act 2006 (Amendment of Part 18) Regulations 2013: see here (pdf).

UK: CRD IV implementation - country by country reporting by credit institutions

The Government has published for final comment proposed Regulations and guidance in respect of its implementation of the country by country reporting requirements of Article 89 of Directive 2013/36/EU. The draft guidance is available here (pdf) and the draft Capital Requirements (Country by Country Reporting) Regulations 2013 are available here (doc). The Regulations are scheduled to come into force on 1 January 2014. Further background information is available here.

Europe: ESMA review of financial institutions' IFRS financial statements

The European Securities and Markets Authority has published a review of the comparability and quality of disclosures in the financial statements of 39 listed financial institutions: see here (pdf). Recommendations are made for improvement in the following areas: credit risk and impact of forbearance practices; liquidity and funding risk; asset encumbrance and fair value measurement of financial instruments.

Germany: supervisory board gender quotas to be introduced

It is being widely reported in the print and online media that Germany's coalition partners have agreed to introduce legislation requiring listed companies to have at least 30% of supervisory board positions occupied by women: see, for example, here or here.

UK: NAPF Corporate Governance Policy and Voting Guidelines

The National Association of Pension Funds has published an updated edition of its Corporate Governance Policy and Voting Guidelines: see here (pdf).

France: AMF imposes largest ever fine

The Enforcement Committee of the French securities regulator, Autorité des Marchés Financiers (AMF), has imposed its largest ever fine in a case involving insider trading: see here.

New Zealand: FMA consults on financial services licensing standards and conditions

The Financial Markets Authority has published for consultation proposed licensing standards and conditions in respect of discretionary investment services, peer to peer lending, crowd funding, independent trustees, derivative issuers and managed investment scheme managers: see here. The standards include governance requirements.

UK: FRC consults on hedge accounting amendments

The Financial Reporting Council has published for consultation proposed amendments to    Financial Reporting Standard 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland in respect of hedge accounting: see here (pdf).

UK: England and Wales: the scope of section 238 of the Insolvency Act 1986

The Court of Appeal gave judgment today in Hunt v Hosking [2013] EWCA Civ 1408. The case concerned a claim brought by a liquidator (Mr Hunt) of a company (Ovenden Colbert Printers Ltd) in which it was alleged that an individual (Mr Hosking) had received payments from the company's client account that were transactions at an undervalue under section 238 of the Insolvency Act 1986. Mr Hosking accepted that he had received payments but argued that they were not received as the result of any transaction entered into by the company. The trial judge agreed: see [2013] EWHC 311 (Ch). So did the Court of Appeal today.

UK: Financial Services (Banking Reform) Bill - report stage amendments and briefing notes

The Financial Services (Banking Reform) Bill begins its report stage in the House of Lords on 26 November. In respect of amendments tabled by the Government on 11 November for debate, a briefing note has been published: see here (pdf).

UK: England and Wales: Court of Appeal upholds fraudulent trading sentences

The Court of Appeal gave judgment yesterday in R. v Hollier & Anor [2013] EWCA Crim 2041 and upheld the sentences imposed by the trial judge for fraudulent trading.

UK: The Scottish Good Higher Education Governance Code

A final version of the Scottish Good Higher Education Governance Code was published earlier this year: see here (pdf). For further information about the Code, and those responsible for its creation, see here.

Antigua and Barbuda: High Court declines to interfere with liquidator's discretion regarding creditor distribution

The Stanford International Bank (SIB) was incorporated in Antigua and Barbuda under the International Business Corporations Act of Antigua and Barbuda, Cap. 222. The bank collapsed in 2009 and was placed in liquidation. The bank's current liquidators were appointed by the High Court of the Eastern Caribbean Supreme Court in 2011 and they decided to reduce the amount that the original liquidators had proposed distributing to the creditors. This reduction was challenged before the High Court, the court being called upon to interfere with the liquidator's discretion.

In an opinion delivered at the end of October, the court decided not to interfere, finding that the proposed distribution method was within the ambit of the liquidators' discretion: see here (pdf). In doing so, the court relied upon English authorities; it also considered the meaning of 'ponzi' scheme, referring to USA case law, and described SIB as  "... a monstrous behemoth, demonically mendacious, with some serpentine subtlety calculated towards evading scrutiny, festering in its own corruption beneath a beautiful skin – until it inevitably imploded" (para. 55).

Europe: Shareholder co-operation during a takeover - ESMA clarification

The European Securities and Markets Authority has published a statement containing a list of shareholder activities which will not, without something more, amount to acting in concert in the context of the Takeover Directive (2004/25/EC): see here (pdf).

Europe: Maystadt report published - the EU contribution to IFRS

In March this year, Michel Barnier - the European Internal Market Commissioner - asked Philippe Maystadt to examine ways of reinforcing the EU’s contribution to International Financial Reporting Standards and improving the governance of the European bodies involved in developing these standards: see here.  Mr Maystadt's report was published today: see here (pdf). The report recommends, amongst other things, the reorganisation of the European Financial Reporting Advisory Group in order to increase its legitimacy and representativeness.

OECD peer review report: supervision and enforcement in corporate governance

The OECD has published a report on the supervision and enforcement of corporate governance arrangements concerning related party transactions, takeover bids and shareholder meetings: see here. The report covers 27 jurisdictions and focuses in particular on the OECD's Corporate Governance Principles. More in-depth information is provided for three countries: Brazil, Turkey and the United States of America.

Belize: Companies (Amendment) Act 2013 introduces single member private companies

The Companies (Amendment) Act 2013 was published in the Gazette last month and, amongst other things, reduces the minimum number of shareholders required to form a private company from two to one: see here (pdf).

Cayman Islands: Revised legislation - companies and partnerships

Revised legislation has recently been published in the Extraordinary Gazette, including the Partnership Law and Companies Law: see, respectively, here (pdf) and here (pdf).

Japan: Audit committees and Kansayaku boards

The Asian Corporate Governance Association has published a paper comparing the Kansayaku board in Japan with the audit committee in other jurisdictions: see here (English, pdf) or here (Japanase, pdf). A brief history of the Kansayaku board is included as well as a summary of related legislative proposals made (but not yet passed) by the Ministry of Justice in 2012.

New Zealand: Implementing the Financial Markets Conduct Act 2013 - regulations published for consultation

The Financial Markets Conduct Act 2013 will introduce a new framework for the promotion and selling of financial products, together with the responsibilities of those who offer, deal and trade in them. The Act is being implemented in two stages: phase one on 1 April 2014 and phase two on 1 December 2014. In this regard, and with a particular focus on phase one, the Ministry of Business, Innovation and Employment has published for comment draft regulations: see here.

UK: England and Wales: Court of Appeal decides that LIBOR claims can be included in proceedings against banks

The Court of Appeal gave judgment today in Graiseley Properties Ltd & Ors v Deutche Bank AG & Ors [2013] EWCA Civ 1372. It decided that pleas based on implied representations regarding LIBOR could be included in proceedings against two banks. Lord Justice Longmore observed that the banks had proposed the use of LIBOR in their contracts and it was therefore arguable that they were, at the very least, representing that their participation in the setting of LIBOR was honest. The banks' rejection of this limited proposition was, in his Lordship's view, surprising.

Ireland: Companies Bill 2012 - progress update

The Select Committee on Jobs, Enterprise and Innovation completed its committee stage consideration of the Companies Bill 2012 earlier this week: see here. A copy of the Bill, as amended at committee stage, will be published here. The Bill now proceeds to report stage. Further information about the Bill is available here.

Jersey: Bribes held on constructive trust - Royal Court follows Reid in preference to Lister

In Sinclair Investments (UK) Ltd. v Versailles Trade Finance Ltd. [2011] EWCA Civ 347 the English Court of Appeal declined to follow AG for Hong Kong v Reid [1994] AC 324, an opinion of the Judicial Committee of the Privy Council, and instead applied one of its earlier decisions (Lister v Stubbs [1890] 45 Ch D 1). The effect was to limit the circumstances in which a proprietary claim could be made in respect of asset or money acquired by a fiduciary in breach of duty.

Jersey's Royal Court (Samedi division), at the end of October in Lloyds Trust Company (Channel Islands) Ltd. v Fragoso [2013] JRC 211, considered whether it should follow Lister in preference to Reid. It declined to do so and ordered that a trust fund with a bank, into which the proceeds of bribes had been paid, was held on constructive trust. Commissioner Clyde-Smith stated: "...  there are important reasons of policy for this Court to follow Reid, namely the need to deter fraud and corruption and to have the ability to strip fiduciaries who have channelled their illicit funds through this jurisdiction of all benefits" (para. 28).

UK: NHS Clinical Commissioning Groups Code of Governance - final edition published

A final edition of the NHS Clinical Commissioning Groups Code of Governance has been published, following a consultation earlier this year: see here (pdf). For background information, and the response of the expert panel to feedback on the earlier draft, see here.

UK: Women on boards - progress report published

Women now hold 19% of FTSE 100 and 15% of FTSE 250 board positions, according to a report published today by Cranfield School of Management: see here (pdf). The Cranfield report, titled Women On Boards, Benchmarking adoption of the 2012 Corporate Governance Code in FTSE 350, also considers the progress FTSE350 companies have made in adopting the new recommendations in the UK Corporate Governance Code 2012 concerning boardroom diversity.

UK: ABI Principles of Remuneration - revised edition published

The Association of British Insurers has published an updated edition of its Principles of Remuneration: see here.

UK: FRC proposes changes in respect of risk management

The Financial Reporting Council has published for consultation, in respect of risk management, proposed changes to the UK Corporate Governance Code, guidance for boards of listed companies, and auditing standards: see here (pdf) and here (pdf). The FRC has also published for consultation guidance for bank directors on solvency and liquidity risk management and the going concern basis of accounting: see here (pdf).

UK: Premium listed companies, controlling shareholders and minority shareholder protection

The Financial Conduct Authority has published a range of proposals to strengthen the position of minority shareholders in premium listed companies where there is a controlling shareholder (holding 30% or more of the votes): see here (pdf). Included are additional voting rights for minority shareholders regarding the appointment of independent directors. It will also be mandatory for premium listed companies with a controlling shareholder to have an agreement in place setting out certain undertakings regarding the independence of the company's business from that of the controlling shareholder.

UK: Disenfranchising short-term shareholders during a takeover bid - the Government's position

Earlier this year the House of Commons Business, Innovation and Skills Committee published a report concerning the Kay Review of UK Equity Markets and Long-term Decision Making in which recommendations were made to Government: see here (pdf). The Government has responded: see here or here (pdf).

In its response the Government explains, amongst other things, its support for ensuring that the interests of those seeking short-term returns from a merger or acquisition do not override the long-term interests of companies; for this reason it does not in principle object to measures which reduce the influence of short-term shareholders. However, the Government's position with regard to disenfranchising short-term shareholders during a takeover bid is that this would not be practical or effective. The reasons for this position are outlined in the Government's response (in annex b) and comments are invited (roundtable discussion is also planned for later this year). The Government also includes in its response a summary of what it has done in respect of the Kay Review recommendations: see here.

Guernsey: GFSC statement on proposed consolidation of legislation relating to its supervisory functions

The Guernsey Financial Services Commission has published a statement in respect of the proposals it published for consultation earlier this year (here, pdf) for the consolidation of the legislation relating to its supervisory functions: see here. Responses to the consultation have caused the Commission to scale back its ambitions: what is now proposed is the identification of priority areas for reform and consolidation of the kind first suggested appears unlikely.

France: AMF report on corporate governance and executive compensation in listed companies

The Autorité des Marchés Financiers (AMF) has published its 2013 report on corporate governance and executive compensation in listed companies. An overview of the report's findings, in English, is available here. A copy of the report, in French, is available here.

UK: DWP publishes 'Better workplace pensions: a consultation on charging'

The Department for Work and Pensions published its consultation paper Better workplace pensions - a consultation on charging earlier this week: see here (pdf). Views are sought on a wide range of matters, including whether a cap on pension scheme charges should be introduced. This consultation follows a call for evidence earlier this year regarding standards in workplace defined contribution pension schemes (including scheme governance): see here. In September the Office of Fair Trading published the results of a market study and stated that relying on competition alone was not sufficient to provide value for money for savers in respect of defined contribution workplace pensions: see here.

IFSB Exposure Draft 16 published for consultation - key elements in supervisory review

The Islamic Financial Services Board has published for consultation Exposure Draft 16 Revised Guidance on Key Elements in the Supervisory Review Process of Institutions offering Islamic Financial Services (excluding Islamic Insurance (Takāful) Institutions and Islamic Collective Investment Schemes): see here (pdf).

Section 3.3 of the Exposure Draft addresses corporate governance and risk management and includes a short section on Sharîah governance (about which see the IFSB's guiding principles, published in 2009, and available here, pdf).

USA: SEC consults on crowdfunding rules

The Securities and Exchange Commission has published for consultation its proposed framework for the offer and sale of securities by companies through crowdfunding: see here (pdf). An overview is available here.