Season's greetings and best wishes for the new year

Season's greetings to all blog visitors and those receiving the daily e-mail updates. I hope that you have found the contents useful and interesting over the past year. The first blog post for 2015 will appear on January 2.

With best wishes for 2015, Robert.

Jersey: the unfair prejudice remedy and the influence of English authorities

The Royal Court (Samedi division) gave judgment a couple of days ago in Kilbey v Grafters Ltd [2014] JRC 225. The case concerned a shareholder's claim for relief under Jersey's unfair prejudice remedy (Article 141 of the Companies (Jersey) Law 1991). The court held that, were it not for the reasonable offer the shareholder had received for his shares, unfair prejudice would have been established and the court's jurisdiction to make an order invoked.

The decision contains a wide ranging discussion of various examples of unfairly prejudicial conduct and also provides an excellent illustration of the influence that English authorities (under the equivalent UK provision: section 994 of the Companies Act 2006) have in the development of this particular aspect of Jersey company law.

UK: Takeover Panel response statement and instrument - post offer undertakings and intention statements

The Takeover Panel yesterday published Response Statement 2014/2 Post offer undertakings and intention statements, following its consultation earlier this year: see here (pdf). The response statement is accompanied by Instrument 2014/4, which will make amendments to the Takeover Code, to implement new rules concerning post offer undertakings and post offer intention statements: see here (pdf). The revised version of the Code will take effect from 12 January 2015.

Ireland: Companies Act 2014 becomes law

The Companies Bill 2012 was signed by the President today and, as the Companies Act 2014, became law: see here. A copy of the Bill, as it stood before signing by the President, is available here (volume 1, pdf) and here (volume 2, pdf).

The Act is expected to come into force during the middle of next year; secondary legislation will follow in the new year. It is the largest piece of legislation to be enacted by the Oireachtas and contains Ireland's new company law framework. It consolidates the existing 17 Companies Acts, which date from 1963 to 2013.

A short overview of the Act, focusing in particular on the reforms it will introduce for private companies, is available here. There is also further information on the Companies Registration Office website: see here.

UK: Supreme Court declines to hear London Metal exchange consultation appeal

The Supreme Court has announced that it has refused United Company Rusal's application to appeal the Court of Appeal decision in United Company Rusal Plc, R (on the Application of) v The London Metal Exchange [2014] EWCA Civ 1271 (a case on the procedural fairness of a consultation process carried out by London Metal Exchange).

UK: FCA publishes new DTRs for extractive and forest industries

The Financial Conduct Authority has published the new Disclosures Rules and Transparency Rules concerning payments to governments by issuers involved in the extractive or logging of primary forest industries: see here (pdf). The new rules apply to financial years beginning on or after 1 January 2015. A detailed policy statement will be published early in the new year.

Romania: Bucharest Stock Exchange consults on new corporate governance code

The Bucharest Stock Exchange has published for consultation a new edition of its corporate governance code. Further information, in English, is available here (pdf).

UK: FCA consultation paper - bringing additional benchmarks into the regulatory and supervisory regime

The Financial Conduct Authority has published a consultation paper titled Bringing additional benchmarks into the regulatory and supervisory regime: see here (pdf). The paper seeks views on how the FCA's current approach to benchmark supervision could be applied beyond LIBOR, and in particular to the seven additional benchmarks the FCA will regulate from April 2015. The paper notes, for example, that whilst the MAR 8.3 requirements and guidance work well for the LIBOR administrator, modifications are needed to accommodate differences in other benchmarks.

UK: BIS and FRC consult on auditor regulation

The Department for Business, Innovation and Skills has published a discussion document seeking views on a range of reforms the purpose of which is to enhance confidence and strengthen the audit regime, in the context of new European law (Directive 2014/56/EU and Regulation (EU) No 537/2014): see here (pdf). The discussion document is accompanied by a consultation paper from the Financial Reporting Council: see here (pdf).

Europe: ESMA report - high frequency trading in EU equity markets

The European Securities and Markets Authority has published its first Economic Report, titled High-frequency trading activity in EU equity markets: see here (pdf). According to the report, HFT activity levels vary widely between trading venues and are linked to market capitalisation (HFT activity increasing with the market capitalisation of stocks). HFT activity ranges from 24% to 43% of equity value traded.

UK: FRC draft annual plan, budget and proposed levies

The Financial Reporting Council has published its draft plan, budget and proposed levies for 2015/16: see here (pdf). The report notes, amongst other things, "... some encouraging signs of more engagement on a wider range of issues between the larger listed companies and their shareholders; but this is not the case across the listed sector or the signatories to the Stewardship Code as a whole". Contributing to the development of an updated Audit Firm Governance Code is one of the (many) tasks for the year ahead.

UK: The Financial Services Act 2012 (Commencement No. 6) Order 2014

The Financial Services Act 2012 (Commencement No. 6) Order 2014 was made yesterday by the Treasury: see here or here (pdf). The Order brings into force, on 1 January 2015, subsections (1), (2), (5) and (6) of section 96, and sections 98 and 99 of the Financial Services Act 2012.

UK: Treasury review of enforcement decision making at the financial regulators

The Treasury today published its final report Review of enforcement decision-making at the financial services regulators: see here (pdf). An overview of the report's recommendations is available here. One of the recommendations is that the Financial Conduct Authority and Prudential Regulation Authority should publish more information about their criteria for beginning investigations and their approaches to referring cases from supervision to enforcement, including how they co-operate with each other.

India: Companies (Amendment) Bill 2014 passed in the Lok Sabha

The Companies (Amendment) Bill 2014 was passed yesterday in the Lok Sabha: see here (pdf). A copy of the Bill, as introduced, is available here (pdf). The Bill makes various amendments to the Companies Act 2013, some designed to address omissions and others under the banner of "ease of doing business". In the latter category are changes to the approval requirements for certain related party transactions and the removal of the requirement for companies to have a minimum amount of paid-up share capital.

Japan: draft corporate governance code published

Earlier this year the Japanese Government announced plans to introduce a new corporate governance code, as part of its Japan Revitalisation Strategy: see here (pdf). The Council of Experts formed to develop the new code published a draft code yesterday: see here (in Japanese). A copy of the draft code, in English, will be available here soon.

Europe: Mortgage Credit Directive - EBA consults on draft guidelines

The European Banking Authority is consulting on two sets of draft guidelines under the Mortgage Credit Directive (Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property). The first set relate to creditworthiness assessments: see here. The second set concerns to the treatment of mortgage borrowers in arrears: see here.

UK: Non-executive directors and conflicts of interest

The Upper Tribunal (Tax and Chancery Chamber) gave judgment yesterday in Burns v Financial Conduct Authority [2014] UKUT 0509 (TCC): see here (pdf). The Tribunal held that Mrs Burns was not fit and proper to hold a non-executive director position. She had, the Tribunal held, "turned a blind eye" to various ethical issues concerning conflicts of interest.

In its decision, the Tribunal commented on the role of the non-executive director (at para. [121]): "It is a sensitive function. Non-execs often have wide-ranging business interests. A non-exec position requires rigorous adherence to the proper standards concerning avoidance of conflicts and the making of disclosures".

Hong Kong: Unfair prejudice - Court of Final Appeal declines to decide merits of case

Last year the Court of Appeal of the High Court gave judgment in Luck Continent Ltd v Cheng Chee Tock Theodor (CACV 107/2012), a case concerning a listed company and the unfair prejudice remedy (now found in Part 14 of the Companies Ordinance, Cap 622). An appeal was made to the Court of Final Appeal and this was heard several days ago: see here. The Panel included, as a non-permanent judge, Lord Hoffmann, a former Law Lord from the United Kingdom well known for his contribution to the development of the English unfair prejudice remedy (see, e.g., O'Neill v Phillips [1999] 1 WLR 1092).

The hearing did not, however, provide the court with the opportunity to consider the unfair prejudice remedy in the very unusual circumstances of the case. This was because the appeal was academic and the court declined to exercise its discretion to consider the merits of the case. The opinion of the court was delivered by Mr Justice Ribeiro PJ. He observed that difficult and interesting questions were raised by the appeal but that it was not one of those "rare and exceptional" cases where, although academic, the court should decide its merits.

Isle of Man: another call to update insolvency law

Earlier this year, in Munin Navigation v Petrodel, His Honour Deemster Gough called for the updating of insolvency law on the Isle of Man, referring to the "archaic statutory provisions and rules which govern insolvency" (para 63).  A few days ago another call for reform was made, this time by the First Deemster and Clerk of the Rolls, His Honour Deemster Doyle, in Lombard Manx v Spirit of Montpelier. The comments were made as part of a judgment in which it was held that Manx common law did not provide the court at first instance with jurisdiction to rescind a winding up order once it has been sealed or otherwise perfected.

UK: FCA announcement on new disclosure rules and transparency rules

The Financial Conduct Authority has announced that it proposes to implement new Disclosure Rules and Transparency Rules, affecting issuers involved in the extractive or logging of primary forest industries, in January 2015: see here.

UK: Government decides against introduction of new employee shareholding vehicle

The Government has announced, following a recent consultation, that it has decided not to introduce a new vehicle for employee shareholdings: see here (pdf).

UK: FRC offers year-end advice for preparers

The Financial Reporting Council has published the advice it has given to preparers of December year end statements: see here (pdf). Such statements will not be subject to the revised UK Corporate Governance Code, which applies to years beginning after 1 October 2014. Nevertheless, in its advice the FRC suggests that preparers may wish to adopt some or all of the new Code provisions early, including those relating to the assessment of risk and the viability of the company.

Japan: Stewardship Code signatories

The Financial Services Agency has published an updated list of the signatories to the Japanese Stewardship Code: see here.

UK: The Diverted Profits Tax - draft legislation published

Draft legislation was published yesterday in respect of the new Diverted Profits Tax (which has, in the UK, become quickly known as the 'Google Tax'): see here (pdf). The main objective of the new tax is described by the Government in these terms: to counteract contrived arrangements used by large groups (typically multinational enterprises) that result in the erosion of the UK tax base.

Update (12 December 2015) - further guidance has been published and is available here (pdf).

Ireland: An update on the Companies Bill 2012 / Companies Act 2014

The Companies Bill 2012 returned to the Dáil Éireann yesterday for consideration of the amendments made to the Bill in the Seanad Éireann (one of the final stages before the Bill becomes law): see here. The Bill's progress can be followed here. It now requires the signature of the President to become law (it will be known as the Companies Act 2014), and this is expected soon. A list of legislation signed by the President is available here.

UK: Transparency and accountability at the Bank of England

The Bank of England today announced various changes to its operations and structure designed to improve transparency and accountability: see here. Some of these changes implement the recommendations of the Warsh Review, also published today: see here. Changes have also been announced concerning the governance of the Bank and its Committees.

For further information, see: The Warsh Review (pdf) | The Bank's proposals (pdf) | Comments from the Governor of the Bank (pdf) | Press conference video recording.

UK: BIS publishes cyber-security guide for non-executive directors

The Department for Business, Innovation and Skills has published a guide for non-executive directors on cyber security: see here (pdf). The purpose of the guide is to help NEDs engage with board colleagues on the oversight of cyber risks.

Jersey: contractual performance and an implied term of good faith

Last month the Royal Court (Samedi division) gave judgment in Haden-Taylor v Canopius Underwriting Ltd [2014] JRC 221, an important case on Jersey contract law dealing with an issue - good faith - on which there is little judicial authority. The judgment was delivered by the Master of the Royal Court, Advocate Matthew John Thompson, and published a couple of days ago.

Master Thompson, in the context of an application to strike out various claims, held that it was arguable that an implied term of good faith existed in contracts governed by Jersey law in respect of contractual performance by the parties. This implied term applied also to insurance contracts and was not inconsistent with the obligation of utmost good faith to which contracts of insurance were subject.

UK: Grant Thornton's Corporate Governance Review 2014

Grant Thornton has published the 2014 edition of its annual corporate governance review, containing the results of its analysis of FTSE350 company reports: see here (pdf).  The review notes that just over 60% of FTSE350 companies comply in full with the UK Corporate Governance Code.

Switzerland: final report of the group of experts on the development of financial market strategy

The group of experts appointed by the Federal Council to make recommendations on the development of financial market strategy in Switzerland have published their final report: see here (pdf). The report has several annexes, available here, some of which are not yet available in English. The report contains recommendations within the following four areas: efficient organisation of regulatory processes; preserving and improving market access; improving the tax environment; and safeguarding systemic stability. The Federal Council's response is available here.

UK: England and Wales: winding-up petitions and arbitration agreements

The Court of Appeal gave judgment today in Salford Estates (No.2) Ltd v Altomart Ltd [2014) EWCA 1575 Civ. The court unanimously held that section 9(1) ("stay of legal proceedings") of the Arbitration Act 1996 did not apply to a winding-up petition where the ground of the petition was that the company was unable to pay its debts and what was in dispute was that issue generally or, more specifically, whether a particular debt mentioned in the petition was outstanding and due.

The Chancellor (Sir Terence Etherton), delivering the leading opinion, observed that it was "... highly improbable that Parliament, without any express provision to that effect, intended section 9 of the 1996 Act to confer on a debtor the right to a non-discretionary order striking at the heart of the jurisdiction and discretionary power of the court to wind up companies in the public interest where companies are not able to pay their debts" (para. [35]).

UK: NAPF updates its 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). An overview of some of the changes is available in the accompanying press release: see here.

UK: The Reports on Payments to Governments Regulations 2014

The Reports on Payments to Governments Regulations 2014 came into force on 1 December: see here or here (pdf). The Regulations implement Chapter ten of Directive 2013/34/EU, which requires all large undertakings and all public-interest entities active in the extractive industry or the logging of primary forests, to prepare and make public a report on the payments they make to governments worldwide.

Further information is available in the explanatory memorandum (here, pdf), transposition note (here, pdf) and impact assessment (here, pdf).

Australia: Financial System Inquiry - final report and recommendations published

The final report of the Financial System Inquiry has been published: see here or here (pdf). The report makes 44 recommendations, the aim of which - to quote from the executive summary - is to provide a "blueprint for an efficient and resilient financial system over the next 10 to 20 years, characterised by the fair treatment of users". The Government is seeking views on the recommendations: see here.

Guernsey: insolvency law reform - consultation underway

A consultation is currently underway in respect of Guernsey's insolvency law regime. Opinions are sought on reform proposals concerning personal and corporate insolvency, in a discussion paper published by the Commerce and Employment Department: see here (pdf). The paper provides a useful overview of Guernsey's current insolvency law regime.

Amongst the questions asked in the consultation paper are the following. Should there be a single insolvency law statute? Is it necessary to create the office of 'official receiver' in Guernsey? Should there be a registration and licensing regime for insolvency practitioners? Should there be a widening of circumstances in which antecedent transactions are capable of challenge?  Should a register for fixed and floating charges be introduced?

Guernsey: GFSC discussion paper - revising the financial regulation laws

The Guernsey Financial Services Commission has published a discussion paper titled Revising the Bailiwick’s financial regulatory laws to maintain the Bailiwick’s reputation as an efficient and well-regulated international finance centre: see here (pdf). The paper contains many wide-ranging reform proposals, including the creation of a single statutory enforcement regime; prohibiting corporate directors from sitting on the boards of trust and corporate service providers; and giving the Commission the power to request meetings with the auditors of banks.

UK: The UK Corporate Governance Code - BSA guidance for building societies

The Building Societies Regulatory Guide states that building societies should have regard to the UK Corporate Governance Code when establishing and reviewing their corporate governance arrangements (see 1.3.2). Guidance for building societies in this regard has recently been published by the Building Societies Association, following the publication of a new UK Code earlier this year: see here (pdf).

UK: The Autumn Statement 2014

The Chancellor delivered the Autumn Statement earlier today: see here. The complete Autumn Statement report is available here (pdf). Within the field of corporate taxation, there are proposals to restrict the amount of loss relief available to banks in respect of losses incurred in previous accounting periods: see here. In respect of tax avoidance, the Government has also published a consultation paper setting out how it proposes to implement the agreed G20-OECD approach for addressing hybrid mismatch arrangements: see here. There are also plans to introduce a new tax on profits diverted out of the UK as the result of "aggressive tax planning techniques".

The Government has also announced (or should that be re-announced?) that it will introduce legislation that will give it the power to implement the OECD's model for country by country reporting.

The Autumn Statement also confirms the Government's support for the devolution of corporation tax in Northern Ireland and notes that legislation will be introduced in the current session of Parliament subject to the outcome of on-going cross party talks.

Singapore: Companies (Amendment) Act 2014 published in Gazette

Parliament passed the Companies (Amendment) Bill 2014 in October this year: see here (pdf). A copy of the Act was published yesterday in the electronic edition of the Government Gazette: see here (pdf). The Act amends the Companies Act (Chapter 50 of the revised 2006 edition). Background information is available here and also in the speech by Senior Minister of State for Finance and Transport, Mrs Josephine Teo, on the Bill's second reading: see here (pdf).

UK: The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014

The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014 were laid before Parliament late last month and come into force on 31 January 2015: see here or here (pdf). An explanatory memorandum is available here (pdf).

The Regulations replace the Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2009 (S.I. 2009/2615) and reduce the list of sensitive words and expressions for which companies, limited liability partnerships and businesses need approval to use in their name.

Europe: EBA opinion and report - credit institutions - meaning and perimeter

The European Banking Authority has published an opinion and report in respect to the meaning of 'credit institution': see, respectively, here (pdf) and here (pdf). In its report, the EBA calls upon the European Commission to consider clarifying the definition of credit institution to ensure that it is interpreted in the same way across the European Union. In the EBA's view, the single rulebook is undermined by the risk that the term could be interpreted differently by Member States.

The EBA has also noted wide differences between Member States in the prudential treatment of entitles that, whilst not credit institutions, carry on bank like activities. No recommendations are, however, offered about the perimeter of 'credit institution'.