Friday 30 January 2015

UK: Accountants, misconduct and the public interest

In 2013 a Disciplinary Tribunal of the Financial Reporting Council held that various allegations of misconduct has been proved against Deloitte & Touche and one of the firm's partners: see here. The Tribunal's decision, according to the FRC, provided "a strong and clear message to all members of the accountancy profession about their responsibility to act in the public interest and comply with their code of ethics".

An appeal was made and the outcome published today: see here. A copy of the Appeal Tribunal's decision is available here (pdf). The Appeal Tribunal upheld some, but not all, of the findings of misconduct. The Tribunal endorsed various parts of the ICAEW's Guide to Professional Ethics and also discussed what the Guide said about the public interest and its relevance in deciding whether to accept (or continue) an appointment. The difficulties applying the public interest requirements contained in the Guide were noted by the Tribunal and it held that these requirements alone could not form the basis of a charge of misconduct against an accountant. The FRC has said, in a short announcement, that it will work with the accountancy profession to address the lack of clarity regarding the public interest requirements.

Thursday 29 January 2015

Europe: ECB - recommendation on dividend distribution policy | variable remuneration review

The European Central Bank, in its banking supervisory role, has published a recommendation to banks in respect of their dividend distribution policy: see here (pdf). Banks adopting divided policies that do not follow the ECB's recommendation are required to explain why. The ECB has also announced that it is undertaking a review of variable remuneration: see here.

Canada: Securities Administrators provide update on their review of proxy voting infrastructure

The Canadian Securities Administrators have published a progress report in respect of their review of the proxy voting infrastructure: see here (pdf). According to the report, the current proxy voting infrastructure is antiquated and fragmented and needs to be improved. Various improvements are identified and the report recommends that all entities playing a role in vote reconciliation should assess their meeting vote reconciliation processes to identify and implement any immediate steps to improve the accuracy and reliability of vote reconciliation.

Wednesday 28 January 2015

UK: The Financial Services and Markets Act 2000 (Regulation of Auditors and Actuaries) (PRA Specified Powers) Order 2015

The Financial Services and Markets Act 2000 (Regulation of Auditors and Actuaries) (PRA Specified Powers) Order 2015 was laid before Parliament yesterday and will come into force on 20 February 2015: see here or here (pdf).

The purpose of the Order is to bring into force provisions which permit the Prudential Regulation Authority, amongst other things, to disqualify an auditor or actuary from acting as such for any PRA-authorised person or particular class of PRA-authorised person. This power, contained in section 345A of the Financial Services and Markets Act 2000 (and inserted under Schedule 13 of the Financial Services Act 2012), required an Order by the Treasury to be brought into force. An explanatory memorandum is available here (pdf).

Tuesday 27 January 2015

Denmark: Revised edition of the Recommendations on Corporate Governance

The codes and principles directory maintained by the European Corporate Governance Institute was updated yesterday with a revised copy of the Recommendations on Corporate Governance published by the Danish Committee on Corporate Governance: see here. The introduction to the Recommendations has been amended to take into account the European Commission recommendation on the quality of corporate governance reporting (2014/208/EU).

Note: The ECGI's link to the English version of the revised Recommendations is not currently working; a direct link, from the Governance Committee's website, is available here (pdf).

UK: England and Wales: Registrar of Companies owed common law duty of care

Judgment was given yesterday in Sebry v Companies House [2015] EWHC 115 (QB). The trial judge held that the Registrar of Companies owed a common law duty of care when entering a winding up order on the Register to take reasonable care to ensure that the order was not registered against the wrong company. This duty was owed to any company that was not in liquidation but which was wrongly recorded on the Register as having been wound up by order of the court. The duty required the Registrar to take reasonable care to enter the order on the record of the company named in the order and not any other company. It did not extend to checking information supplied by third parties: it extended only to entering information accurately on the Register.

Monday 26 January 2015

UK: Implementation of the Mortgage Credit Directive

HM Treasury has published a summary of responses in respect of its consultation on the implementation of the Mortgage Credit Directive (Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property): see here (pdf). Accompanying the publication is a copy of the Mortgage Credit Directive Order 2015 that will shortly be laid before Parliament: see here (pdf).

Friday 23 January 2015

New Zealand: FMA Handbook - Corporate Governance in New Zealand, Principles and Guidelines

Following a consultation last year, the Financial Markets Authority has published a new edition of its handbook Corporate Governance in New Zealand - Principles and Guidelines: see here (pdf). The handbook was first published in 2004 by the Securities Commission (now replaced by the FMA) and is a reference guide to help directors and their advisers decide how best to apply the nine key corporate governance principles.

UK: JCPC considers claim for rectification of share register

The Judicial Committee of the Privy Council gave its opinion earlier this week in Nilon Limited v Royal Westminster Investments S.A. [2015] UKPC 2 (an appeal from the Court of Appeal of the British Virgin Islands). The case concerned a claim for an order for rectification of Nilon’s register of members under section 43(1)(a) of the BVI Business Companies Act 2004 (the equivalent of section 125 of the Companies Act 2006).

At issue was whether proceedings for rectification of the register were permitted only if the register was presently inaccurate or whether the proceedings could be used to determine if a party was in breach of contract by failing to procure a company to issue shares. It was the former (according to Lord Collins, delivering the opinion of the Board): proceedings could only be brought where the applicant had a right to registration by virtue of a valid transfer of legal title. It was not enough to have a prospective claim against the company, dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract. In reaching this view, Lord Collins held that the English decision Re Hoicrest Ltd [2000] 1 WLR 414 was wrong as a matter of principle (however sensible it may have been as a matter of case management).

Thursday 22 January 2015

UK: The Corporation Tax (Northern Ireland) Bill 2014-15

The Corporation Tax (Northern Ireland) Bill 2014-15 was introduced in Parliament earlier this month and received its First reading: see here. A copy of the Bill, as introduced, is available here (pdf) and explanatory notes are available here (pdf). The purpose of the Bill is to give the Northern Ireland Assembly the power to set the main rate of corporation tax for certain trading profits (to be known as the 'Northern Ireland rate').

Wednesday 21 January 2015

Europe: the gender diversity of listed company boards

The European Commission has published research regarding the proportion of board positions occupied by women in the largest EU listed companies: see here (pdf). The research found that, on average, 20.2% of board members were women.

Tuesday 20 January 2015

UK: Supreme Court to hear appeal in collective investment scheme case

In Financial Services Authority v Asset L I Inc (t/a Asset Land Investment Inc) [2013] EWHC 178 (Ch)[2013] WLR (D) 54 the trial judge held that certain sales of land were collective investment schemes as defined by section 235 of the Financial Services and Markets Act 2000. This finding was challenged before the Court of Appeal last year but rejected (see [2014] EWCA Civ 435). Several days ago the Supreme Court announced that it would hear an appeal from the Court of Appeal's decision: see here (pdf).

Monday 19 January 2015

UK: Small Business, Enterprise and Employment Bill - Parts 7 and 8 - provisional implementation plan

The Department for Business, Innovation and Skills has published a provisional implementation plan for Part 7 ("Companies: transparency") and Part 8 ("Company Filing Requirements") of the Small Business, Enterprise and Employment Bill: see here (pdf). This explains, amongst other things, that the prohibition (with exceptions) on corporate directors will come into force in October 2015 and that companies will no longer be able to issue bearer shares two months after the Bill has received Royal assent. The Bill is currently before the House of Lords and its Committee stage will resume today.

UK: Restricting share capital reductions in takeovers

Last year, in the Autumn Statement, the Government announced that in order to protect the stamp duty tax base it would introduce legislation to prevent the use of 'cancellation' schemes of arrangement for company takeovers (such schemes enable stamp duty tax to be avoided). A draft of the proposed legislation - The Companies Act 2006 (Amendment of Part 17) Regulations 2015 - has now been published (see here, pdf) together with an information and impact note (herepdf).

UK: Transparency in UK bond markets

The Financial Conduct Authority has published a new paper in its occasional paper series, Transparency in the UK bond markets: see here (pdf). The FCA's paper finds a significant degree of diversity in the UK bond markets, with large differences between market participants, the ways in which they trade and the risks involved in trading different instruments.

Friday 16 January 2015

UK: The PRA's recovery and resolution planning framework

The Prudential Regulation Authority has today published several documents (containing policy statements and rules) which together set out its recovery and resolution planning framework: see here. The statements and rules are relevant for holding companies, mixed financial holding companies, mixed activity financial holding companies, banks, building societies, and PRA-designated investment firms.

Thursday 15 January 2015

UK: FRC publishes annual review of governance and stewardship

The Financial Reporting Council has published its annual review Developments in Corporate Governance and Stewardship: see here (pdf). The report provides: an assessment of corporate governance and stewardship in the UK; a report on the quality of compliance with, and reporting against, the UK Corporate Governance Code and UK Stewardship Code; findings in respect of the quality of engagement between companies and shareholders; an indication of the changes in governance behaviour or reporting that the FRC would like to see; and a summary of other developments, including changes to the regulatory framework within the UK and at European level (e.g., the European Commission's Recommendation on the quality of corporate governance reporting (2014/208/EU) and the proposed new Shareholder Rights Directive). .

A few points from the report follow. The FRC believes that the quality of corporate governance in the UK is high but it nevertheless identifies areas where improvements can be made. One such area is the quality of explanations provided as part of 'comply or explain', in particular where companies explain why, in departing from the Code, their chosen arrangements are appropriate.

The role of proxy advisors is discussed in the report because of the mixed reports that FRC has received about the quality of reporting, engagement and voting outcomes which result from the relationship between some proxy advisors and their clients. The FRC will be considering what role it can play in improving engagement and communication between the parties. The FRC will also be publishing a discussion document this year on succession planning and will also begin work to assess how effective boards are at establishing company culture and embedding appropriate behaviour.

With regard to the UK Stewardship Code, the FRC is concerned that too many signatories do not do what they have signed up to do. The standard of reporting by signatories is also variable. The first half of 2015 will see the FRC begin a project on how it can best promote a culture of stewardship; it will also increase its scrutiny of adherence to the Code.

Wednesday 14 January 2015

Europe: Advocate General finds ECB OMT programme compatible with EU law

Advocate General Cruz Villal√≥n, in an opinion for the Court of Justice of the European Union in case C‑62/14, has advised that the European Central Bank's Outright Monetary Transaction programme is compatible, in principle, with EU law: see here. A summary of the opinion, which is not binding on the court, is available here (pdf).

Tuesday 13 January 2015

UK: The Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015

The Company, Limited Liability Partnership and Business (Names and Trading Disclosures) Regulations 2015 were made a few days ago and come into force on 31 January: see here or here (pdf). This statutory instrument will consolidate several existing instruments relating to trading disclosures and company, limited liability partnership and business names. Further information is available in the accompanying explanatory memorandum: see here (pdf). An impact assessment has also been published: see here (pdf).

Monday 12 January 2015

UK: BDO's review of board composition

Towards the end of last year, BDO published the results of its analysis of the board composition of over 1,700 quoted companies (including those within the FTSE100, FTSE250, FTSE Small Cap, Fledgling and AIM markets): see here (pdf).

The analysis considered the age, gender and tenure of executive and non-executive directors. Amongst the findings were these: age diversity is greatest on AIM, where directors’ ages ranged from the mid-20s to 94; in FTSE 100 companies, chairmen are most likely to be appointed from within their own boards.

Friday 9 January 2015

UK: The Money Laundering (Amendment) Regulations 2015

The Money Laundering (Amendment) Regulations 2015 were laid before Parliament today and come into force on 6 February: see here or here (pdf). An explanatory memorandum is available here (pdf). The Regulations provide that the Chartered Institute of Legal Executives will become a supervisory authority for the purposes of the Money Laundering Regulations 2007. General information about the framework created by the Regulations is available here.

Thursday 8 January 2015

UK: FCA uses new powers to fine sponsor

The Financial Conduct Authority has, for the first time, used new powers to fine a sponsor: see here. A copy of the FCA's final notice is available here (pdf). The fine was imposed under section 88A of the Financial Services and Markets Act 2000, inserted in the 2000 Act by section 18 of the Financial Services Act 2012.

Wednesday 7 January 2015

UK: Bank of England Court of Directors - minutes during the crisis period

Following a request from the Treasury Committee, the Bank of England has released, in redacted form, minutes for the Court of Directors during the crisis period of June 2007 to May 2009: see here. The minutes - and what they reveal about the actions of the Bank - are widely discussed in the media: see, for example, here and here.

UK: Takeover Code - mandatory bids - new note for rule 9.1

The Takeover Panel has published a new note on Rule 9.1 (the mandatory offer) of the Takeover Code: see here (pdf). The new note provides that, in the case of a company to which the Takeovers Directive applies, Rule 9.1 does not apply in relation to any change in interests in shares or other transaction which is effected by the use of resolution tools, powers and mechanisms (within the meaning given in article 216 of the Bank Recovery and Resolution (No. 2) Order 2014).

Tuesday 6 January 2015

UK: The Bank Recovery and Resolution Order 2014

The Bank Recovery and Resolution Order 2014 was made last month and came into force on 1 January: see here or here (pdf). The Order is one of several that implement Directive 2014/59/EU (establishing a framework for the recovery and resolution of credit institutions and investment firms). An explanatory memorandum is available here (pdf). A transposition note for the Directive is available here (pdf).

Monday 5 January 2015

Australia: Productivity Commission inquiry - barriers to setting up, transferring and closing a business - issues paper published

The Productivity Commission - as part of its public inquiry into the barriers to setting up, transferring and closing a business (and identifying options for reducing barriers where appropriate) - has published an issues paper: see here (pdf) or here (docx). As would be expected, the paper asks questions concerning the operation of the corporate and personal insolvency regimes.

Friday 2 January 2015

Pakistan: SECP feedback statement on the proposed framework for limited liability partnerships

The Securities and Exchange Commission has published a feedback statement for the comments received in respect of its recent consultation on a proposed framework for the introduction of limited liability partnerships: see here (pdf).

Malaysia: annual report disclosures and the 2012 corporate governance code

Bursa Malaysia has published the results of its review of corporate governance disclosures in annual reports by 300 issuers listed on the Main and ACE markets: see here (pdf). The report is the first to be published by Bursa Malaysia in respect of disclosure following the introduction of the Malaysian Code of Corporate Governance 2012. An overview of the report's findings is available here.

Japan: draft corporate governance code - copy in English published

A copy, in English, of the draft corporate governance code published last month by the Council of Experts is now available: see here (pdf). Comments are invited: see here.