Europe: ESMA fines and censures credit rating agency

The European Securities and Markets Authority has publicly censured a credit rating agency - DBRS Ratings Limited - for failing to comply with the corporate governance, compliance and record-keeping requirements under the Credit Rating Agencies Regulation (EU, No 462/2013): see here (pdf). A copy of the public notice is available here (pdf). ESMA also imposed a fine in respect of the record-keeping failures, the first time it has fined a credit rating agency. ESMA has sole responsibility for the registration and supervision of credit rating agencies in the European Union; see here for more about this particular function.

UK: Companies House - free access to all public, digital data

Companies House has announced that all public digital data held on the UK register of companies is now available to view free of charge: see here. It has also published a statistical release, for May 2015, with information about incorporated companies: see here (pdf).

Europe: Council position on banking structural reform

The Council of the European Union has agreed its negotiation position in respect of the proposals for structural reform of the banking sector: see here (pdf).

India: company law committee formed to review implementation of the Companies Act 2013

The Ministry of Corporate Affairs has set up a company law committee, the purpose of which is to review the implementation of the Companies Act 2013: see here (pdf). Public comments regarding the 2013 Act are invited: see here.

Australia: ASIC guidance - collective action by investors

The Australian Securities and Investments Commission has published an updated edition of Regulatory Guide 128 - Collective Action by Investors: see here (pdf). The guidance is intended for investors wanting to cooperate with each other in relation to their investment in a listed company or managed investment scheme. The guidance has been published by ASIC for two reasons: (1) to encourage collective action that can promote improvements in corporate governance for the long-term benefit of the entity; and (2) to deter investors from taking action that is inconsistent with the letter or spirit of the takeover and substantial holding provisions within the Corporations Act 2001.

UK: High Pay Centre report - are remuneration consultants independent?

The High Pay Centre has published a report titled Are Remuneration Consultants Independent?: see here (pdf). The report contains the results of a study of the disclosures made by companies in the UK FTSE Eurofirst 100 index in respect of their relationship with remuneration consultants. The report notes (to quote directly from it):

... despite legislation and the adoption of the voluntary RCG code, the extent of commercial relationships between firms which are cited as providers of remuneration services to remuneration committees and the companies to which services are provided, remains undisclosed. Almost all of the companies buying remuneration services from code signatories were also employing the same firm to provide services other than remuneration services.

Assertions of independence by reference to a voluntary code is a poor substitute for information which allows users of remuneration reports to understand the commercial ties that bind companies with the providers of remuneration services".

UK: PRA and FCA publish new remuneration rules

The Prudential Regulation Authority and Financial Conduct Authority have published a joint policy statement, titled Strengthening the alignment of risk and reward, in which new remuneration rules are set out: see here (pdf). These new rules, the PRA and FCA state, should be read alongside a forthcoming publication (expected soon) containing joint rules for increasing individual accountability in banking.

Isle of Man: winding-up orders and the inherent jurisdiction of the court

Judgment was given several days ago in Spirit of Montpelier v Lombard Manx (Case 9 of 2014): see here. This is an important decision on the role of the court in the context of insolvency. The court unanimously held that the Manx courts have an inherent jurisdiction at common law to review, rescind or vary a winding-up order where such an order is necessary in the interests of justice. This jurisdiction, the court held, should only be exercised where there has been a material change in circumstances since the making of the order, or if the facts on which the original order had been made were mistaken, innocently or otherwise, or if there had been a manifest mistake on the part of the judge in formulating the order.

UK: Law Commission consultation - consumer prepayments on retailer insolvency

The Law Commission for England and Wales has published a consultation paper setting out reform proposals in respect of the position of consumer prepayments on retailer insolvency: see here (pdf). A summary of the consultation paper is available here (pdf).

Reform options are outlined in five areas: (a) the chargeback scheme; (b) facilitating possible means of protection; (c) possible regulation of high risk sectors; (d) limited preferential status for consumers making large payments in the months leading up to insolvency and not otherwise protected; and (e) changing the rules governing the passing of ownership.

UK: PSC Register - draft legislation published

The Department for Business, Innovation and Skills (BIS) has published a consultation paper, including draft legislation (the Register of People with Significant Control Regulations 2015), which sets out how the new People with Significant Control Register will operate: see here (pdf). The Regulations cover: the scope of the register; how the nature of control is recorded on the register; the fees that companies can charge in making available information on the register; the circumstances in which certain information can be withheld from the public register; and how companies can compel others to provide information.

Update (23 June 2015): an updated consultation paper was published today. The update contained this announcement from BIS: there will be a delay in the introduction of the ban on appointing corporate directors, originally scheduled for October 2015. According to the consultation paper, it will now come into force in April 2016.

South Africa: King IV code - progress report

An update on the work being undertaken in South Africa to produce a new corporate governance code - to be known as King IV - has been published by the Institute of Directors: see here (pdf).

UK: IOD asks - what is good corporate governance?

Earlier this week the Institute of Directors, in conjunction with Cass Business School, published a report titled The Great Governance Debate – Towards a Good Governance Index for Listed Companies: see here (pdf). The report sets out a new framework for measuring good governance and is intended to be the first step in the creation of a Good Governance Index for ranking companies that is intended to capture factors beyond formal compliance with governance codes.

Europe: OMT Programme compatible with EU Law

The Court of Justice of the European Union gave its opinion yesterday in Gauweiler and Others (Case C-62/14). A summary of the decision is available here (pdf). The court held that the so-called OMT Programme, which provided for the purchase of government bonds on secondary markets by the European System of Central Banks, was compatible with European Union Law.

Pakistan: Securities Act 2015 published in the National Gazette

A copy of the Securities Act 2015, which replaces the 1969 Securities and Exchange Ordinance, has been published in the National Gazette of Pakistan: see here (pdf). An overview of the new Act has been provided by the SECP: see here (pdf).

UK: FCA final rules - restrictions on the retail distribution of regulatory capital instruments

Following a consultation that ended earlier this year, the Financial Conduct Authority has published its final rules in respect of the restrictions on the retail distribution of regulatory capital instruments: see here (pdf).

UK: NAPF report 'Where is the workforce in corporate reporting?'

The National Association of Pension Funds has published a discussion paper on the subject of companies' reporting of their approach to workforce management: see here (pdf). Based on a survey of reporting by FTSE100 companies, the paper notes that the quantitative and qualitative reporting by companies is very limited. The paper suggests four areas where better reporting is required and provides suggested metrics: the composition of the workforce (e.g., full-time, part-time, temporary, permanent); the stability of the workforce; the skills and capabilities of the workforce; and the motivation and engagement of the workforce.

IOSCO report - Good Practices on Reducing Reliance on CRAs in Asset Management

The International Organization of Securities Commissions has published its final report Good Practices on Reducing Reliance on CRAs in Asset Management: see here (pdf). The report is addressed to national regulators, asset managers and investors. It suggests specific practices that can be undertaken to reduce the potential over-reliance on external credit ratings, whilst noting that such ratings can provide useful, and sometimes necessary, benchmarks for asset managers and investors.

UK: Mark Carney's Mansion House speech - ethical drift, social licence and markets

Dr Mark Carney, the Governor of the Bank of England, delivered a speech yesterday at the Mansion House in London titled 'Building real markets for the good of the people': see here (pdf). A few hours earlier, the final report and recommendations of the Fair and Effective Markets Review (FEMR) had been published. Here are some extracts from Dr Carney's speech, in which he endorsed the FEMR report:

Markets are not ends in themselves, but powerful means for prosperity and security for all. As such they need to retain the consent of society – a social licence – to be allowed to operate, innovate and grow. Repeated episodes of misconduct have called that social licence into question. ... Real markets are resilient, fair and effective. They maintain their social licence ...

We need a better balance between individual and firm accountability ... [I]ndividuals must be held to account ... [F]irms must take greater responsibility for the system by improving the quality, clarity and market-wide understanding of FICC trading practices ... [K]ey elements of the Senior Managers Regime should be extended to all firms active in wholesale FICC markets, including dealers and asset managers. That means all senior managers would have clearly defined responsibilities and would be answerable for training, certifying and monitoring the material risk takers they supervise ...

It’s vital that we – public authorities and private market participants – work together to reverse the tide of ethical drift. This cannot be a one-off exercise. We need continuous engagement so that market infrastructure keeps pace with market innovation."

UK: Fair and Effective Markets Review - final report published

The Fair and Effective Markets Review was set up by the Chancellor in June 2014 and given two objectives: [1] reinforcing confidence in the fairness and effectiveness of wholesale financial market activity conducted in the United Kingdom; [2] influencing the international debate on trading practices, including highlighting issues that can only be addressed through co-ordinated international action. The Review's final report and recommendations were published today: see here (pdf). A summary is available in the accompanying press release. Further information, including the terms of reference and responses to the earlier consultation paper, is available here.

UK: The Companies Act 1947 - farewell

Writing in the first issue of the Modern Law Review to appear in 1948, Professor Sir Otto Kahn-Freund (as he was to become) observed that it "... is difficult to write a comprehensive and succinct review of a statute [the Companies Act 1947] which is intended to be a series of amendments of the existing law" (full text here, pdf, at p. 81). Although now obsolete, several sections of the 1947 Act remain on the statute book but perhaps for not much longer: the Act is listed for repeal in the Law Commission's report Statute Law Repeals: Twentieth Report Draft Statute Law (Repeals) Bill, published earlier this month.

Europe: ESMA call for evidence on the Best Practice Principles for Providers of Shareholder and Voting Research and Analysis

The European Securities and Markets Authority has published a call for evidence on the impact of the Best Practice Principles for Providers of Shareholder Voting Research and Analysis: see here.

Ireland: Companies Act 2014 implementation - more secondary legislation published

The Companies Act 2014, which contains Ireland's new company law framework, became law last December: see here. The Act will be brought into force on 1 June this year by the Companies Act 2014 (Commencement) Order 2015 (as amended by the Companies Act 2014 (Commencement) (No. 2) Order 2015). Further information about the Act and its implementation is available here. In addition to the secondary legislation already passed - and noted here - the following have recently been published on the Irish Statute Book website (all in pdf):

• Companies Act 2014 (Fees) Regulations 2015.
• Companies Act 2014 (Recognised Stock Exchanges) Regulations 2015.
• Companies Act 2014 (Bonding) Order 2015.
• Companies Act 2014 (Part 14 Prescribed Officers) Regulations 2015.
• Companies Act 2014 (Section 580(4) Members Voluntary Winding Up Report) Regulations 2015. 
• Companies Act 2014 (Section 208 Report) Regulations 2015.
• Companies Act 2014 (Section 623 Account) Regulations 2015.
• Companies Act 2014 (Section 682) Regulations 2015.
• Companies Act 2014 (Disqualification and Restriction Undertakings) Regulations 2015.
• Companies Act 2014 (Section 1313) Regulations 2015.
• Companies Act 2014 (Section 150) Regulations 2015.

South Africa: Sharia law and mora interest

The Supreme Court of Appeal gave judgment last month in Lodhi 5 Properties Investments v Firstrand Bank Limited (170/14) [2015] ZASCA 72: see here (pdf). A summary of the decision is available here (pdf). The court held that a debtor was liable to pay mora interest in respect of its delayed payment of an outstanding debt to a bank, under a loan agreement governed by Sharia law. The court found that mora interest was not interest payable in respect of the loan of money: it was instead the damages that arose because of the debtor's failure to perform an obligation and was not, therefore, subject to the Sharia law prohibition on the charging of interest on loan debts.

Ireland: Companies Act 2014 implementation - further secondary legislation

The Companies Act 2014, which contains Ireland's new company law framework, became law last December: see here. The Act will be brought into force on 1 June this year by the Companies Act 2014 (Commencement) Order 2015. Secondary legislation relating to the Act has been made - including the Companies Act 2014 (Forms) Regulations 2015 - and, most recently, the Companies Act 2014 (Section 897) Order 2015: see here (pdf). Further information about the Act and its implementation is available here.

UK: FCA hedge fund survey published

The Financial Conduct Authority has published the latest edition of its annual hedge fund survey: see here (pdf).

UK: FRC consultation - improving the quality of reporting by smaller listed and AIM quoted companies

The Financial Reporting Council has published a consultation paper in which it sets out proposals to improve the quality of reporting by smaller listed and AIM quoted companies: see here (pdf).

Netherlands: consultation later this year on revised corporate governance code

The Dutch Corporate Governance Code Monitoring Committee has announced that it will later this year consult on revisions to its governance code. Further information, in Dutch, is available here.