Friday 29 April 2016

Malaysia: company law reform - Companies Bill passed by the Dewan Negara

The Companies Bill 2015 (Rang Undang-Undang Syarikat 2015) was passed by the House of Representatives (Dewan Rakyat) several weeks ago: see here. Yesterday it was passed by the Senate (Dewan Negara) and now awaits the assent of the King (Yang di-Pertuan Agong). The record of debate in the Dewan Negara is available here (pdf). A copy of the Act, which will contain Malaysia's new company law framework, will be published in the Federal Gazette: see here.

Gibraltar: Court of Appeal judgment on the restoration of companies to the register

Last month it was held by Mr Justice Jack, sitting in the Supreme Court, that the Registrar of companies and court did not have the power, under the Companies Act 2014 (pdf), to restore to the register a company that had been struck off under the Companies Act 1930 (pdf): see here (pdf). An appeal was promptly made and heard; and, a week or so ago, the Court of Appeal (Sir Colin Rimer JA, Dame Janet Smith JA and Dudley CJ) gave judgment: see here (pdf).

The court unanimously held that a company struck off the register under the 1930 Act (the predecessor of the 2014 Act) could be restored to the register, finding that a right of restoration continued, notwithstanding the repeal of the 1930 Act, in accordance with section 33 ("Effect of repeal") of the Interpretation and General Clauses Act 1962 (pdf). Further information, and clarification concerning the application process for restoration, has been provided by Companies House Gibraltar: see here (pdf).

Wednesday 27 April 2016

UK: FRC publishes updated edition of the UK Corporate Governance Code

The Financial Reporting Council today published an updated edition of the UK Corporate Governance Code, which will apply to accounting periods beginning on or after 17 June 2016: see here (pdf). The code applies to all companies with a Premium Listing, whether incorporated in the UK or elsewhere.

Canada: Supreme Court to hear oppression remedy case

Earlier this month the Supreme Court granted leave to appeal in a case heard by the Quebec Court of Appeal, Black v Alharayeri 2015 QCCA 1350, that will provide the court with the opportunity to consider (again) the oppression remedy found in section 241 of the Canada Business Corporations Act 1985. The progress of the case (including the likely hearing date) can be followed here.

Tuesday 26 April 2016

Europe: Capital Markets Union Action Plan - first status report published

The European Commission has published its first status report, following publication last September of its Capital Markets Union Action Plan: see here (pdf). The report is intended primarily to help policymakers track the progress of the various actions and initiatives in the action plan. It includes, for example, an update on the proposal for a Regulation on the prospectus to be published when securities are offered to the public or admitted to trading (COM(2015) 583 final, 30.11.2015). It notes, too, that the Commission will soon publish a report on crowdfunding in the European Union.

Monday 25 April 2016

UK: Companies and the EU referendum

The Cabinet Office has published guidance for companies on how they are affected by the rules on campaigning during the EU referendum period: see here.

Friday 22 April 2016

UK: The Financial Services (Banking Reform) Act 2013 (Commencement No. 10) Order 2016

The Financial Services (Banking Reform) Act 2013 (Commencement No. 10) Order 2016 was made earlier this week and brought into force, yesterday, further provisions of the framework for ring fencing banking activities under the 2013 Act. Information about the Order is available in the accompanying explanatory note and for information about the provisions of the 2013 Act that have been brought into force by earlier Orders, see here.

Thursday 21 April 2016

South Korea: public consultation on proposed amendments to the corporate governance code

The Korea Exchange and Corporate Governance Services held a public meeting a few days ago to discuss proposed amendments to the South Korean Corporate Governance Code: see here. Information about the proposed amendments has not yet been published in English but is available in Korean: see here.

France: revised edition of the AFEP/MEDEF Corporate Governance Code for Listed Companies

A belated post: at the end of 2015, a revised edition of the AFEP/MEDEF Corporate Governance Code for Listed Companies was published. A copy of the revised code, in English, is available here (pdf).

Wednesday 20 April 2016

UK: Supreme Court judgment on collective investment schemes

The Supreme Court gave judgment earlier today in Asset Land Investment Plc v The Financial Conduct Authority [2016] UKSC 17 (on appeal from [2014] EWCA Civ 435). The court unanimously held that the arrangements in question, which centred on the selling of individual plots of land at six possible development sites, amounted to the operation of a 'collective investment scheme' within section 235 of the Financial Services and Markets Act 2000, and were therefore regulated activities for the purposes of the general prohibition found in section 19 of the Act. A summary of the judgment, which provided the court with its first opportunity to consider the regulation of collective investment schemes, is available here (pdf). A summary was also delivered before the court by Lord Carnwath: see the video recording below.

Tuesday 19 April 2016

Malaysia: Securities Commission consults on updated corporate governance code

The Securities Commission has published for public comment a revised edition of the Malaysian corporate governance code: see here (pdf). The code was first introduced in 2000 on a 'comply or explain' basis (see here, pdf). The revised edition will operate using 'apply or explain an alternative', the view being that the comply or explain approach caused some companies to adopt a mechanistic approach to corporate governance.

Barbados: legislation passed to permit the creation of incorporated cell companies

Legislation - the Companies (Amendment) Act, 2016 - was passed earlier this year to amend the Companies, Cap. 308, to enable incorporated cell companies to be created in Barbados: see here. A copy of the 2016 Act is available here (pdf).

Monday 18 April 2016

UK: new corporate offence - the failure to prevent the criminal facilitation of tax evasion - consultation on legislation and guidance

Last year HMRC consulted on the legislation required to introduce the new corporate criminal offence of the failure by a company or partnership to prevent the criminal facilitation of tax evasion: see here (pdf). A further consultation paper was published yesterday, with revised legislation and guidance, for public comment: see here (pdf).

UK: Treasury Committee inquiry into bank capital standards

In an announcement last Friday, the chairman of the House of Commons Treasury Committee, the Rt Hon Andrew Tyrie MP, announced that the Committee would soon begin an inquiry into bank capital standards: see here. This follows the Committee's publication of a letter (here, pdf), from the Governor of the Bank of England to the Committee, concerning the disagreement between Sir John Vickers (chairman of the Independent Commission on Banking) and the Financial Policy Committee over the implementation of the systemic risk buffer.

USA: The Gender Diversity in Corporate Leadership Bill introduced in the House of Representatives

Last month the Gender Diversity in Corporate Leadership Bill (H.R. 4718) was introduced in the House of Representatives by Rep. Carolyn B. Maloney and referred to the House Committee on Financial Services. If enacted the Bill will, amongst other things, amend the Securities Exchange Act of 1934 to direct the Securities and Exchange Commission to require issuers to disclose the gender composition of the issuer's board of directors, and nominees for it, in any proxy or consent solicitation material for an annual shareholders meeting. A copy of the Bill is available here (pdf) and its progress can be followed here.

Friday 15 April 2016

UK: PRA policy and supervisory statements on the responsibilities of boards

The Prudential Regulation Authority has published a policy statement and accompanying supervisory statement concerning the responsibilities of boards: see, respectively, here (pdf) and here (pdf). The supervisory statement has been produced primarily for the boards of firms regulated by the PRA, and it identifies those aspects of governance regarded as particularly important by the PRA. Key issues for boards to consider are identified and the board's collective responsibility is emphasised. The statement is not, however, a comprehensive guide to good governance; moreover, the PRA makes clear that the supervisory statement does not replace its exercise of supervisory judgment.

Hong Kong: Court of Final Appeal considers directors' fiduciary duties

The English decision London and Mashonaland Exploration Co Ltd v New Mashonaland [1891] WN 165 has invariably been seen as authority for the proposition that the holding per se of directorships in competing companies is not objectionable (see e.g., Bell v Lever Brothers [1932] AC 161). The Mashonaland decision is widely cited, sparsely reported and, in recent years, much criticised (see, e.g., Commonwealth Oil and Gas Company v Baxter [2009] CSIH 75; Plus Group Ltd v Pyke [2002] EWCA Civ 370; Links Golf Tasmania Pty Ltd v Sattler [2012] FCA 634).

Such criticism has now been made at the highest appellate level in Hong Kong in an important Court of Final Appeal decision on directors' fiduciary duties: Cheng Wai Tao v Poon Ka Man Jason [2016] HKCFA 23. To quote Mr Justice Spigelman NPJ: "The duty of diligence expected from contemporary directors ... makes Mashonaland an anachronistic authority on which reliance cannot now be placed" (para. [98]).

A summary of the court's decision, in English, is available here.

Thursday 14 April 2016

UK: Supreme Court judgment next week in collective investment scheme case

Next week, on Wednesday, the Supreme Court will hand down its judgment in Asset Land Investment Plc v The Financial Conduct Authority (on appeal from [2014] EWCA Civ 435), in which the principal question before it was the meaning of 'collective investment scheme' within section 235 of the Financial Services and Markets Act 2000.

Singapore: Court of Appeal considers the statutory derivative action

The Court of Appeal has in Petroships Investment Pte Ltd v Wealthplus Pte Ltd [2016] SGCA 17 provided important guidance on the operation of the statutory derivative action under section 216A of the Companies Act (Cap 50, 2006 Rev Ed) and, in doing so, held that such actions cannot be brought where a company is in liquidation. A copy of the court's judgment, delivered by Andrew Phang Boon Leong JA (the other justices being Sundaresh Menon CJ and Chao Hick Tin JA), is available here (pdf).

Wednesday 13 April 2016

Europe: Commission publishes proposals for country-by-country reporting and tax transparency

The European Commission yesterday published its proposals for a Directive that will require multinationals operating in the EU with global revenues exceeding EUR 750 million a year to publish information on where they make their profits and where they pay their tax in the EU on a country-by-country basis. This information would also be required in respect of those jurisdictions seen as not abiding by appropriate tax governance standards. Whilst the proposal will bring about greater disclosure, it will not introduce a framework for full and complete country-by-country reporting by multinational companies, and some information about tax paid will continue to be aggregated.

The proposed Directive will amend the Accounting Directive (Directive 2013/34/EU). For further information see: Text of the proposal (pdf) | Impact assessment: summary (pdf) and full text (pdf) | Commission press release | Fact sheet | FAQsPress conference video recording |.

Ireland: CLRG report on the representation of companies in court

The Company Law Review Group has published its report and recommendations on the representation of companies in court (more particularly, the common law rule that companies can only appear or be represented in court by a solicitor or counsel): see here (pdf). The CLRG has concluded:

Given the stated policy of the Irish Courts to work around the rule where the requirements of justice dictate, and the unique position of the courts to be able to measure the need for such exceptions, the Company Law Review Group remains to be convinced of the need for wider reform of the rule, though it is not indisposed to wider reform in principle if introduced in the proper context. The Company Law Review Group considers that in the absence of a general overhaul of civil procedure rules or concerted action with the Rules Committees of the Courts, the most that can be achieved by means of a change to the Companies Act 2014 is a statutory restatement of the rule, and that any further relaxation of the rule by means of provision in the Companies Act 2014 should be limited to specific corporate proceedings such as applications to extend the time for filing of Annual Returns. Wider reform would have consequences for grander policies on access to justice and rights of audience in the civil courts – matters beyond the remit of the Company Law Review Group. The Company Law Review Group would make itself available to the relevant bodies as part of any such wider reform as a number of specific company related issues might be addressed in such measures".

Tuesday 12 April 2016

Netherlands: a governance code for single tier board companies

The Dutch Corporate Governance Code Monitoring Committee has announced that it will include, in the updated edition of the Dutch Corporate Governance Code due later this year, an appendix containing a version of the Code suited to companies with a single board structure: see here. The option of having a single tier board was introduced several years ago. The main Code will continue to be prepared from the perspective of companies adopting a two-tier board.

Monday 11 April 2016

UK: consultation on conversion to a charitable incorporated organisation

A joint consultation paper, from the Cabinet Office and Charity Commission, seeks views on the introduction of a process to permit community interest companies and charities formed as companies limited by guarantee to convert into a charitable incorporated organisation (CIO): see here. The CIO legal form was introduced in 2013 and, since then, over 6,500 have been registered with the Charity Commission.

Mauritius: 'apply and explain' and a new governance code

The National Committee on Corporate Governance has published for public comment a draft of a new corporate governance code: see here (pdf). The code contains eight mandatory principles with supporting guidance and recommendations and, to quote from page six of the document containing the Code, it is:

Based on a philosophy of application coupled with disclosure, the Code employs an ‘apply-and-explain’ methodology. The Code of Corporate Governance for Mauritius is the first to adopt this new approach to corporate governance. This is a departure from the ‘comply-or-explain’ approach associated with the Cadbury Report in the UK (1992) and the ‘apply-or-explain’ approach associated with the Dutch Tabaksblat Code of Corporate Governance (2004) and the King III Report in South Africa (2009)."

A couple of comments (not intended, in any way, as criticism). First, a draft of South Africa's new corporate governance code - known as King IV - was published earlier this year and this adopts 'apply and explain'. Second, useful as these labels may be in describing an ethos or tradition, do they fully capture the way in which governance codes and frameworks operate in practice?  For example, is the approach proposed for Mauritius very different from that in the United Kingdom where Listing Rule 9.8.6 requires listed companies to apply the Main Principles of the UK Corporate Governance Code and to provide information about their compliance (or not) with the Code's provisions?

Friday 8 April 2016

Europe: Commission consultation on the EU insolvency law framework

The European Commission has launched a consultation on insolvency law, in the context of its work developing proposals for the deepening of the capital markets union: see here. The consultation's main purpose is to seek views on the efficient organisation of debt restructuring procedures and the rationale and process for debt discharge for entrepreneurs. But views are also sought on aspects of the insolvency law framework relevant for the internal market and capital markets.

Taiwan: stewardship principles for institutional investors

The Taiwan Stock Exchange will publish a final version of a set of stewardship principles for institutional shareholders - sometimes termed a stewardship code - later this year, following a consultation on draft principles that began last year and concluded in February: see here. A copy of the draft principles, translated into English, is available here (docx).

Update (16 October 2016) - the final version of the principles can be found here.

Japan: Advisory Council recommendations on strengthening the audit framework

The Advisory Council on the Systems of Accounting and Auditing, set up by the Financial Services Agency to make recommendations to improve the external audit framework in Japan, published its report and recommendations earlier this year. An English translation of the report and recommendations was published this week: see here (pdf).

The recommendations are grouped within five areas: the management of audit firms; the information given to the shareholders; detecting fraud; assessing audit quality; and the audit environment generally (including companies' governance arrangements). Creating an audit firm governance code is one of the recommendations made by the Advisory Council in its report. The report appears not to recommend the introduction, at this stage, of mandatory audit firm rotation but suggests, instead, that further analysis is undertaken by the FSA, exploring the experiences in other jurisdictions.

Thursday 7 April 2016

Malaysia: company law reform - Companies Bill 2015 passed by the Dewan Rakyat

The Companies Bill 2015 (Rang Undang-Undang Syarikat 2015) was passed by the House of Representatives (Dewan Rakyat) earlier this week and now proceeds to the Senate (Dewan Negara) before receiving the assent of the King (Yang di-Pertuan Agong). The record of debate in the Dewan Rakyat is available here (pdf) and it is interesting to note that, in the context of directors' duties in the Bill, there was some discussion of section 172 ("Duty to promote the success of the company") of the UK Companies Act 2006.

Note: if the link to the debate does not work, or appears broken, there is another way of accessing the material: visit this page and select 4 April.

Pakistan: company law reform - second draft of the Companies Bill published for public comment

The Securities and Exchange Commission of Pakistan (SECP) has published for public comment a second draft of the Companies Bill 2016: see here (pdf). Comments on the draft Bill, which will contain the core company law framework and replace the Companies Ordinance 1984, should be sent to the SECP ( Further information about the company law reform process is available here and a copy of the first draft of the Bill is available here (pdf).

Wednesday 6 April 2016

UK: FCA business plan 2016/17 - culture and governance

The Financial Conduct Authority has published its 2016/17 business plan: see here (pdf). The plan identifies seven 'priority themes', one of which is firms' culture and governance. This theme is discussed on pages 34 and 35 of the plan, where the FCA sets out the outcomes it seeks, the activities it plans and how success will be measured.

Tuesday 5 April 2016

Europe: ESMA fines trade repository for EMIR data access breaches

The European Securities and Markets Authority (ESMA) has, for the first time, taken enforcement action against a trade repository registered in the European Union: see here and here (pdf). The action, against DTCC Derivatives Repository Ltd for breach of the obligation to ensure immediate access for regulators to data reported under Regulation (EC) No 648/2012 in OTC derivatives, central counterparties and trade repositories (EMIR), was taken within Articles 64(5), 65, 67 and 73 of EMIR. For further information about ESMA's role in supervising trade repositories, see here.

Monday 4 April 2016

Europe: ESMA final report - guidelines on sound remuneration policies under the UCITS and AIFM Directives

The European Securities and Markets Authority (ESMA) has published its final report Guidelines on sound remuneration policies under the UCITS Directive and AIFMD: see here (pdf). Part 11 of the report sets out guidelines concerning the governance of remuneration, and suggests that all management companies (even those that are not obliged to do so under Article 14b(4) of the UCITS Directive) should have a remuneration committee.

Friday 1 April 2016

Gibraltar: restoration to the register under the Companies Act 2014

The Hon Mr Justice Jack, sitting in the Supreme Court, has considered the operation of section 414 of the Companies Act 2014 in The Matter of Tasmania Investments Ltd (Claim No 2015, Comp 23; 23 March 2016): see here (pdf). Section 414 provides a means for companies that have been struck off the register under sections 411, 412 or 413 to be restored to the register by the Registrar of Companies. At issue was whether the Registrar had the power, under the 2014 Act, to restore to the register a company that had been struck off in January 2002 under the Companies Act 1930.

Judge Jack held that the Registrar did not have this power, a conclusion he reached with regret, observing that the "failure of the 2014 Act to deal with cases where companies had been struck off under the 1930 Act is likely to have been an oversight. It may be that the Gibraltar Parliament needs to look at the issue. Nonetheless the court's function is to apply the law as it has been enacted, not as it might have been" (para. 20).

Following this decision, the Registrar has announced that until further notice it will not proceed with any company restorations in respect of companies struck off under the 1930 Act; only reinstatements where the company was struck off under the 2014 Act will be dealt with: see here (pdf). A copy of the 1930 Act is available here (pdf) and a copy of the 2014 Act is available here (pdf).