Wednesday 30 August 2017

Isle of Man: FSA consults on new edition of governance code for insurers

The Isle of Man Financial Services Authority is consulting a new edition of its corporate governance code for insurance companies (previously known more formally as the code of practice for regulated insurance entities): see here.

Tuesday 29 August 2017

UK: Government publishes corporate governance reform proposals

The Government today published its corporate governance reform proposals, following the publication of a green paper last year: see here (pdf). The proposals, contained in a response document (and therefore lacking the precision that would be expected in a white paper), are principally concerned with directors' remuneration and employee and stakeholder voice. Some proposals will require legislation but others - in the form of "invitations" - are directed to the Financial Reporting Council for consideration as part of its forthcoming review of the UK Corporate Governance Code. This raises interesting questions about the status of the Financial Reporting Council and, indeed, the way in which the Code is updated. When the FRC says that it is "independent", what does this mean?

New secondary legislation is proposed, for example, to require all companies of significant size to explain how the directors comply with section 172 of the Companies Act 2006 in respect of those factors to which they are required to have regard (e.g., the interests of the company's employees; the impact of the company's operations of the community and environment). Amongst the invitations sent to the FRC is one suggesting that the FRC consult on a new Principle in the UK Corporate Governance Code "establishing the importance of strengthening the voice of employees and other non-shareholder interests at board level as an important component of running a sustainable business". As part of this, the FRC has been invited to consider and consult on a new Code provision requiring premium listed companies, on a comply or explain basis, to adopt one of three employee engagement mechanisms (a designated non-executive director; a formal employee advisory council; or a director from the workforce).

Wednesday 23 August 2017

European Union: High Level Group on Sustainable Finance publishes interim report

The High Level Group on Sustainable Finance published its interim report Financing a Sustainable European Economy last month: see here (pdf). The report sets out, for discussion, policy recommendations. A final report will be published later this year. The Group has recommended, amongst other things, that a set of European level governance and stewardship principles incorporating long-term value creation should be developed. Other recommendations relating to governance, reporting and fiduciary duty are also made.

Switzerland: Ethos survey of governance, remuneration and shareholder voting

Ethos, the Swiss Foundation for Sustainable Development comprising Swiss pension funds and institutions, has published the results of its survey of shareholder voting, executive remuneration and governance of companies in the SPI index. The report notes, amongst other things, an increase in shareholder opposition with 14% of resolutions receiving less than 90% support from shareholders (up from 12% in the previous year). An overview of the report, in English, is available here. Copies of the report, in French and German, are available here.

Tuesday 22 August 2017

UK: FT report on forthcoming corporate governance reform white paper

The Financial Times newspaper reports that the Government's Corporate Governance Reform white paper is likely to be published next week, following on from the green paper published last November: see here (subscription required). The FT report is titled 'May shelves plan for crackdown on high pay' and it suggests that the Government is now unlikely to propose giving shareholders an additional binding vote on remuneration.

Thursday 17 August 2017

UK: Board diversity - Green Park's 10,000 report

Green Park has published the fourth edition of its Leadership 10,000 report, which now includes a ranking of FTSE100 companies in respect of their success and commitment in improving leadership diversity: see here. The report notes that 58% of FTSE100 boards have no directors from ethnic minorities; the Parker Review recommended, last year, that by 2021 all FTSE100 boards should have at least one director of colour.

Wednesday 16 August 2017

IOSCO consults on recommendations to improve the transparency of corporate bond markets

The International Organisation of Securities Commissions has published for public consultations a series of recommendations the aim of which is to improve the transparency of corporate bond markets: see here (pdf).

Tuesday 15 August 2017

UK: FRC consults on updated Guidance on the Strategic Report

The Financial Reporting Council has published for consultation an updated edition of its Guidance on the Strategic Report: see here. The amendments take into account the increased disclosure obligations to which certain large companies are subject under the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, but also reflect the FRC's intention to strengthen the link between the purpose of the strategic report and the matters to which directors should have regard as part their duty to promote the success of the company under section 172 of the Companies Act 2006.

Wednesday 9 August 2017

Australia: new FSC standard - Principles of Internal Governance and Asset Stewardship

The Financial Services Council has published a new standard titled Principles of Internal Governance and Asset Stewardship: see here (pdf). The purpose of the standard is, to quote directly from it, " provide guidance to FSC Members who undertake the role of Asset Managers in setting and achieving best practice in fulfilling their fiduciary responsibility as custodians of one of the largest pools of managed funds in the world". The standard is mandatory for FSC full members from 1 July 2018. The standard will operate very much like the stewardship codes seen in other jurisdictions.

Tuesday 8 August 2017

USA: Federal Reserve Board consults on supervisory expectations for boards of directors

Last week the Federal Reserve Board published for public comment a proposal setting out its supervisory expectations for the boards of directors of a range of financial institutions including bank holding companies, including (for example) the attributes of an effective board: see here (pdf).

Monday 7 August 2017

UK: HMRC consults on draft corporation tax reform guidance

HMRC has published, for consultation, draft guidance on forthcoming reforms to the corporation tax regime, more specifically restrictions on what can be deducted in respect of loss relief and corporate interest: see, respectively, here and here. This consultations follows the publication of draft legislation for these changes last month (see here and here.

Friday 4 August 2017

UK: FRC update on Stewardship Code signatories, tiering and forthcoming reviews

The Financial Reporting Council has published an updated list of signatories to the UK Stewardship Code: see here. Last year the FRC published a ranking of Code signatories, placing 40 in the lowest tier - tier 3 - indicating that their approach to stewardship required greater transparency and engagement. Yesterday the FRC announced that tier 3 had been removed, with half of those within it moving into tier 1 or 2 and the remainder deciding they no longer wished to be Code signatories: see here.

The FRC has also announced that its review of the UK Corporate Governance Code, being held later this year (twenty five years after the publication of the Cadbury Report and Code), will include questions on the approach it should take in its review of the UK Stewardship Code in 2018.

Thursday 3 August 2017

UK: CIPD/HPC annual survey of FTSE100 executive director pay

The CIPD and High Pay Centre have published their annual survey of FTSE100 executive director pay: see here (pdf). To quote the opening paragraph from the executive summary: "Our review of FTSE 100 CEO pay packages shows a sharp turnaround in the rising trend of remuneration. FTSE 100 CEOs have seen an overall drop in pay packages, especially at the top end, though the gulf between the highest paid executives and the rest of the workforce still remains".

Wednesday 2 August 2017

India: Lok Sabha passes Companies (Amendment) Bill, 2017

The Companies (Amendment) Bill, 2017, which makes amendments to the Companies Act, 2013, was passed by the Lok Sabha last week and now proceeds to the Rajya Sabha. The record of debate is available here (pdf). A copy of the Bill, as passed, is available here (pdf). The Bills amends, amongst other things, the independence requirements for independent directors of listed companies. It also provides further details on the framework for identifying beneficial ownership.

Tuesday 1 August 2017

UK: England and Wales: the right to inspect (and require a copy) of the register of members

The Court of Appeal gave judgment late last month in Fox-Davies v Burberry Plc [2017] EWCA Civ 1129 (on appeal from [2015] EWHC 222 (Ch)). This is an important case on the right to inspect a company's register of members under section 116 of the Companies Act 2006 and, in particular, the circumstances in which an application will be regarded as "not sought for a proper purpose" under section 117.