Thursday 29 August 2019

UK: Charity Commission publishes new external scrutiny benchmark and compliance results

The Charity Commission (England and Wales) has published the results of its assessment of a sample of 296 charities' accounts against a new external scrutiny benchmark: see here. The purpose of the Commission's research was to find out if a minimum standard of scrutiny by auditors and independent examiners had taken place. The Commission found that just over three quarters of charities with an income of £1 million or more met the benchmark. However, among charities with income between £25,000 and £250,000, only 37% met the benchmark.

The Commission has also published a report on charities' reporting of related party transactions: see here.

Wednesday 28 August 2019

UK: England and Wales: Law Commission seeks views on intermediated securities

The Law Commission for England and Wales has published a call for evidence concerning the system of intermediated securities: see here (pdf). An overview is available in the Commission's press release: see here. Views are sought on various issues including whether owners of intermediated securities find it more difficult to secure voting rights compared with those owning securities directly.

Friday 23 August 2019

USA: SEC guidance on proxy rules and proxy voting responsibilities

Earlier this week the Securities and Exchange Commission published two documents concerning proxy voting: [1] guidance regarding the proxy voting responsibilities of investment advisers (here, pdf); [2] interpretation and guidance regarding the applicability of the proxy rules (here, pdf).

Wednesday 21 August 2019

Vietnam: Corporate Governance Code of Best Practices

Last week, the publication of the Vietnamese Corporate Governance Code of Best Practices was noted: see here. At the time, a copy of the Code in English was not available. It is now: see here (pdf).

Australia: Financial Services Royal Commission implementation roadmap published

The final report and recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, led by the Hon Kenneth Hayne AC QC, was published in February: see here. At the same time, the Australian Government published a response: see here (pdf). More recently - a couple of days ago, in fact - the Government published an implementation roadmap: see here (pdf).

Amongst the report's recommendations were those concerning the culture, governance and remuneration of regulated entities (see, in particular, chapter 6). In this regard, the roadmap notes, amongst other things, that the APRA is reviewing its work programme in this area and will publish a statement of its approach by the end of 2019.

Tuesday 20 August 2019

UK: Companies House - changes to the late filing penalties manual

Companies House has made several changes to its late filing penalties manual, taking effect from 1 October 2019: see here.

Monday 19 August 2019

UK: FTSE100 remuneration - preview of forthcoming report from Deloitte

Deloitte today published a preview of some of the findings from its forthcoming review of directors' remuneration in FTSE100 companies, due to be published in October: see here. These findings include: the median CEO package is £3.4 million; approximately one third of FTSE100 companies have reduced pensions for new executive appointments; and a reduction in the number of companies receiving low votes (below 80% in favour) on remuneration.

Friday 16 August 2019

UK: Upper Tribunal decides that public censure appropriate sanction for breach of integrity principle

The Upper Tribunal (Tax and Chancery Chamber) decision Andrew Tinney v The Financial Conduct Authority [2019] UKUT 0227 (TCC), given in May this year, has now been published: see here. It appears on the same day as the FCA's publication of its final notice in the case: see here (pdf). The Tribunal found that Mr Tinney had acted without integrity - in breach of (what is now) APER Statement of Principle 1 - and that the appropriate sanction was public censure. The Tribunal decision is noteworthy because of the discussion it contains concerning the meaning of integrity. The Tribunal observed (para. [13]):
A lack of integrity does not necessarily equate to dishonesty.  While a person who acts dishonestly is obviously also acting without integrity, a person may lack integrity without being dishonest.  One example of a lack of integrity not involving dishonesty is recklessness as to the truth of statements made to others who will or may rely on them or wilful disregard of information contradicting the truth of such statements".

Thursday 15 August 2019

India: report and recommendations on corporate social responsibility

The committee formed last year by the Ministry of Corporate Affairs to review the corporate social responsibility framework has published its report and recommendations: see here (pdf).

Among the recommendations are those concerning section 135 of the Companies Act 2013, which introduced, for companies of a certain size, mandatory spending on corporate social responsibility activities and the formation of a corporate social responsibility committee. The report recommends, for example, that the section 135 obligation should not apply to newly incorporated companies. It also recommends extending the current CSR regime to limited liability partnerships and, for smaller companies, relaxing the requirement to form a separate corporate social responsibility committee (for such companies the board would carry out the functions of the committee).

Wednesday 14 August 2019

Vietnam: launch of the Corporate Governance Code of Best Practices

It's almost three years since I posted a note to say that the International Finance Corporation, part of the World Bank Group, was working with the State Securities Commission in Vietnam to develop a corporate governance code. That code has now been published, according to a tweet from the IFC (although I have yet to locate a copy online*):

* - update (21 August 2019): a copy of the code in English can be found here (pdf).

Monday 12 August 2019

New Zealand: Supreme Court considers insolvent transaction provision of the Companies Act 1993

Last Friday the Supreme Court gave judgment in Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86, in what is now the leading authority on
section 292 ("Insolvent transaction voidable") of the Companies Act 1993. The court unanimously rejected the argument that for a transaction to be voidable under section 292 it was necessary, in addition to the requirements within section 292 itself, to prove that the payment diminished the assets of the company. Further information is available in the media release published by the court: see here (pdf).

Friday 9 August 2019

UK: England and Wales: conduct of general meetings and the role of the chairman

Judgment was given yesterday by Deputy High Court Judge Lance Ashworth QC in Kaye v Oxford House (Wimbledon) Management Company Ltd [2019] EWHC 2181 (Ch). The decision is an important and interesting one exploring the operation of general meetings and, in particular, the role of the chairman in conducting the business and in closing the meeting. It would also appear to be the first authority to consider the operation of section 303(5) of the Companies Act 2006, which provides that a resolution may be moved at a meeting unless (to quote directly): (a) it would, if passed be ineffective (whether by reason of inconsistency with any enactment or the company's constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious.

Here is an extract:

It is the duty and function of the chairman to preserve order and to take care that the proceedings are conducted in a proper manner and that the sense of the meeting is properly ascertained with regard to any question which is properly before the meeting. However, he does not have power to stop the meeting at his own will and pleasure ... the chairman is not running the general meeting for his own benefit, but for the benefit of the company as a whole. The chairman must therefore act at all times in good faith and for proper purposes, remembering at all times that the authority to preside over the meeting does not confer dictatorial power" (para. [106]).  

USA: SEC proposes amendments to disclosure requirements under Regulation S-K

Yesterday the Securities and Exchange Commission published proposals to amend the disclosure requirements under Regulation S-K in respect of business (item 101(a) and (c), legal proceedings (item 103) and risk factors (item 105). These amendments are intended, according to the SEC, "to improve the readability of disclosure documents, as well as discourage repetition and disclosure of information that is not material". For further information see here and here (pdf).

Thursday 8 August 2019

UK: Establishing the Financial Services Contracts Regime

HM Treasury has published a draft of the statutory instrument that will establish the Financial Services Contracts Regime (FSCR): see here (pdf). The FSCR is intended to provide run-off mechanisms for several temporary regimes that have been put in place by EU exit statutory instruments. Further information is available here.

Wednesday 7 August 2019

India: SEBI report on proxy advisors

At the end of last month, SEBI published a report from the Working Group on Issues Concerning Proxy Advisors: see here. Public comment is now invited in respect of the report and the recommendations it contains. The report recommends that SEBI "may" consider drafting a code of conduct for proxy advisors. It also recommends that SEBI "should" make a stewardship code, operating on the basis of 'comply or explain', mandatory for all institutional shareholders.

Tuesday 6 August 2019

Ghana: Companies Act 2019 receives President's assent

It is now over sixty years since Professor Gower was appointed to chair a commission on company law reform in Ghana, the product of which was the Companies Act 1963. A new company law framework, to replace the 1963 Act, was placed before Parliament last year: the Companies Bill 2018. In May this year, it was reported in the media that the Bill had been passed and the new company law framework - the Companies Act 2019 - would become law on receiving the President's assent: see here.

The Ghana Presidency website reports that the President gave his assent earlier this month: see here. A copy of the new Act has not yet been published on the Parliament website.

Friday 2 August 2019

UK: England and Wales: sentencing fraudulent trading

Last month, in Ali, R v [2019] EWCA Crim 1263, the Court of Appeal heard three appeals against a sentence - 28 months' imprisonment - imposed on three individuals for fraudulent trading under section 993 of the Companies Act 2006. One of the grounds of appeal concerned what was said to be the sentencing judge's undue or excessive reliance on the Sentencing Council Guideline for Fraud, Bribery and Money Laundering Offences, in the absence of a specific guideline for fraudulent trading.

The appeals were dismissed, the court finding that the sentences were neither wrong in principle nor manifestly excessive. The sentencing judge had stated that it was appropriate to pay "more than some regard" to the Guideline for Fraud, an observation noted by the court and not - as far as I can tell - explicitly accepted or rejected. It should, however, be noted that since the court's judgment was given, the Sentencing Council has published a new General Guideline for sentencing offences not covered by a specific sentencing guideline: see here. The General Guideline requires, as part of step 1 ("Reaching a provisional sentence"), that the court should take account (if applicable) of the definitive sentencing guidelines for analogous offences.

Thursday 1 August 2019

USA: All S&P500 boards now contain at least one female director

The Wall Street Journal reports - in an article titled "The Last All-Male Board on the S&P500 Is No Longer" - that Copart Inc. has appointed Diane M. Morefield to its board: see here.