Germany: new Code submitted to the BMJV

Lasy year the Corporate Governance Code Commission (DCGK) published a new edition of its Corporate Governance Code: see here. The DCGK has announced that the Code has now been submitted to the Federal Ministry of Justice and Consumer Protection (BMJV) and it will, when published in the Federal Gazette, enter into force: see here (pdf).

UK: The European Union (Withdrawal Agreement) Act 2020 (Commencement No. 1) Regulations 2020

The European Union (Withdrawal Agreement) Act 2020 (Commencement No. 1) Regulations 2020 were made yesterday: see here. They are, as their title suggests, the first commencement regulations to be made under the European Withdrawal Act 2020 and they are accompanied by a short explanatory note: see here. The bring into force, amongst other things, provisions within the 2020 Act providing for the operation of the implementation period including saved law.

UK: FRC consults on revised ISA (UK) 315

The Financial Reporting Council has published for consultation a revised version of International Standard on Auditing (UK) (ISA (UK) 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, following recent changes made by the IAASB to the international standards on auditing: see here.

UK: The Financial Services (Consequential Amendments) Regulations 2020

The Financial Services (Consequential Amendments) Regulations 2020 were made yesterday and laid before Parliament today: see here. They come into force immediately before exit day. Their purpose - to quote directly from the accompanying explanatory memorandum (available here, pdf) - is explained as follows:

This instrument is being made under the European Union (Withdrawal Agreement) Act 2020 ... to amend several EU Exit instruments previously made under the European Union (Withdrawal) Act 2018 ... Specifically, the instrument delays the application of a number of financial services temporary permissions and transitional regimes established by these EU Exit instruments, such that they apply by reference to the end of the Implementation Period (“IP”) rather than exit day (31 January 2020)."

UK: The Money Laundering and Terrorist Financing (Amendment) Regulations 2019

I noted, earlier this year, that the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 were made last year: see here. I noted, too, that the changes being introduced by the new regulations were the subject of a consultation for which the Government's formal response had not yet been published. The response is now available: see here (pdf).

UK: England and Wales: foreign proceedings and solvent companies - recognition order terminated

Last year, in Bailey & Anor (As Foreign Representatives of Sturgeon Central Asia Balanced Fund Ltd), Re [2019] EWHC 1215 (Ch), [2019] WLR (D) 297, Mrs Justice Falk held, under the Cross-Border Insolvency Regulations 2006 (which implement the UNCITRAL Model Law for Cross-Border Insolvency), that it was appropriate to recognise as a foreign proceeding the liquidation, in Bermuda, of a solvent company. 

That order has been terminated by Chief Insolvency and Companies Court Judge Briggs, for the reasons set out in a judgment delivered today: Carter v Bailey & Anor (Sturgeon Central Asia Balanced Fund Ltd) [2020] EWHC 123 (Ch). Judge Briggs held that recognition was available only where it concerned proceedings relating to the resolution of the debtor's insolvency or financial distress. While the current case concerned a company being wound-up (on just and equitable grounds), that company was solvent and was not in financial distress.

To quote Judge Briggs (para. [5]): "It would be contrary to the stated purpose and object of the Model Law to interpret 'foreign proceedings' to include solvent debtors and more particularly include actions that are subject to a law relating to insolvency which have the purpose of producing a return to members not creditors".

UK: England and Wales: administration, jurisdiction and a company incorporated in Gibraltar

Judgment was given several days ago by Mrs Justice Falk in Re Nektan (Gibraltar) Ltd [2020] EWHC 65 (Ch). The case concerned an application for an administration order, under para. 12(1)(a) of Schedule B1 of the Insolvency Act 1986, in respect of a company incorporated in Gibraltar. The principal question before the court was whether it had the jurisdiction to do so. Mrs Justice Falk held that it did, in a decision exploring the meaning of "company" within paragraph 111 of Schedule B1, and the position of Gibraltar incorporated companies more generally.

UK England and Wales: articles for use in connection with any fraud

The ICLR has produced a summary for R v Smith, a decision of the Court of Appeal (Criminal Division) from several days ago that has not (yet) been published on BAILII: see here. The decision is an important one concerning the application of section 6(1) of the Fraud Act 2006, which provides that "[a] person is guilty of an offence if he has in his possession or under his control any article for use in the course of or in connection with any fraud". The court held that section 6(1) was wide enough to encompass articles created after the commission of the fraud offence: it could include, therefore, a document that had been created subsequently in order to mask or hide a fraud.

UK: England and Wales: directors' duties and company administration

ICC Judge Barber gave judgment yesterday in Re Systems Building Services Group Ltd [2020] EWHC 54 (Ch). I note the case here because of the interesting discussion it contains regarding the extent and nature of the general duties of directors in the context of company administration. Judge Barber stated (at paras. [55] and [56]):

....the general duties of a director of a company to the company set out in ss171 to 177 [Companies Act 2006] do survive the company's entry into administration and creditors' voluntary liquidation. Whilst in office, a director continues to owe the company the duties laid down in ss171 to 177 CA 2006, as applied and interpreted in accordance with the underlying common law rules and equitable principles on which such duties were based: s170(3) and (4).

The fact that, on a company's entry into administration or creditors voluntary liquidation, the Insolvency Act 1986 is engaged, imposing a series of additional specific duties on the part of a director and limiting his managerial powers to those authorised under or in accordance with the Act, does not, in my judgment, operate so as to extinguish the fundamental duties owed by a director of a company to the company as reflected in ss.171 to 177 CA 2006."

UK: England and Wales: High Court holds that cryptocurrencies are a form of property

A copy of the judgment of Mr Justice Bryan in AA v Persons Unknown, Re Bitcoin [2019] EWHC 3556 (Comm) has now been published on BAILII, following the lifting of reporting restrictions. The decision is of considerable interest, and importance, because of the analysis it contains concerning cryptocurrencies. The trial judge held that cryptocurrencies were a form of property capable of being the subject of a proprietary injunction and, in doing so, described as "compelling" the recent analysis of cryptocurrencies within the UKJT legal statement.

Update (8 February 2020) - the ICLR has published a summary of the decision: see here.

UK: England and Wales: in reality a derivative claim?

His Honour Judge Eyre QC gave judgment last Friday in Zedra Trust Company (Jersey) Ltd v The Hut Group Ltd [2020] EWHC 5 (Ch). The decision is of interest because of the discussion it contains concerning the boundaries between the unfair prejudice remedy (Part 30 of the Companies Act 2006) and the statutory derivative claim (Part 11 of the 2006 Act). The case arose in the context of an application to strike out a petition under Part 30 as being an abuse of process on the grounds that it was, in reality, a derivative claim.

UK: FRC's publishes annual review of the UK Corporate Governance Code

The Financial Reporting Council has today published its annual review of the UK Corporate Governance Code: see here (pdf). The report assesses companies' reporting in respect of the 2016 Code; it also comments on the disclosures provides by companies adopting the 2018 Code early and sets out the FRC's expectations in this regard. The quality of the reporting by these 'early adoptors' is described as being mixed.

UK: The Money Laundering and Terrorist Financing (Amendment) Regulations 2019

The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 were made on 20 December: see here. The accompanying explanatory memorandum is available here (pdf) and a shorter explanatory note is available here. Regulation 1(2) provides that the regulations will come into force later this week on January 10, with the exception of regulations 5(5)(c), 6 and 12(b). The regulations make amendments to the UK anti-money laundering framework arising from the amendments made to the fourth anti-money laundering directive (2015/849/EU) by the fifth anti-money laundering directive (2018/843/EU). These amendments will see the expansion of the UK's framework to include new businesses and activities, particularly concerning crypto-assets.

The changes being made by the 2019 regulations were the subject of a consultation last year: see here. Although the regulations have now been made, the Government's formal response to the consultation has not been published. The explanatory memorandum accompanying the regulations states, however, that "[the] government will soon publish its formal response ... This response document will summarise the stakeholder responses submitted and set out the legislative changes and reasoning behind them" (para. 10.7).

India: SEBI publishes stewardship code

At the end of last month, SEBI published a circular containing a stewardship code for mutual funds and all categories of alternative investment funds, in respect of their investment in listed equities: see here. The circular also notes that SEBI, IRDAI and PFRDA are examining a proposal for more wide-reaching stewardship principles in India.

Finland: the 2020 corporate governance code

A new edition of the corporate governance code published by the Securities Market Association is now in force. A copy of this 2020 code, which replaces the 2015 code, is available here (pdf).

Philippines: SEC publishes new corporate governance code

The Securities and Exchange Commission has published a new edition of its code of corporate governance for public companies and registered issuers: see here (pdf).

A happy new year to you all

Rather belatedly, I wish all readers of the blog - and email subscribers - a happy new year!