UNPRI consultation on human rights framework

A PRI consultation on a new human rights framework has begun. A paper has been published - see here (pdf) - the purpose of which is to set out a framework for institutional investors on the implementation of respect for human rights in their investment activities.

UK: England and Wales: the equitable remedy of rectification, tax returns and electronic documents

Judgment was given today by Master Kaye in Re Webster [2020] EWHC 2275 (Ch), a case concerning a taxpayer's claim for the rectification of an electronically submitted tax return. The claim was refused. Master Kaye found that, even if a tax return were a unilateral document capable of rectification, it would be "an odd and a surprising result and contrary to public policy" if the statutory regime that applied to the particular circumstances of the case (a claim for Gift Aid relief) could be circumvented by the use of the equitable remedy of rectification (see para. [77]).  It was also held, in principle, that documents or instruments created electronically were susceptible to rectification. 

UK: England and Wales: unfair prejudice and the removal of directors

Written judgment was delivered today by the Court of Appeal in Loveridge v Loveridge [2020] EWCA Civ 1104. The case centred on allegations of unfair prejudice, under section 994 of the Companies Act 2006, and interim orders that had been granted by the trial judge pending a trial.  Unlike the trial judge, the Court of Appeal found that the petitioning shareholder-director had failed to demonstrate an arguable case under section 994 based on the existence of an equitable constraint on the exercise of legal powers. Such a case had been based, in part, on the petitioner's role as the "driving force" behind the development of various businesses. Lord Justice Floyd observed (paras. [52] and [53]): 

It is not the law that progressive and energetic managers, however well they perform their duties to the benefit of the company, acquire entrenched rights not to be removed from their positions if the constitution of the company permits their removal. Such a principle would act as a significant but unjustified restriction on countless companies with dynamic executives from operating their companies in accordance with their constitutions .... the fact that an individual has had such a role [as 'driving force'] is not a sufficient indication that he is entitled to maintain it in the face of constitutional rules which permit it to be terminated".

 

Basel Committee consultation: Principles for the Sound Management of Operational Risk

The Basel Committee has published, for consultation, an updated edition of its Principles for the Sound Management of Operational Risk: see here. In the press release accompanying the consultation, the Committee states: "...the growth of technology-related threats has increased the importance of banks' operational resilience. The Covid-19 pandemic has made the need to address these threats even more pressing".

EU: Commission report - directors' duties and sustainable corporate governance

The European Commission has published a study on directors' duties and sustainable corporate governance: see here. The study found that, to "some extent", regulatory frameworks and market practices, contribute to corporate short-termism; and various options for reform our outlined. 

Ireland: The Companies (Miscellaneous Provisions) (COVID-19) Act 2020

A copy of the Companies (Miscellaneous Provisions) (COVID-19) Act 2020 is now available on the electronic Irish Statute Book website: see here or here (pdf). A summary of the Act's provisions, which include permitting the postponement of annual general meetings and the holding of certain meetings electronically, is available here.

UK: The Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No. 2) Regulations 2020

The Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) (No. 2) Regulations 2020 were laid before Parliament yesterday and came into force today: see here or here (pdf). As the accompanying explanatory memorandum explains (here, pdf), these Regulations have been made for somewhat embarrassing reasons: to revoke and supersede a first set of Regulations - the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) Regulations (S.I. 2020/710) - which, due to an "administrative error", were made in a form containing drafting errors and omissions. The purpose of the new Regulations remains, nevertheless, the same: to ensure the effective application to CIOs of the new moratorium provisions within Part A1 of the Insolvency Act 1986 (as inserted by the Corporate Insolvency and Governance Act 2020). 

UK: England and Wales: winding-up companies on public interest grounds

The Court of Appeal gave judgment several days ago in Secretary of State for Business, Energy And Industrial Strategy v PAG Asset Preservation Ltd [2020] EWCA Civ 1017. A summary of this important decision, which concerned section 124A of the Insolvency Act 1986, has now been published by the ICLR: see [2020] WLR(D) 451.

Section 124A provides that where it appears to the Secretary of State that it would be expedient in the public interest that a company should be wound-up, the court may permit a winding-up petition to be presented where it concludes that it would be just and equitable to do so.  At first instance the trial judge declined, on the Secretary of State's application, to wind-up two companies that operated what was described as a business rates avoidance (or mitigation) scheme: see Secretary of State for Business, Energy and Industrial Strategy v PAG Asset Preservation Ltd [2019] EWHC 2890 (Ch)). The Court of Appeal affirmed that decision and noted (at para. [61]): 

.... when determining whether it is just and equitable to wind up a company under section 124A, the court is required to identify for itself the aspects of the public interest which would be promoted by making a winding up order. In this case, however, there is no challenge to the judge's finding that there was no evidence of harm to the public and in oral submissions before us, Mr Chaisty was unable to identify any class of the public who were or might be harmed. An essential element, therefore, is missing".

 

Ireland: the Companies (Miscellaneous Provisions) (COVID-19) Bill 2020

The Companies (Miscellaneous Provisions) (COVID-19) Bill 2020 completed its journey through the Dáil Éireann at the end of July: see here. A day or two later it received the assent of the President and became law: see here. A copy of the Act will appear on the electronic Irish Statute Book website soon: see here. A summary of the Act's provisions, which include permitting the postponement of annual general meetings and the holding of certain meetings electronically, is available here.

Australia: Victoria Court of Appeal reasserts that fiduciary duties may survive end of the relationship that gave rise to them

The Victoria Court of Appeal gave judgment several days ago in Schmidt v AHRKalimpa Pty Ltd [2020] VSCA 193. The decision is of note because of the discussion it contains concerning whether, and in what circumstances, fiduciary duties may survive the end of the relationship that gave rise to them. The court stated (at para. [142]): 

We acknowledge that there is authority in jurisdictions outside Victoria to the effect that a fiduciary duty does not survive the termination of the relationship that gave rise to it. However, in our view, in the absence of a contrary decision by the High Court, the law in Victoria is as stated by this Court in Edmonds [[2005] VSCA 27]. That is, depending on the circumstances of a particular case, fiduciary duties may survive the termination of the relationship that first called those duties into being".

New Zealand: Court of Appeal - fiduciary duties and shareholders

The Court of Appeal gave judgment last Friday in Dold v Murphy [2020] NZCA 313: see here (pdf). The decision is of note because of the discussion it contains concerning the circumstances in which a shareholder (or shareholders) would owe fiduciary duties to each other. The President stated (at para. [59]): 

... the proposition that shareholders owe fiduciary duties generally to one another would represent a surprising development, and one we think contrary to principle. With certain statutory exceptions — most notably relief against oppression under s 174 of the Companies Act 1993 — shareholders are entitled to act selfishly in their dealings with one another. That is the antithesis of fiduciary obligation. The fact that one shareholder’s actions may diminish the value of another’s shareholding does not mean there is a fiduciary obligation: impact on another’s worth is not enough ... The shareholder-shareholder relationship is not inherently fiduciary".