Switzerland: say on pay

Ethos - the Swiss Foundation for Sustainable Development, created in February 1997 by two Geneva based pension funds and currently composed of 78 institutional investors - has reported here that three Swiss companies - Credit Suisse Group, Nestlé and UBS - have agreed to provide shareholders with an advisory vote on their remuneration reports.

UK: corporate reporting - CIMA study

Today's Times newspaper contains an opinion piece titled Corporate reports in narrative style give better impression by the CIMA chief executive Charles Tilley. The article refers to a new CIMA report, published today, titled Complexity, Relevance and Clarity of Corporate Reporting; Views of CIMA FTSE350 Directors.

UK: APB announces major update of auditing standards

The Auditing Practices Board has announced that it will be updating its auditing standards in line with the new International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) as part of its Clarity Project. The new UK and Irish standards will be effective for audits of financial statements for periods ending on or after 15 December 2010. The APB proposes, before the end of April, to issue an exposure draft containing a complete set of its proposed new standards. These will be subject to a three month consultation period with the aim of publishing final standards in the autumn.

The APB consulted on its plans in October 2008: see its consultation paper here and responses here. 

UK: rewards for failure, the court of public opinion and human rights

Yesterday's comments by the Rt. Hon. Harriet Harman QC MP concerning Sir Fred Goodwin's pension have been widely reported. Ms Harman provided this eminently quotable statement concerning the pension agreement: "...it might be enforceable in a court of law, this contract, but it is not enforceable in the court of public opinion and that is where the government steps in". 

This has been interpreted by some as an indication that the Government may legislate to reduce Sir Fred's pension entitlement. The difficulties with such an approach - which would involve rewriting contracts - were rehearsed several years ago when the Company Directors’ Performance and Compensation Bill 2002-03 was introduced in Parliament as a Private Members' Bill by Archie Norman MP. The Bill would have resulted in directors'  compensation for loss of office being subject to a test of reasonableness in the light of any failure by the director. It did not receive Government support (see here) and was killed off at Second Reading (see Hansard for the controversial way in which this was done: HC Deb 31 January 2003 vol 398 cc1147-8). Nevertheless, the Government introduced a mandatory advisory vote for the shareholders of quoted companies with regard to the company's remuneration report (see, now, Section 439 of the Companies Act (2006)).

Of relevance to the current debate was the opinion of the then Parliamentary Joint Committee on Human Rights with regard to Archie Norman's Bill. The Committee explained that the Bill:

... appears to make it possible to deny payment of money legally due to a director, interfering with the director's right to peaceful enjoyment of possessions and depriving the director of property protected by Article 1 of Protocol No. 1 to the [European Convention on Human Rights]. The Committee is concerned about the possibility that this might be incompatible with two sets of rights under that Article: first, the right of the director to money legally due to him or her; secondly, the right of the company to use its property and enter into contracts as seems best to it. Under Article 1, compensation for a deprivation of property in the public interest is required save in exceptional circumstances, and any control on the use of property must strike a fair balance between the rights of property owners and the general public interest (which may itself demand compensation in some circumstances)."

UK: the Bank Administration (England and Wales) Rules 2009

The Bank Administration (England and Wales) Rules 2009 were made on 23 February and came into force on 25 February. A copy is available on the OPSI website: see here (HTML) or here (PDF). An explanatory memorandum has also been published. The Rules set out the procedure for the bank administration procedure introduced by Part 3 of the Banking Act 2009. They are based on the rules for administration in Part 2 of the Insolvency Rules 1986.