Singapore: revised corporate governance code - draft published by MAS

The Corporate Governance Council formed by the Monetary Authority of Singapore has published a consultation paper setting out proposed changes to the Corporate Governance Code to which listed companies are subject on a comply or explain basis: see here (pdf). A draft copy of the revised Code is available here (pdf).

The proposed changes are wide-ranging and include greater disclosure with regard to individual director remuneration and an increase in the proportion of independent directors on the board from the current one third to at least a half where: [a] the same person is chairman and chief executive; or [b] the chairman and chief executive are immediate family members; or [c] the chairman and chief executive are both part of the management team; or [d] the chairman is not independent.

UK: the Bribery Act 2010 (Commencement) Order 2011

The Bribery Act 2010 (Commencement) Order 2011 was made on 7 June - see here or here (pdf) - and provides that the Bribery Act (2010) comes into force on 1 July.

UK: the FSA's 2010/11 annual report

The Financial Services Authority published its 2010/11 annual report yesterday: see here (pdf). Today's newspapers focus on the reported measure of market cleanliness in respect of takeovers, i.e. the proportion of abnormal share price movements prior to the takeover announcement: 21.2%. Elsewhere the report stresses the significance of the change introduced at the start of the year with regard to the European regulatory architecture and the creation of the new European Supervisory Authorities: the fact that the FSA (and it successor bodies) have a policy influencing rather that policy making role.

Hong Kong: fiduciary obligation to consider shareholder interests in context of share issue

The High Court (Court of First Instance) gave judgment last week in Passport Special Opportunities Master Fund, LP v Esun Holdings Ltd (action number 2722 of 2008): see here or here (Word). This is a very interesting decision concerning the duties of directors in which the trial judge recognised the existence of a fiduciary obligation to have regard to the interests of shareholders when exercising the power to issue shares. To quote from the judgment (at paras. [147], [150] and [152]):

...although I was initially attracted by [the] submission that it would be inappropriate for a court to interfere with the decision of directors in relation to commercial questions such as whether or not, and how, funds should be raised for the company concerned once it is established that the power was exercised in good faith for proper purposes, and was not tainted by an improper primary motivation, I have come to the conclusion that there is an obligation of a fiduciary nature imposed upon directors, when deciding whether or not, and in what manner, to embark on an issue of new shares, to have regard to the interests of shareholders, and to exercise the power (if it is decided to do so) in a way that is fair as between different groups of shareholders ...

... While I accept that the court should not set itself up as a tribunal to which disgruntled litigants can appeal against the commercial decisions of the board of directors, I do not think that this excludes the possibility that the court can and should, in an appropriate case, inquire into the manner in which the decision was reached. If it can be established that the decision was reached with no consideration at all for a clearly relevant factor, it is not immediately apparent why it should not be subject to challenge ...

... I do not think that this involves a contravention of the principle that the court should not substitute its own judgment for the business judgment of the directors. If it is shown that the directors have taken account of the relevant factors, and have not acted for improper purposes, the weight that they choose to assign to the various factors which they properly take into account is a matter for them, and not something with which the court should concern itself".

Note: the Companies Bill is currently before the Bills Committee in the Legislative Council: see here. The Bill includes a partial codification of directors' duties (notably the standard of skill, care and diligence). Support for a more comprehensive codification of directors' general duties was not forthcoming at the consultation stage (see here, pp. 8 to 11, pdf).

UK: Companies House - edition 71 of Register published

Companies House has published the spring 2011 edition of its newsletter Register: see here (pdf). This reports the intention of Companies House to move towards electronic filing for the majority of returns and incorporations by March 2013. Included elsewhere in the newsletter there is a short round-up of some recent company law cases.