USA: say on pay - a "cruel hoax" says Bob Monks

Bloomberg Businessweek reports that at 1,998 companies where shareholders have had the opportunity to exercise a 'say on pay' vote, at only 32 were a majority of votes cast against: see here. The article quotes Bob Monks' response: "Say-on-pay is at best a diversion and at worst a deception ... You only have the appearance of reform, and it's a cruel hoax".

UAE: Dubai: authorised firms - governance and remuneration standards

The Dubai Financial Services Authority has published a consultation paper setting out proposed changes to the corporate governance and remuneration standards applicable to authorised firms and institutions, including greater clarity with regard to the purpose of those standards: see here (pdf). Appendices indicating the effect of the changes on the relevant DFSA rulebooks are available here.

UK: financial regulation reform white paper and draft bill published

The Government has today published its white paper A new approach to financial regulation: the blueprint for reform and draft Bill: see here (pdf). Background information is available here. The new regulatory framework will be achieved through a Bill making amendments to the Financial Services and Markets Act (2000), to be introduced in Parliament later this year.

UK: the role of audit and market concentration - Government response to Economic Affairs Committee report

The chairman of the House of Lords Economic Affairs Committee, Lord MacGregor of Pulham Market, has said that the Government’s response to the Committee's recent report on audit market concentration and the auditor's role is "not good enough": see here.

There is much in the Government's response - available here - in respect of its current position on various governance and financial reporting matters. For example, the Government rejects imposing a ban on audit firms providing non-audit services to their audit clients, because it believes that the APBs Ethical Standards are sufficient to ensure auditor independence. It notes, nevertheless, that the it would be desirable for company audits to be put out to tender more frequently than is currently the case. The response also states that BIS and the FRC are expected to seek views on possible reforms to the FRC's powers later this year.

UK: corporate governance raised at yesterday's PMQs

The removal of several non-executive directors from the board of ENRC, a FTSE100 listed company, by its controlling shareholders has remained in the news, not least because the company's general counsel has since resigned. The situation raises many questions concerning the extent to which the UK's governance framework for listed companies is appropriate for a company dominated by a few shareholders. The company's governance reached Prime Minister's Questions yesterday in Parliament where, in response to a question referring to ENRC and governance more generally, the Prime Minister stated (Hansard, col 778):

"... we want companies to come to London to access capital and float on the main market or the AIM market. It is one of the attractions of Britain that we are an open global economy, but when those companies come, they must understand that we have rules of corporate governance that are there for a reason, and they need to obey those rules. I am sure my right hon. Friend the Chancellor will address that not only in his speech tonight, but in the papers that we will be publishing in subsequent days".

It will be interesting to see what is forthcoming. What are these rules that must be obeyed to which the Prime Minister referred? It would be difficult to argue that he is referring to the UK's Corporate Governance Code given that it operates on the basis of 'comply or explain'.