UK: Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date) Regulations 2021

A draft of the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date) Regulations 2021 was laid before Parliament on 11 February under the affirmative procedure. The accompanying (draft) explanatory memorandum - available here (pdf) - explains the purpose of the Regulations as follows (para. 7.1): 

This instrument extends the expiry date of the period during which the power in section 20 [of the Corporate Insolvency and Governance Act 2020] can be used, from 30 April 2021 to 29 April 2022. The section 20 power enables the Secretary of State to make regulations temporarily modifying corporate insolvency or governance legislation for various purposes in connection with mitigating the impact of coronavirus. An example of a previous exercise of this power is the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020/1349. 

Further information is also available in the announcement made earlier this week by the Department for Business, Energy and Industrial Strategy: see here. 

Jersey: Royal Court considers shareholder remedies

I note, a little belatedly, an important judgment of the Royal Court (Samedi division) on shareholder remedies from earlier this year: Financial Technology Ventures II (Q) LP and Ors v ETFS Capital Limited and Tuckwell [2021] JRC025.  The judgment contains a detailed exposition of the principles concerning the unfair prejudice remedy (Article 141(1) of the Companies (Jersey) Law 1991) and winding-up on just and equitable grounds (Article 155(1)), drawing heavily on (non-binding) English authorities.

The court (Deputy Bailiff MacRae and Jurats Olsen and Christensen) accepted that the company's affairs had been conducted in an unfairly prejudicial manner in respect of the actions taken by the company's founder and chairman, who held (directly or indirectly with his wife) 58% of the company's issued share capital. These actions - described by the court as being part of a scheme designed to drive the plaintiffs out of the company - included those designed to secure the removal of independent directors and unilaterally changing the business of the company.

UK: FRC publishes 21/22 draft plan, strategy and budget

A few days ago the Financial Reporting Council published its draft plan, strategy and budget for 2021/22: see here (pdf). Alongside the work being done to create ARGA - the new Audit, Reporting and Governance Authority - the document notes the intention to "[u]ndertake assessments of performance against the UK Corporate Governance Code, the UK Stewardship Code and the Wates Corporate Governance Code for Large Private Companies. Subject to the outcome of Government consultation [a white paper is expected soon, the Financial Times has reported], consult on revisions to the UK Corporate Governance Code and associated guidance ahead of legislation"

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UK: Scotland: unfair prejudice petitions - the reasonable offer and abuse of process

The Court of Session (Outer House) delivered its opinion in Cheyne and Cheyne v Cheyne Engineering Ltd and Balmoral Group Holdings Ltd [2021] CSOH 17 last week. This is an important decision on the operation in Scotland of the unfair prejudice remedy - sections 994 to 996 of the Companies Act 2006 - because of the confirmation it provides of the court's power to dismiss an unfair prejudice petition as an abuse of process where a reasonable offer has been made for the petitioner's shares.  To quote Lord Ericht (at para. [57]): 

The unfair prejudice provisions in the Companies Act 2006 apply in both Scotland and England. The remedies given are equitable, and the court has a wide discretion. In these circumstances it seems to me that it is inherently desirable that there is consistency between the approach of the Scottish and English courts. Accordingly, in my opinion, where the respondent to an unfair prejudice petition makes a reasonable offer which gives the petitioner all the remedy which the petitioner could realistically expect to obtain, and the petitioner refuses the offer and continues with the litigation, it is competent in Scotland for the court to dismiss the petition as an abuse of process. I reserve my opinion as to whether dismissal for abuse of process for refusal of an offer would be competent in Scotland in any petition or action other than an unfair prejudice petition". 

UK: England and Wales: Supreme Court on parent company liability for actions of subsidiary companies

A belated (and overdue) return to the blog, to report the delivery today, by the Supreme Court, of its judgment in Okpabi v Royal Dutch Shell Plc [2021] UKSC 3: see here or here (pdf).  A summary of the judgment is available here (pdf). 

The Supreme Court unanimously held that the Court of Appeal (in [2018] EWCA Civ 191) had erred in law in several respects, thereby opening the way for the claim to be brought in England against the UK incorporated parent company in respect of environmental harm caused by a Nigerian subsidiary.  It was wrong, the Supreme Court held, to approach the question of whether a parent company owed a duty of care in respect of the conduct of its subsidiaries by reference to any generalised assumption or presumption. Moreover, the Court of Appeal had focused unduly on the question of control by the parent company; what mattered, the Supreme Court stated, was the extent to which the parent took over, or shared with the subsidiary, the management of the relevant activity (something that control by the parent might demonstrate, but not necessarily).  The Supreme Court also held that, to the extent that the Court of Appeal had suggested that the parent company's promulgation of group wide policies or standards could never in itself give rise to a duty of care, that was inconsistent with Lungowe v Vedanta Resources plc [2019] UKSC 20.

An oral summary of the Supreme Court's decision was delivered by Lord Hamblen: see below.