UK: ICSA consults on the effectiveness of the independent evaluation of listed company boards

In the statement published last year following its insolvency and corporate governance consultation, the Department for Business, Energy and Industrial Strategy stated that it had invited ICSA to convene a group with the purpose of identifying ways to improve the quality and effectiveness of board evaluations: see here (pdf, para. 1.66). The group has been formed and a day or so ago published a consultation paper: see here (pdf). The paper begins by seeking views on the purpose of board evaluation before summarising the evidence regarding current practice. It then invites suggestions and views on various matters and proposals, including a code of practice for the providers of board evaluation services and voluntary principles for listed companies when engaging external reviewers.

UK: IA report - Shareholder votes on dividend distributions in UK listed companies

Last year, when responding to the feedback received in respect of its insolvency and corporate governance consultation, the Department for Business, Energy and Industrial Strategy stated that it was "concerned at what appears to be a growing trend for companies to pay only interim dividends which, under most articles of association, do not require shareholder approval": see here (pdf, para. 1.52).* The Investment Association was asked to assess and report on the prevalence of this practice and this it did a few days ago with the publication of its report Shareholder votes on dividend distributions in UK listed companies: see here (pdf).

The IA's sample contained 628 companies: the constituents of the FTSE All-Share as at 1 January 2018 that held an AGM between 1 December 2017 and 30 November 2018. This sample included 98 FTSE 100 companies, 249 FTSE 250 companies and 281 FTSE SmallCap companies. The IA found that of those companies paying dividends, 22% did not seek shareholder approval. The majority of such distributions were interim dividends: 92% of companies not seeking a shareholder resolution were distributing interim dividends only.

The IA's findings lead it to call on companies to publish a distribution policy, in respect of which the IA will establish a working group to develop best practice guidance. The group will also consider whether there should be a mandatory vote on this policy and/or yearly distributions. The guidance is expected in the autumn this year.

Note

* - See, for example, Article 70 of the Model Articles for Public Companies - available here.

China: guidelines for the articles of association of listed companies

The China Securities Regulatory Commission has issued an updated edition of its guidelines for the articles of association of listed companies. A copy of the new guidelines, in English, is available here (pdf).

UK: The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019

The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 were made a few days ago and come into force on 10 June: see here or here (pdf).

The Regulations implement, in part, Directive (EU) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement. More specifically, the Regulations will implement elements of articles 9a ("Right to vote on the remuneration policy") and 9b ("Information to be provided in and right to vote on the remuneration report") of the Directive to the extent that they are not already part of UK law. Further information can be found in the accompanying explanatory memorandum (here, pdf) and transposition note (here, pdf).

Saudi Arabia: CMA publishes amended Corporate Governance Regulations

The Capital Market Authority has adopted an amended edition of its Corporate Governance Regulations: see here (pdf, English). Further information, including related company law changes, is available here.