UK: Supreme Court to give judgment next week in BNY Corporate Trustee Services

The Supreme Court has announced that it will hand down its judgment next Wednesday in BNY Corporate Trustee Services Limited v Eurosail-UK 2007-3BL PLC (on appeal from [2011] EWCA Civ 227). At issue, to quote the court's summary, was the "... proper interpretation of section 123(2) of the Insolvency Act 1986 as incorporated into a securitisation agreement, in particular whether a company is to be deemed 'unable to pay its debts' by reason of the fact that on an examination of its balance sheet its liabilities exceed its assets, or whether some further test is involved ...".

UK: HM Treasury makes first recommendations to the Financial Policy Committee

Section 4 of the Financial Services Act 2012 inserted new provisions into the Bank of England Act 1998 in respect of the Financial Policy Committee, including a requirement that HM Treasury make recommendations to the FPC in respect of matters that the FPC should regard as relevant to its understanding of the Bank of England's financial stability objective. The first recommendations have been made: see here (pdf).

UK: The QCA Corporate Governance Code for Small and Mid-Size Quoted Companies

The Quoted Companies Alliance yesterday published an updated edition of its Corporate Governance Code for Small and Mid-Size Quoted Companies: see here. The Code, which is endorsed by the Financial Reporting Council, is intended for companies not subject to the UK Corporate Governance Code, including standard listed companies and those on AIM and the ICAP Securities and Derivatives Exchange. A copy of the Code is not available to view free of charge.

UK: FRC publishes plan and budget for 2013-2016

The Financial Reporting Council - the organisation responsible for promoting high quality corporate governance and reporting to foster investment (to quote its mission) - has published its plan and budget for 2013-2016: see here (pdf). Amongst other things, the FRC identifies areas where it needs to improve its understanding, including capital markets and the needs of investors.

Australia: High Court judgments - preference shares and the scope of section 1322(4) of the Corporations Act 2001

The High Court - the highest court in the Australian judicial system - gave judgment today in Beck v Weinstock [2013] HCA 15. The court upheld the decision of the New South Wales Court of Appeal (see [2011] NSWCA 228) and unanimously held that preference shares could be validly issued even where, at the time of their issue, there were no other issued shares over which they enjoyed priority. Justice Gageler noted that "Questions of contemporary corporate finance are not readily determined by implications drawn from practices of past centuries ... It is inherent in the concept of a preference share that the rights attaching to it are differentiated from the rights attaching to an ordinary share. But it is not intrinsic to that differentiation of rights that there be ordinary shares on issue." (paras. 80 and 91). A summary of the court's decision is available here (pdf).

The court also gave judgment in related proceedings, Weinstock v Beck [2013] HCA 14, on appeal from [2012] NSWCA 76. The court upheld the appeal and held that the court could, under section 1322(4) of the Corporations Act 2001, validate the appointment of a director. Chief Justice French stated (para. 39):

Corporations, in contemporary Australian society, serve the purposes of enterprises, large and small, owned and operated by men and women, some of whom are sophisticated, knowledgeable and well-advised on matters of corporate governance and some, perhaps many, of whom are not. Section 1322(4) and related provisions reflect a long-standing legislative recognition that mistakes will happen in corporate governance and that it is not in the public interest that the validity of decisions made in relation to corporations be unduly vulnerable to innocent errors which may be corrected without substantial injustice to third parties. In accordance with its evident purpose, s 1322(4)(a) is to be construed broadly and applied pragmatically, principally by reference to considerations of substance rather than those of form."

A summary of the court's decision is available here (pdf).