Tuesday, 19 August 2014

India: OECD report on related party transactions and minority shareholder protection

The OECD has published a report titled Improving Corporate Governance in India - Related Party Transactions and Minority Shareholder Protection: see here (pdf). The report refers to provisions in India's new company law framework - the Companies Act 2013 - but it does not include some recent changes, including those made by the Companies (Meetings of Board and its Powers) Second Amendment Rules 2014: see here (pdf).

Monday, 18 August 2014

UK: FTSE100 CEO pay is 143 times that of average employee

According to research published today by the High Pay Centre, the chief executives of FTSE100 companies are paid 143 times more than their average employee: see here.

Friday, 15 August 2014

UK: Companies House annual report and accounts 2013/14

Companies House has published its annual report and accounts for 2013/14: see here. It is reported that 533,032 new incorporations took place during the year, bringing the number of companies on the register to 3.3 million (of which 7,821 are public limited companies).

Thursday, 14 August 2014

Singapore: MAS/SGX review of securities market structure and practices - proposals now confirmed

Earlier this year the Monetary Authority of Singapore and Singapore Exchange published a consultation paper titled Review of Securities Market Structure and Practices: see here (pdf). The consultation period closed in early May and, a few days ago, a joint response was published: see here (pdf). The response outlines the actions that will now be taken, including setting a minimum trading price for issuers listed on the SGX Mainboard and the introduction of a wider range of sanctions for breaches of listing rules.

Wednesday, 13 August 2014

New Zealand: Law Commission report on multiple defendants proposes capped liability scheme for auditors

Earlier this year the New Zealand Law Commission published its report Liability of Multiple Defendants: see here (pdf). The Commission has concluded that the system of joint and several liability is the preferred system and that it should remain the general rule. This said, the Commission has proposed some adjustments to the current regime, including the introduction of scheme whereby the liability of auditors and audit firms can be capped in respect of large or complex audits including the audits of listed companies.

Tuesday, 12 August 2014

UK: England and Wales: employment, bonuses and contractual discretion

Judgment was given last week in Brogden v Investec Bank Plc [2014] EWHC 2785 (Comm). The decision, which concerned unsuccessful claims for bonus payments, is noteworthy because of the discussion it contains regarding the manner in which contractual discretion should be exercised.

The trial judge, Mr Justice Leggatt, observed (at para. [100]): "Both on the authorities and as a matter of principle, it seems to me that where a contract gives responsibility to one party for making an assessment or exercising a judgement on a matter which materially affects the other party's interests and about which there is ample scope for reasonable differences of view, the decision is properly regarded as a discretion which is subject to the implied constraints that it must be taken in good faith, for proper purposes and not in an arbitrary, capricious or irrational manner".

Monday, 11 August 2014

UK: NHS Foundation Trust Governance Code - revised edition published

Monitor has published a revised edition of its NHS Foundation Trust Code of Governance: see here (pdf). The revised edition, dated July 2014, replaces the Code published in December 2013. A list of the changes is available here (pdf).

Friday, 8 August 2014

Europe: Review of the European System of Financial Supervision

The European Commission has published its review of the European System of Financial Supervision: see here. According to the review reports, the European Supervisory Authorities has performed well; further improvements are, however, identified for the short and medium term in order that they are able to fully exploit their mandates.

Thursday, 7 August 2014

UK: FCA restrictions on the distribution of CoCos to retail investors

Section 138I of the Financial Services and Markets Act 2000, inserted by section 24 of the Financial Services Act 2012 - imposes obligations on the Financial Conduct Authority in respect of the exercise of its rule-making powers, including, for example, publishing a draft of the rules accompanied by a cost benefit analysis. An exception is provided by section 138M of the 2000 Act in respect of temporary product intervention rules, the first use of which was illustrated earlier this week when the FCA announced that it would impose restrictions on the distribution of contingent convertible securities (CoCos) to retail investors from 1 October: see here (pdf).

At European level, the risks associated with investment in CoCos were highlighted on 1 August in a statement published by the European Securities and Markets Authority: see here (pdf).

UK: FCA consultation - workplace pensions and independent governance committees

The Financial Conduct Authority has published for consultation the rules it proposes to make in order to require certain firms to establish independent governance committees in respect of their workplace personal pension schemes: see here (pdf).

Wednesday, 6 August 2014

UK: Part V of the Walker Guidelines - amended version published

Part V of the Guidelines for Disclosure and Transparency in Private Equity (also known as the Walker Guidelines) were amended last month. The amended version of Part V is available here (pdf) and replaces part V and Annex D from the Guidelines issued in 2007.

Tuesday, 5 August 2014

The fourth edition of the ICGN Global Governance Principles

The codes and principles directory maintained by the European Corporate Governance Institute was updated yesterday with a copy of the fourth edition of the Global Governance Principles published by the International Corporate Governance Network: see here.

Monday, 4 August 2014

Europe: Single Resolution Mechanism Regulation published

The 30 July 2014 (L225) edition of the Official Journal of the European Union contains Regulation (EU) No 806/2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund: see here. Background information is available here.

Friday, 1 August 2014

UK: FCA consults on transposition of the Recovery and Resolution Directive

The Financial Conduct Authority has published for consultation the changes it proposes to make to its Handbook as part of the UK's transposition of European Directive 2014/59/EU on the establishment of a framework for the recovery and resolution of credit institutions and investment firms: see here (pdf). The Prudential Regulation Authority is also undertaking a consultation in respect of the changes it will make to its Handbook: see here.

Thursday, 31 July 2014

Ireland: Irish Collective Asset-Management Vehicles Bill 2014

The Irish Collective Asset-Management Vehicles Bill 2014 was introduced in the Dáil Éireann several days ago: see here. A copy of the Bill, as introduced, is available here (pdf). Explanatory notes are available here (pdf). The purpose of the Bill is to create a new corporate vehicle for funds in Ireland and a framework for the operation of the new vehicles.

Wednesday, 30 July 2014

UK: PRA/FCA consultation papers - new senior managers regime and new remuneration rules

The Financial Conduct Authority and Prudential Regulation Authority published two joint consultation papers today. The first, titled Strengthening accountability in banks: a new regulatory framework for individuals, sets out the proposed framework for the new senior managers regime and the new certification regime: see here (pdf). The second paper, titled Strengthening the Alignment of Risk and Reward: New Remuneration Rules, sets out proposed changes to the Remuneration Code: see here (pdf).

UK: corporate governance reform proposals

Earlier this month the Trades Union Congress published a collection of essays on the subject of corporate governance and reform. The collection, published under the title Beyond Shareholder Value - The reasons and choices for corporate governance reform, is available here (pdf).

UK: Takeover Panel 2014 annual report published

The Takeover Panel has published its annual report and accounts for the year to 31 March 2014: see here (pdf). The report explains, amongst other things, that during this period the Panel Executive issued one letter of private criticism (related to the conduct of the parties involved) and 41 educational/warning letters (higher than in previous years).

Tuesday, 29 July 2014

Monday, 28 July 2014

Europe: Commission evaluation of the Commercial Agents Directive

The European Commission has begun its first general evaluation of the Commercial Agents Directive (86/653/EEC): see here.  A public consultation has been launched, the purpose of which is to seek information about the operation and future of the Directive (in particular its significance for SMEs and cross-border activities).

Friday, 25 July 2014

UK: market for statutory audit services - CMA publishes draft Order

The Competition and Markets Authority has published for comment a draft of the Order that will implement the recommendations made by the Competition Commission (one of the bodies the CMA has replaced) in respect of the market for statutory audit services: see here (pdf). The Order covers audit tendering and audit committee responsibilities in this regard. An explanatory note accompanying the Order is available here (pdf). Further background information, including all of the Competition Commission's inquiry publications, can be found here.

Thursday, 24 July 2014

UK: EHRC inquiry into the appointment and recruitment of FTSE350 directors

The Equality and Human Rights Commission has begun an inquiry examining the recruitment and appointment practices of FTSE350 companies: see here. As part of the inquiry, guidance has been published on board appointments and equality law: see here (pdf).

UK: HM Treasury consults on transposition of the Bank Recovery and Resolution Directive

HM Treasury has begun a consultation in respect of the UK's implementation of European Directive 2014/59/EU on the establishment of a framework for the recovery and resolution of credit institutions and investment firms: see here. Further information about the Directive is available here.

UK: The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014

The Financial Services and Markets Act 2000 (Ring-fenced Bodies and Core Activities) Order 2014 was made yesterday and comes into force on 1 January 2015: see here (pdf). The Order forms part of the statutory framework governing the ring-fencing of banking activities and defines which banks are ring-fenced bodies and the activities which can only be done by ring-fenced bodies. It also defines the circumstances in which accepting deposits can be undertaken by banks that are not ring-fenced. Further information is available in the explanatory memorandum prepared to accompany the Order: see here (pdf).

Wednesday, 23 July 2014

UK: FCA consultation on removing the requirement to publish interim management statements

The Financial Conduct Authority has published a consultation paper setting out the changes it will make to the Disclosure Rules and Transparency Rules (DTR) in order to remove the requirement for issuers to publish interim management statements: see here (pdf).

UK: FRC issues amendments to UK GAAP (FRS101 and FRS102)

The Financial Reporting Council has today published amendments to Financial Reporting Standard 101 and Financial Reporting Standard 102: see here.

Tuesday, 22 July 2014

India: SEBI International Advisory Board discusses corporate governance norms

The International Advisory Board (IAB) of the Securities and Exchange Board of India held its fourth meeting a few days ago: see here. Amongst the matters discussed were corporate governance norms in India. The IAB has suggested that there should be different governance standards for large and complex groups and it also called for more focused enforcement of corporate governance norms.

Monday, 21 July 2014

IFAC/CIPFA International Framework: Good Governance in the Public Sector

Earlier this month, IFAC and CIPFA launched their International Framework - Good Governance in the Public Sector: see here (pdf). The framework contains seven principles that can be used to review and update national governance codes for the public sector. A supplement has been published to accompany the framework and this provides further information and examples in respect of the seven principles: see here (pdf).

Friday, 18 July 2014

UK: Government consults on new employee shareholding vehicle

The Government has begun a consultation in which it seeks views on whether a new vehicle for employee shareholding is required: see here.

UK: Takeover Code - consultation on proposed amendments

The Code Committee of the Takeover Panel has published a consultation paper setting out proposed amendments to various provisions in the Takeover Code: see here (pdf). It is, for example, proposed that the deadline for a potential competing offeror to clarify its position should be a firm date set out in the Code and not, as present, a flexible date set by the Panel on a case by case basis.

Thursday, 17 July 2014

UK: FRC annual report identifies areas for improvement

The Financial Reporting Council published its annual report yesterday: see here (pdf). In his section of the report, the FRC's chief executive, Stephen Haddrill, identifies areas where further work is required, including understanding the causes of poor quality reporting by some smaller listed and AIM quoted companies. It is also noted that the FRC is discussing with the Department for Business, Innovation and Skills the extent to which faults in reporting and auditing can be made public where they do not amount to misconduct.

Wednesday, 16 July 2014

UK: Supreme Court judgment in FHR - bribes are held on trust (and subject to a proprietary claim)

The Supreme Court gave judgment earlier today in FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45: see here (pdf). A summary of the court's decision is available here (pdf). A panel of seven justices heard the appeal; the court's judgment was delivered by the President, Lord Neuberger. The court unanimously held that bribes (or secret commissions) received by an agent are held on trust for the principal.

FSB recommendations for reform of benchmark rates in foreign exchange markets

The Financial Stability Board has published a consultation paper in which it sets out recommendations for the reform of benchmark rates in foreign exchange markets: see here (pdf).

Tuesday, 15 July 2014

UK: FCA proposals for a price cap on high cost short term credit

The Financial Conduct Authority has published a consultation paper in which it sets out its proposals for introducing a cap on the cost of so-called 'pay day' loans. The paper, titled Proposals for a price cap on high‐cost short‐term credit, is available here (pdf).

Monday, 14 July 2014

UK: High Pay Centre report published - 'How to make top pay fairer'

The High Pay Centre has today published a report titled How to make top pay fairer: see here (pdf). The report identifies eight wide-ranging measures which, it is argued, could be adopted in order to deliver fairer, more proportionate pay for those at the top. These include employee representation on boards and introducing a maximum pay ratio.

Friday, 11 July 2014

UK: Supreme Court judgment in FHR due next week

The Supreme Court will give judgment next week in FHR European Ventures LLP v Cedar Capital Partners LLC: see here. The principal issue before the court, to quote from its case summary, was this: does an agent who receives a secret commission hold the sum paid on constructive trust for his principal(s) giving rise to proprietary rights?

The appeal hearing took place last month before a panel of seven justices: Lord Neuberger, Lord Mance, Lord Sumption, Lord Carnwath, Lord Toulson, Lord Hodge and Lord Collins.

UK: ICSA report - "The company secretary: building trust through governance"

ICSA has published a report titled The Company Secretary - building trust through governance: see here. The report, which draws on research led by Professors Andrew and Nada Kakabadse, notes that many of those interviewed - including chairmen - recognise the important and unique function performed by the company secretary. Many company secretaries, however, said that their role was largely taken for granted and often improperly utilised. The report identifies and explains how high performing company secretaries are able to contribute to good governance through helping to build trust.

Thursday, 10 July 2014

UK: England and Wales: de facto directorships and substantial property transactions

The Court of Appeal gave judgment earlier today in Smithton Ltd v Naggar [2014] EWCA Civ 939. At first instance the trial judge held that an individual was not a de facto director or shadow director and that certain transactions were not substantial property transactions for the purposes of section 190 of the Companies Act 2006: see [2013] EWHC 1961 (Ch). The Court of Appeal held that there was no basis for setting aside these findings. Arden LJ (with whom Elias and Tomlinson LJJ agreed) delivered the leading judgment and, with regard to section 190, observed that it:
"... requires an arrangement (which can be a non-contractual arrangement) under which a director or connected person acquires "or is to acquire" an interest in shares. There is no basis for interpreting the words 'is to acquire' as 'may acquire'. The fact that conditional arrangements are permitted does not require this interpretation since even a conditional arrangement must still satisfy the words quoted even if it is conditional" (para. [110]). 

UK: The Financial Services (Banking Reform) Act 2013 (Commencement No. 5) Order 2014

The Financial Services (Banking Reform) Act 2013 (Commencement No. 5) Order 2014 was made yesterday: see here (pdf). The Order brings into force certain provisions in the Financial Services (Banking Reform) Act 2013 in order to enable the Prudential Regulation Authority and the Financial Conduct Authority to make and consult on rules governing the conduct of persons working in the financial services sector as provided by Part 4 of the 2013 Act.