Thursday, 21 September 2017

Netherlands: draft of the first Dutch Stewardship Code published

Eumedion - the foundation representing institutional investors in the Netherlands - has published a draft Stewardship Code: see here (pdf). The new Code builds on Eumedion's Best Practices for Engaged Share-Ownership, published in 2011 (here, pdf). It contains eleven principles and is intended to come into force on 1 January 2018.

Wednesday, 20 September 2017

Singapore: MAS removes requirement for mandatory audit rotation of local banks

Last month the Monetary Authority of Singapore announced, in response to an earlier consultation, that it would be removing the requirement for the mandatory rotation of firms auditing local banks: see here (pdf). In reaching this decision, MAS cites the "regulatory developments since 2008 that have introduced additional safeguards to enhance the quality and independence of external audit, the primary responsibility of audit committees in ensuring the independence, objectivity and quality of external audit, and the potential risk of audit gaps arising from frequent change of auditors".

Tuesday, 19 September 2017

UK: Takeover Panel - consultation paper on statements of intention and related matters

The UK Takeover Panel Code Committee has published a consultation paper titled Statements of intention and related matters: see here (pdf). Amendments are proposed to Rules 2.7, 19.5, 19.6, 24 and 25 of the Takeover Code, the effect of would be, for example, to bring forward the requirement for an offerer to make statements of intention to the time at which the announcement of a firm intention to make an offer is made.

Monday, 11 September 2017

South Africa: shareholder voting and auditor reappointment

Mandatory audit firm rotation will be introduced in South Africa from 2023. Meanwhile, the Independent Regulatory Board for Auditors has been monitoring shareholder voting at general meetings in respect of auditor reappointment and has found what it describes as a "visible trend towards voting against the reappointment of auditors": see here.

Friday, 8 September 2017

India: SEBI consults on the credit rating agency regulatory framework

The Securities and Exchange Board of India is consulting on the regulatory framework applicable to credit rating agencies: see here.

Thursday, 7 September 2017

Pakistan: the Listed Companies (Code of Corporate Governance) Regulations 2017

Last week the Securities and Exchange Commission announced the publication of draft Regulations setting out governance standards for listed companies: see here (pdf). A copy of the Regulations (their full title being the Listed Companies (Code of Corporate Governance) Regulations 2017) is now available in English: see here (pdf).

Wednesday, 6 September 2017

UK: PLSA discussion paper - 'Good governance - how to get there'

The Pensions and Lifetime Savings Association has published a discussion paper titled 'Good governance - how to get there': see here (pdf). The paper calls, amongst other things, for a rebalancing of the regulatory priorities of the Pensions Regulator, with a stronger emphasis on the scrutiny of board appointments and effectiveness.

Tuesday, 5 September 2017

Hong Kong: the Companies (Amendment) Bill 2017

The Companies (Amendment) Bill 2017 was introduced in the Legislative Council earlier this year and has received its first reading. A copy of the Bill, as introduced, is available here (pdf). A briefing note is available here (pdf). The Bill contains, for companies incorporated in Hong Kong, the framework for maintaining a register of significant controllers.

Monday, 4 September 2017

A joint statement from the "Five Chairmen Group"

Earlier this year the chairmen of corporate governance committees from Germany, France, Italy, the United Kingdom and the Netherlands met for their third annual meeting: see here. A joint statement was published after the meeting: see here (pdf). The Group has, amongst other things, called for a flexible approach in the new implementation of the new Shareholders' Rights Directive.

South Africa: reviewing the Companies Act, 2008

Reports in the media suggest that the Department for Trade and Industry has begun a review of the Companies Act, 2008: see, for example, here.

Friday, 1 September 2017

Pakistan: SECP publishes draft Listed Companies (Code of Corporate Governance) 2017

The Securities and Exchange Commission has announced the publication of draft Regulations setting out governance standards for listed companies. The draft Regulations, titled the Listed Companies (Code of Corporate Governance) 2017 - will be published shortly. Meanwhile, some background information is available in the accompanying press release: see here (pdf).

Wednesday, 30 August 2017

Isle of Man: FSA consults on new edition of governance code for insurers

The Isle of Man Financial Services Authority is consulting a new edition of its corporate governance code for insurance companies (previously known more formally as the code of practice for regulated insurance entities): see here.

Tuesday, 29 August 2017

UK: Government publishes corporate governance reform proposals

The Government today published its corporate governance reform proposals, following the publication of a green paper last year: see here (pdf). The proposals, contained in a response document (and therefore lacking the precision that would be expected in a white paper), are principally concerned with directors' remuneration and employee and stakeholder voice. Some proposals will require legislation but others - in the form of "invitations" - are directed to the Financial Reporting Council for consideration as part of its forthcoming review of the UK Corporate Governance Code. This raises interesting questions about the status of the Financial Reporting Council and, indeed, the way in which the Code is updated. When the FRC says that it is "independent", what does this mean?

New secondary legislation is proposed, for example, to require all companies of significant size to explain how the directors comply with section 172 of the Companies Act 2006 in respect of those factors to which they are required to have regard (e.g., the interests of the company's employees; the impact of the company's operations of the community and environment). Amongst the invitations sent to the FRC is one suggesting that the FRC consult on a new Principle in the UK Corporate Governance Code "establishing the importance of strengthening the voice of employees and other non-shareholder interests at board level as an important component of running a sustainable business". As part of this, the FRC has been invited to consider and consult on a new Code provision requiring premium listed companies, on a comply or explain basis, to adopt one of three employee engagement mechanisms (a designated non-executive director; a formal employee advisory council; or a director from the workforce).

Wednesday, 23 August 2017

European Union: High Level Group on Sustainable Finance publishes interim report

The High Level Group on Sustainable Finance published its interim report Financing a Sustainable European Economy last month: see here (pdf). The report sets out, for discussion, policy recommendations. A final report will be published later this year. The Group has recommended, amongst other things, that a set of European level governance and stewardship principles incorporating long-term value creation should be developed. Other recommendations relating to governance, reporting and fiduciary duty are also made.

Switzerland: Ethos survey of governance, remuneration and shareholder voting

Ethos, the Swiss Foundation for Sustainable Development comprising Swiss pension funds and institutions, has published the results of its survey of shareholder voting, executive remuneration and governance of companies in the SPI index. The report notes, amongst other things, an increase in shareholder opposition with 14% of resolutions receiving less than 90% support from shareholders (up from 12% in the previous year). An overview of the report, in English, is available here. Copies of the report, in French and German, are available here.

Tuesday, 22 August 2017

UK: FT report on forthcoming corporate governance reform white paper

The Financial Times newspaper reports that the Government's Corporate Governance Reform white paper is likely to be published next week, following on from the green paper published last November: see here (subscription required). The FT report is titled 'May shelves plan for crackdown on high pay' and it suggests that the Government is now unlikely to propose giving shareholders an additional binding vote on remuneration.

Thursday, 17 August 2017

UK: Board diversity - Green Park's 10,000 report

Green Park has published the fourth edition of its Leadership 10,000 report, which now includes a ranking of FTSE100 companies in respect of their success and commitment in improving leadership diversity: see here. The report notes that 58% of FTSE100 boards have no directors from ethnic minorities; the Parker Review recommended, last year, that by 2021 all FTSE100 boards should have at least one director of colour.

Wednesday, 16 August 2017

IOSCO consults on recommendations to improve the transparency of corporate bond markets

The International Organisation of Securities Commissions has published for public consultations a series of recommendations the aim of which is to improve the transparency of corporate bond markets: see here (pdf).

Tuesday, 15 August 2017

UK: FRC consults on updated Guidance on the Strategic Report

The Financial Reporting Council has published for consultation an updated edition of its Guidance on the Strategic Report: see here. The amendments take into account the increased disclosure obligations to which certain large companies are subject under the Companies, Partnerships and Groups (Accounts and Non-Financial Reporting) Regulations 2016, but also reflect the FRC's intention to strengthen the link between the purpose of the strategic report and the matters to which directors should have regard as part their duty to promote the success of the company under section 172 of the Companies Act 2006.

Wednesday, 9 August 2017

Australia: new FSC standard - Principles of Internal Governance and Asset Stewardship

The Financial Services Council has published a new standard titled Principles of Internal Governance and Asset Stewardship: see here (pdf). The purpose of the standard is, to quote directly from it, "...to provide guidance to FSC Members who undertake the role of Asset Managers in setting and achieving best practice in fulfilling their fiduciary responsibility as custodians of one of the largest pools of managed funds in the world". The standard is mandatory for FSC full members from 1 July 2018. The standard will operate very much like the stewardship codes seen in other jurisdictions.

Tuesday, 8 August 2017

USA: Federal Reserve Board consults on supervisory expectations for boards of directors

Last week the Federal Reserve Board published for public comment a proposal setting out its supervisory expectations for the boards of directors of a range of financial institutions including bank holding companies, including (for example) the attributes of an effective board: see here (pdf).

Monday, 7 August 2017

UK: HMRC consults on draft corporation tax reform guidance

HMRC has published, for consultation, draft guidance on forthcoming reforms to the corporation tax regime, more specifically restrictions on what can be deducted in respect of loss relief and corporate interest: see, respectively, here and here. This consultations follows the publication of draft legislation for these changes last month (see here and here.

Friday, 4 August 2017

UK: FRC update on Stewardship Code signatories, tiering and forthcoming reviews

The Financial Reporting Council has published an updated list of signatories to the UK Stewardship Code: see here. Last year the FRC published a ranking of Code signatories, placing 40 in the lowest tier - tier 3 - indicating that their approach to stewardship required greater transparency and engagement. Yesterday the FRC announced that tier 3 had been removed, with half of those within it moving into tier 1 or 2 and the remainder deciding they no longer wished to be Code signatories: see here.

The FRC has also announced that its review of the UK Corporate Governance Code, being held later this year (twenty five years after the publication of the Cadbury Report and Code), will include questions on the approach it should take in its review of the UK Stewardship Code in 2018.

Thursday, 3 August 2017

UK: CIPD/HPC annual survey of FTSE100 executive director pay

The CIPD and High Pay Centre have published their annual survey of FTSE100 executive director pay: see here (pdf). To quote the opening paragraph from the executive summary: "Our review of FTSE 100 CEO pay packages shows a sharp turnaround in the rising trend of remuneration. FTSE 100 CEOs have seen an overall drop in pay packages, especially at the top end, though the gulf between the highest paid executives and the rest of the workforce still remains".

Wednesday, 2 August 2017

India: Lok Sabha passes Companies (Amendment) Bill, 2017

The Companies (Amendment) Bill, 2017, which makes amendments to the Companies Act, 2013, was passed by the Lok Sabha last week and now proceeds to the Rajya Sabha. The record of debate is available here (pdf). A copy of the Bill, as passed, is available here (pdf). The Bills amends, amongst other things, the independence requirements for independent directors of listed companies. It also provides further details on the framework for identifying beneficial ownership.

Tuesday, 1 August 2017

UK: England and Wales: the right to inspect (and require a copy) of the register of members

The Court of Appeal gave judgment late last month in Fox-Davies v Burberry Plc [2017] EWCA Civ 1129 (on appeal from [2015] EWHC 222 (Ch)). This is an important case on the right to inspect a company's register of members under section 116 of the Companies Act 2006 and, in particular, the circumstances in which an application will be regarded as "not sought for a proper purpose" under section 117.

Monday, 31 July 2017

Zimbabwe: public comments invited on the Public Entities Corporate Governance Bill

The Public Entities Corporate Governance Bill was gazetted by the Clerk of Parliament on 21 July and public comments are now invited. A copy of the invitation, and draft Bill, are available here. The first schedule of the Bill reproduces the National Code on Corporate Governance (known as Zimcode).

Friday, 28 July 2017

UK: FRC report - developments in audit 2016/17

The Financial Reporting Council has published the 2016/17 edition of its annual audit developments report. A copy of the full report is available here (pdf) and a summary is available here (pdf). The report notes that the FRC issued more than £14.2 million of sanctions on auditors and audit firms in 2016/17. These sanctions, and the rest of the FRC's work, demonstrate the importance of auditors' professional scepticism and their ability to sufficiently challenge management in an independent and objective way.

Thursday, 27 July 2017

UK: the future of LIBOR

Andrew Bailey, the chief executive of the Financial Conduct Authority, delivered a speech today titled 'The future of LIBOR': see here. The speech makes clear that the FCA's support for LIBOR will continue until the end of 2021 but planning should begin now for the transition to alternative reference rates that are based firmly on transactions.

Wednesday, 26 July 2017

UK: extending the Senior Managers and Certification Regime

The Financial Conduct Authority and Prudential Regulation Authority have today published proposals to extend the reach of the Senior Managers and Certification Regime: see, respectively, here and here. The FCA's proposals will mean that the Regime will apply to almost all regulated firms; the PRA's proposals will extend the regime to all insurers.

Tuesday, 25 July 2017

Burma: Companies Bill introduced in the Amyotha Hluttaw

The Directorate of Investment and Company Administration has published the latest version of the Companies Bill. The Bill will introduce a new company law framework in Burma. A copy of the Bill, in English, is available here (pdf). It has been reported that the Bill has begun its legislative journey following its introduction in the Amyotha Hluttaw: see here.

Monday, 24 July 2017

UK: implementing the new framework for insurance special purpose vehicles

Last November HM Treasury published for public comment the Regulations that will introduce the new regulatory and tax framework for insurance special purpose vehicles (ISPVs), also known as insurance linked securities vehicles. The comments have been considered and HM Treasury's response was published earlier this month: see here (pdf). Final Regulations (subject to Parliamentary approval) have also been published: see the Risk Transformation Regulations 2017 (pdf) and the Risk Transformation (Tax) Regulations 2017 (pdf). The Prudential Regulation Authority has also published an update on its related consultation concerning the authorisation and supervision of ISPVs: see here (pdf).

HM Treasury have decided that a protected cell company structure should be provided for multi-arrangement ISPVs. The duties of directors of protected cell companies will largely be the same as for directors under the Companies Act 2006.  However, additional duties will be owed and section 172 of the 2006 Act will apply in modified form: the Risk Transformation Regulations 2017 explain that the reference in section 172(1)(f) to members should be regarded as a reference to shareholders and that the need to act fairly between shareholders of the protected cell company should be separately assessed for each part of the protected cell company.

The Regulations also provide for the powers of directors: they have such powers as (a) are necessary to fulfil their duties; or (b) are conferred upon them by the protected cell company’s instrument of incorporation.

Friday, 21 July 2017

UK: HM Treasury consults on the anti-money laundering supervisory regime

HM Treasury has published a consultation paper concerning the creation of the new Office for Professional Body AML Supervision (OPBAS): see here. Draft Regulations have also been published: see here (pdf). HM Treasury would like to know, in particular, whether respondents believe that the Regulations are drafted so as to permit OPBAS to help (and ensure) professional body AML supervisors comply with their obligations; views are also sought on the likely impact of OPBAS on business.

Thursday, 20 July 2017

UK: FRC publishes annual report for 2016/17

The Financial Reporting Council yesterday published its annual report for 2016/17: see here (pdf). The report notes - as already announced - that a review of the UK Corporate Governance Code will begin in 2017/18. It is also noted, however, that this will be followed by a review of the UK Stewardship Code.

Wednesday, 19 July 2017

EU: employee participation on the supervisory board and employees working outside of Germany

The Court of Justice of the European Union gave judgment yesterday in Konrad Erzberger v TUI AG (Case C-566/15). Under German law (as interpreted by case law and understood by some, but not all, writers) only employees employed in Germany are permitted to elect employee representatives to the supervisory board. At issue before the court was whether this provision was contrary to EU law. The court held that it was not. A summary of the decision is available here (pdf).

Tuesday, 18 July 2017

Pakistan: listed companies and board diversity

The Securities and Exchange Commission of Pakistan has announced that in the revised Code of Corporate Governance it will be a requirement for listed companies to have at least one female director: see here (pdf). According to the SECP, 69 out of the 100 companies that comprise the KSE100 index have no female directors.

Monday, 17 July 2017

Australia: Treasury consults on Banking Executive Accountability Regime

The Treasury has published a consultation paper seeking views on the key policy considerations that will shape the design of the new Banking Executive Accountability Regime: see here (pdf). The purpose of the new regime is to enhance the responsibility and accountability of authorised deposit-takers and their directors and senior executives. The consultation seeks views on a range of matters including the institutions and individuals to be covered by the new regime.

Friday, 14 July 2017

Canada: the personal liability of directors and the oppression remedy

In a judgment given yesterday - Wilson v Alharayeri 2017 SCC 39 (on appeal from 2015 QCCA 1350)- the Supreme Court has, once more, considered the operation of the oppression remedy found in section 241 of the Canada Business Corporations Act 1985. More specifically, the court considered the circumstances in which it was appropriate to make a director personally liable under section 241(3) in respect of oppressive or unfairly prejudicial conduct and the factors that should be considered in fashioning a remedy.

UK: FRC publishes 'Keys Facts and Trends in the Accountancy Profession'

The Financial Reporting Council has published the latest edition of its annual publication Key Facts and Trends in the Accountancy Profession: see here (pdf). Section 5, on audit firms, provides data on the concentration of listed companies' audits and highlights the dominance of the 'Big Four' in respect of FTSE100 companies and, indeed, those companies in the FTSE250.

Thursday, 13 July 2017

UK: governance standards and listed companies - a couple of consultations

A couple of consultations have begun this week relating to listed companies and governance. First, the Financial Conduct Authority (as the UK's Listing Authority) is seeking views on a proposal to create a new premium listed category for sovereign controlled companies, which would see a relaxation of the related party and controlling shareholder rules for such companies: see here (pdf). Second, a review of the AIM Rules has begun and as part of this the London Stock Exchange is seeking views on the appropriateness of the current corporate governance arrangements and requirements: see here (pdf).