The Court of Appeal last week confirmed the High Court’s first instance decision that a side letter between a Mr Barbudev, founder of a Bulgarian cable TV company, and a Warburg Pincus acquisition vehicle – by which Mr Barbudev would be given the right to invest in up to 10% of the acquisition vehicle following its purchase of his company – was no more than an “agreement to agree” and so not legally enforceable.
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30 April 2012
Barbudev v Eurocom Cable: Side letter to share purchase agreement was no more than an agreement to agree
30 April 2012
Shadow banking regulation: Views of the Bank of England, European Commission and ECB
Three speeches on the possible future regulation of shadow banking from last week’s European Commission High Level Conference:
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30 April 2012
Golden Ocean Group v Salgaocar Mining Industries: Guarantee can be constituted by exchange of e-mails
In Golden Ocean Group v Salgaocar Mining Industries the Court of Appeal has confirmed that a guarantee can be constituted by an exchange of e-mails.
See this useful note by Fenwick Elliott (at pages 8 and 9), which also discusses more generally how contracts can be formed by e-mail – and that as, in this case, the sender’s Christian name at the end of an e-mail will be all that is required for a signature.
29 April 2012
Chandler v Cape: Court of Appeal confirms that parent company owed duty of care to employee of subsidiary
Last week the Court of Appeal confirmed the High Court’s finding last year that, in some circumstances, a parent company could be found to owe a duty of care to an employee of a subsidiary.
The judgment sets out a four stage test for when the law may impose on a parent company responsibility for the health and safety of its subsidiary’s employees.
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27 April 2012
Dewey & LeBoeuf: it gets worse
New York Prosecutors Examining Former Dewey Chairman - New York Times.
Manhattan DA Investigates Former Dewey & LeBoeuf Chairman – Wall Street Journal.
27 April 2012
Market liquidity: Current regulatory proposals
Speech by David Lawton of the FSA on why liquidity matters to regulators, and reviewing some of the proposed European regulations that will impact on the trading and liquidity of financial instruments, here.
27 April 2012
Bribery Act: SFO yet to make any prosecutions
27 April 2012
FSA briefings on the key European directives affecting UK financial services
The Financial Services Authority maintains on its website a series of briefings on European legislation affecting UK financial services; their principal usefulness is the links they contain to key Commission, ESMA and FSA papers. Many of these briefings have been updated this month.
26 April 2012
Listed company fined for breach of related party and systems and controls rules
This is the first time that the Financial Services Authority has imposed a fine for breaches of the related party rules contained in Listing Rule 11 and of the procedures, systems and controls requirement of Listing Principle 2.
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26 April 2012
“There are now far more capable lawyers and law firms than there is work for them to do”
A vastly pessimistic interview with a historian of law firms in the New York Times.
25 April 2012
Common myths when employing someone for the first time
From the Department of Business, Innovation and Skills here.
See also: Take on an employee in 5 steps - Business Link
25 April 2012
Bank of England policy maker: remuneration periods should be 10 years or more and pay should be in long-term debt, not equity
Andrew Haldane, an executive director of the Bank of England and member of the Financial Policy Committee, argued in a speech on 14 April 2012 that banks bonuses to be restructured to reflect the reality of the underlying risk cycle:
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25 April 2012
Private actions in competition law: empowering SMEs and private individuals: BIS starts consultation
The Department of Business, Innovation and Skills yesterday launched a consultation on “Private actions in competition law”. The consultation paper is here and the BIS press release is here.
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24 April 2012
Hector Sants’ final speech as FSA CEO: The overriding importance of integrity for financial services leaders
In his last appearance as head of the FSA, Hector Sants discussed three questions:
• What do we mean when we say we want firms to have ‘effective boards’?
• What does this mean for the regulator’s Significant Influence Function process – often referred to as the ‘SIF’ process? And
• To what extent can the regulator incentivise the right behaviour and culture in firms?
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24 April 2012
UK businesses continue to prepare for a Euro event
London-listed Associated Business Foods plc emphasises in its interim dividend announcement this morning that it is analysing the impact of Eurozone “instability” i.e. a potential exit by one or more country from the Euro, or a break up of the Eurozone, on its operations:
“Each of our businesses has analysed the potential impact of euro instability on their operations, looking at a range of possible outcomes and the action necessary to minimise the consequences.”
See also: A Eurozone exit: Legal implications for companies and businesses
24 April 2012
FSA drops “failure to supervise” action against UBS wealth management head
Following a decision of the Upper Tribunal, the Financial Services Authority has discontinued its action against John Pottage, former CEO at UBS Wealth Management, for failure to put in place suitable controls and to supervise his organisation. The FSA’s action was the first against an individual, rather than a firm, in relation to control and supervision, as Citywire discusses here.
23 April 2012
“Two years ago we invested $250,000 in Instagram…the investment will be worth $78,000,000 when the Faceboook acquisition closes”
Some people are never happy: “Despite Instagram’s awesome performance and our monstrous return, a number of articles have come out criticizing us for not making even more money on our investment.” Tech VC firm Andreessen Horowitz on how they made 316 times their investment in Instagram, and why they didn’t make more, here.
23 April 2012
How conduct supervision will work under the Financial Conduct Authority
Reflecting the Government’s planned reform of financial services regulation, the Financial Services Authority has already divided itself internally into a Conduct Business Unit and a Prudential Business Unit; and in April this year started the split supervision of dual regulated firms between these two Units. Last week the FSA’s director of supervision at the Conduct Business Unit set out in a speech how – alongside these structural changes – the future Financial Conduct Authority will approach it supervision of the firms it regulates.
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23 April 2012
Chandler v Cape: holding company’s duty of care to employee of subsidiary
UPDATE 29 April 2012: The Court of Appeal has agreed with the High Court and confirmed that a parent company may owe a duty of care to an employee of a subsidiary, as we discuss in this post.
In Chandler v Cape, the High Court found that a holding company had, and had breached, a duty of care (in this case, in relation to health and safety) to an employee of a subsidiary company.
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23 April 2012
Tiffin v Lester Aldridge: Can a partner in an LLP be an employee?
A partner cannot be an employee of a partnership, because an individual cannot employ herself.
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23 April 2012
Foreign Corrupt Practices Act: Walmart in Mexico
The New York Times has a remarkable investigative piece on Walmart and alleged widespread breaches of the US Foreign Corrupt Practices Act in its Mexican operations here.
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23 April 2012
UKLA listing regime changes result in Daily Mail & General Trust leaving the FTSE UK index series
20 April 2012
It doesn’t matter whether a cat is black or white so long as it catches mice
- Deng Xiaoping. The Chinese People’s Daily newspaper, mouthpiece of the ruling Communist Party, has raised $245 million in that most capitalist of activities, an IPO.
20 April 2012
ESMA publishes final technical advice on delegated acts under the new short selling and credit default swaps regulation
ESMA has today published its final advice on possible delegated acts under the regulation on short selling and certain aspects of credit default swaps ((EC) No 236/2012)). Press release here and final advice here.
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20 April 2012
Why is financial innovation less likely to produce beneficial social impact than innovation in other sectors?
Lord Turner, the Chairman of the Financial Services Authority, took this question as one of the themes of his lecture this week on “Securitisation, shadow banking and the value of financial innovation”:
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20 April 2012
Changes to the UK Corporate Governance Code, Stewardship Code and Auditing Standards: FRC starts consultation
Here is the Financial Reporting Council press release, which highlights the principal proposed changes to the Codes and Standards and contains links to the consultation documents.
read more »
20 April 2012
Dewey considers merger-and-bankruptcy plan, says Wall Street Journal
“Among potential partners for the merger-and-bankruptcy plan being floated, Dewey has made overtures to New York-based Shearman & Sterling LLP; Greenberg Traurig LLP, which has roots in Miami; and Pittsburgh-based Reed Smith LP, these people said.
A Greenberg Traurig spokeswoman said: “We have a great deal of respect for Dewey LeBoeuf and their quality lawyers. It would be inappropriate for us to comment on market rumors.” At Shearman & Sterling, a spokesman said the firm “isn’t in discussions with Dewey & LeBoeuf concerning a merger.”"
Wall Street Journal report. And followed by a similar report in the New York Times.
19 April 2012
Sex and light fittings: employee gets compensation for injury sustained during work trip liaison
19 April 2012
No holds barred attack on Mervyn King by ex-member of MPC
David Blanchflower gives a tirade of abuse about the Governor of the Bank of England in the New Statesman. “A tyrant looks to his own advantage rather than that of his subjects and uses extreme and cruel tactics – which pretty much sums up how I feel Mervyn King has run the Bank of England in his role as governor since 2003″, and much more.
Mr Blanchflower, a former member of the Monetary Policy Committee is not a great fan of Paul Tucker, the favourite to replace Sir Mervyn: “He seems to have little leadership skills and, in my view, is intellectually not up to the task. In the days when he and I were on the MPC, I kept a “Tucker brown-nose score”, whereby I awarded him a point if he said any of the following: “I couldn’t agree with you more, Governor”; “Absolutely right, Governor”; “I agree with you completely Governor” or some such sycophantic nonsense. At some meetings, he would get into double figures.”
19 April 2012
AADB consultation on sanctions for auditors guilty of misconduct
The Accountancy and Actuarial Discipline Board yesterday started a consultation on “Sanction Guidance to Tribunals“. The consultation discusses the sanctions that the independent tribunal could impose on auditors found guilty of professional misconduct by the AADB. The headline suggestion is that, for the first time, fines should be calculated by reference to an audit firm’s turnover. AADB press release here.
See also: PwC receives largest fine ever imposed on a UK accountancy firm
19 April 2012
Zuckerberg didn’t tell Facebook board that he was going to buy Instagram until day of deal
The Wall Street Journal reports that Mark Zuckerberg only told his board about Facebook’s biggest ever acquisition on the morning of the day the deal was announced. “The board, according to one person familiar with the matter, “Was told, not consulted.”"
As we note here, he would be able to act in the same way after Facebook’s IPO, given his majority voting control.
See also: Super-voting stock in publicly-traded US technology companies and Leading proxy advisor surprised that Mark Zuckerberg controls Facebook
19 April 2012
Hill-loving Chief Executive of troubled Serious Fraud Office leaves unexpectedly
Phillippa Williamson has left the SFO days before the new head, Davis Green QC, starts work. Ms Williamson enjoyed the unusual luxury of continuing to live in the Lake District whilst running this most challenged of organisations, working from home two days a week and receiving an allowance of £27,600 for travel and accommodation costs.
See also: Serious Fraud Office apologises to Tchenguiz and SFO to be investigated as it lectures business leaders on “tone from the top”
19 April 2012
Hong Kong may hold banks liable for contents of listing prospectuses
Reports Reuters Business.
18 April 2012
ICAEW legal and regulatory technical releases
A reminder of the very useful legal and regulatory technical releases of the ICAEW and available on their website, including:
- Tech 01/11 guidance for directors on accounting records under the Companies Act 2006
- Tech 02/10 and 01/09 on distributable profits
- Tech 06/08 on financial and accounting duties and responsibilities of directors.
There is also a useful financial services release on the preparation of section 166 reports and financial reporting release on the disclosure of auditor remuneration; and various audit releases (for example, access to working papers, and auditors’ duty of care to third parties).
18 April 2012
Voting at general meetings: ICSA Registrars Group guidance note
Guidance note on “Practical issues around voting at general meetings” published on 17 April 2012. Focuses on public company general meetings and addresses “the operation of the UK voting process” (in particular problems around the delivery, receipt and recognition of proxy votes), setting out the approach taken by the outsourced registrars – Computershare, Capital and Equiniti.
The Guidance contains a 2011 analysis by one registrar, showing how near to the proxy deadline most proxies are delivered: “48 hours before the Proxy Deadline most companies had received proxy appointments in respect of only 20% of capital; 24 hours before the proxy deadline this had risen to 50%; and by the Proxy Deadline itself had risen to almost 70%.”
18 April 2012
Change to stock transfer form from 6 April 2012
Reasons for change summarised by ICSA here.
18 April 2012
Launch of first Renminbi bond in London
By HSBC – announcement here. Marked by a speech by the Chancellor of the Exchequer here. “London has a long history of global financial inventiveness – from founding the first organised market for insurance for trading around the world hundreds of years ago, to the development of the Eurodollar markets through the 1960s, 70s and 80s, and global foreign equities trading in more recent times. RMB trading is the next step along a 400 year road.”
18 April 2012
Dewey: speculation that partner departures mean loan covenants may be breached
“An accelerating wave of partner defections from the New York law firm Dewey & LeBoeuf is now threatening to violate the firm’s loan agreements with its banks.” – New York Times
18 April 2012
Citigroup shareholders vote down executive pay plan
A landmark moment in US corporate governance as Citigroup shareholders use their Dodd-Frank Act right to “say on pay” and vote against Citi’s executive compensation plan; see this comprehensive report by Reuters. The proxy advisory firms had advised a vote against the plan.
