29 June 2012
In March 2012 the European Securities and Markets Authority published a discussion paper on possible policy options on the proxy advisory industry, “to gain evidence on the extent to which market failures related to the activities of proxy advisors may exist, the extent to which EU-level intervention might be appropriate, and what ESMA’s role might involve”.
We covered the launch of the discussion paper in this post.
Today ESMA has published the responses it has received to the discussion paper.
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Posted in Consultations, Corporate governance, Equity capital markets, Europe, Lobby groups, Regulators |
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29 June 2012
On 28 June 2012 the European Securities and Markets Authority published a consultation paper on its proposed guidelines on the remuneration of alternative investment fund managers. The consultation paper is here and the accompanying press release is here.
The guidelines, once adopted, will apply to hedge fund, private equity fund and real estate fund managers where those alternative investment funds are within the ambit of the Alternative Investment Fund Managers Directive (AIFMD). For background on the AIFMD, see these posts.
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Posted in Consultations, Europe, Financial services and market conduct, Private equity, Regulators |
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29 June 2012
The Financial Services Authority has this morning issued a statement outlining the settlement it has reached with Barclays, HSBC, Lloyds and RBS in relation to their mis-selling of interest rate swaps to small and medium-sized businesses. The FSA press release is here and the further details about the settlement are here.
From the FSA press release:
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Posted in Financial services and market conduct, Regulators |
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28 June 2012
The Department of Business, Innovation and Skills today published the draft regulations that will implement the Government’s plans to reform the pay of quoted company directors. The regulations are contained in this consultation document. The accompanying BIS press releases are here and here.
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Posted in Companies Act 2006 and company law, Consultations, Corporate governance, Directors, Equity capital markets, Reporting and accounts, UK government |
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28 June 2012
Here is the letter sent by the Barclays Chief Executive to the Chairman of the Treasury Select Committee tonight. Excerpts are copied below .
The letter says that the attempted manipulation was done for two reasons:
- To benefit trading positions.
- More interestingly, in relation to the LIBOR setting process during the credit crisis. That was to attempt to reduce the market perception that Barclays was suffering higher funding costs than other banks.
The key question that the Barclays letter raises, but does not answer, is who took the “decision to lower submissions” in relation to that second reason. It seems ill-advised that Barclays has released a letter that so obviously poses this question but leaves it unresolved. The bank will be under pressure to provide an answer.
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Posted in Directors, Financial services and market conduct, Regulators, Risk management |
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27 June 2012
And CEO Bob Diamond gives up his bonus – takes some seriously bad news for that to happen – after regulators find that Barclays attempted to manipulate the London Interbank Offered Rate, one of the global benchmarks for interest rates.
Barclays statement here. FSA press release here and Final Notice here. US Department of Justice statement here. From the US Commodities Futures Trading Organisation press release:
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Posted in Financial services and market conduct, Regulators |
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27 June 2012
Here is a detailed, 27 page analysis of specific “problems and anomalies” contained in the Companies Act 2006, compiled by the Company Law Committee of the City of London Law Society and the Law Society Company Law Committee. (It also has, as an appendix, a letter discussing the issues raised by Farstad v Enviroco.)
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Posted in Companies Act 2006 and company law |
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26 June 2012
As we reported here last week, the Secretary of State withdrew his action to have the former directors of Farepak Food & Gifts Limited (Farepak), and its parent company European Home Retail Group PLC, disqualified as directors.
The former directors had been widely blamed in the media and by action groups for the collapse of Farepak, a company that ran a Christmas savings club and whose collapse in 2006 led to over 100,000 customers losing almost all of their deposits.
The judge presiding over the disqualification action, Mr Justice Peter Smith, made a statement following the withdrawal of the disqualification action last week. In that statement he made clear that blame had been wrongly attached to the directors:
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Posted in Companies Act 2006 and company law, Directors |
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26 June 2012
Here are the meeting minutes of the Company Law Committee of The City of London Law Society for January 2012 and April 2012.
Posted in Companies Act 2006 and company law, Lawyers, Lobby groups |
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25 June 2012
The defendants in the Blue Index insider dealing case have been sentenced.
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Posted in Regulators |
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25 June 2012
Defra announced on 20 June 2012 that it intends to require quoted companies* to report their greenhouse gas emissions in the directors’ report of their annual report, and will consult on the contents of secondary legislation to implement that policy. The announcement follows a prior consultation to decide how to proceed with the requirements of section 85 of the Climate Change Act 2008.
*See section 385 Companies Act 2006
UPDATE 25 July 2012: The Defra consultation has now been published and is here.
Posted in Companies Act 2006 and company law, Consultations, Reporting and accounts, UK government |
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25 June 2012
The European Securities and Markets Authority has published the 14th version of its “Question and Answers” on prospectuses. (This was originally produced by CESR, the forerunner to ESMA.)
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Posted in Equity capital markets, Europe, Financial services and market conduct, Regulators |
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25 June 2012
The changes to be made to the FSA Handbook as part of the UK implementation of the EU Amending Directive have been published. The changes relate principally to the Prospectus Rules and to the Disclosure Rules and Transparency Rules and will come into force on 1 July 2012.
The EU Amending Directive amends the prospectus regime established by the 2003 EU Prospectus Directive. We discuss the Amending Directive and its UK implementation in this post.
Posted in Equity capital markets, Europe, Financial services and market conduct |
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21 June 2012
Following yesterday’s announcement by the Government on how it will legislate to give shareholders of quoted companies greater control over directors’ pay – which we covered in this post - the Financial Reporting Council has today published a report on “A single figure for directors’ remuneration”. Accompanying press release here.
The aim of the report, which comes out of work done by the FRC’s Financial Reporting Lab, is to suggest a methodology by which quoted companies can publish a single figure for the pay of each of their directors. The report will support the Government’s intention, in its proposed pay reforms, to require quoted companies to publish that single figure in the pay “implementation report” that a company will need to publish in its annual report.
The FRC’s report runs to 15 pages and contains multiple tables, suggest disclosure approaches and appendices – suggesting that the production of a single figure that is meaningful (and comparable across other companies) is, as might be expected, not going to be straightforward. Cold towels all round.
See also: FRC to consult on directors’ pay in support of the Government’s reform plans
Posted in Companies Act 2006 and company law, Corporate governance, Directors, Equity capital markets, Regulators |
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21 June 2012
Following yesterday’s announcement by the Government on how it will legislate to give shareholders of quoted companies greater control over directors’ pay - which we covered in this post - the Financial Reporting Council has announced that it will consult on remuneration-related changes to the UK Corporate Governance Code once the Government’s legislation is in place:
“The FRC will consult on two proposals that the Government has asked it to consider: to extend the Code’s existing provisions on claw-back arrangements, and to limit the practice of executive directors sitting on the remuneration committees of other companies. It will also seek views on whether companies should engage with shareholders and report to the market in the event that they fail to obtain at least a substantial majority in support of a resolution on remuneration.”
See also: A single figure for directors’ pay? FRC Financial Reporting Lab report
Changes to the UK Corporate Governance Code, Stewardship Code and Auditing Standards: FRC starts consultation
Posted in Companies Act 2006 and company law, Consultations, Corporate governance, Directors, Equity capital markets, Regulators |
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21 June 2012
The Government yesterday published its finalised plans for giving shareholders in quoted companies* control over directors’ remuneration. The Department of Business, Innovation and Skills press release is here and its “Statement of government policy” is here.
BIS describes its proposed reforms as “the most comprehensive reforms of the framework for directors’ remuneration in a decade”. The reforms will be effected through the Enterprise and Regulatory Reform Bill. What BIS describes as “simplified” regulations setting out how companies must report directors’ pay will be published and consulted on. The government’s plan is that all these reforms will be enacted by October 2013.
Pay reforms: Government intentions
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Posted in Companies Act 2006 and company law, Corporate governance, Directors, Equity capital markets, UK government |
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21 June 2012
The Insolvency Service yesterday withdrew its action against former directors of Farepak Food & Gifts Limited (Farepak) and its parent company European Home Retail Group PLC.
The application for disqualification orders against the directors was in progress at the High Court. It was withdrawn following the judge’s questioning of whether the action should continue in the light of, amongst other matters, the reported actions of HBOS in refusing to place Farepak customers’ money into a separate trust account prior to Farepak’s collapse. If HBOS did refuse to do that, it would have meant that more cash was available to meet creditors’ claims. HBOS was a major creditor.
The Daily Telegraph’s report of the ending of the disqualification action is here and the Mail’s is here.
UPDATE 6 July 2012: Lloyds Banking Group to make £8 million ex-gratia payment to former Farepak customers
See also: Farepak: what the judge said
Business Secretary Vince Cable has referred HBOS, now part of Lloyds Banking Group, to the FSA after his prosecution of the Farepak directors collapsed last week. In a statement Mr Cable also said he would also be contacting HBOS to establish how they would respond to calls for the bank to pay more into the Farepak creditors’ compensation fund – Daily Telegraph
Disqualification action against former Farepak directors to start on 24 May
Farepak liquidation: Advisers’ fees exceed total creditor payout
Insolvency Service applies for disqualification order against former President of the CBI
Posted in Companies Act 2006 and company law, Directors |
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20 June 2012
Groupe Eurotunnel announced today that it is transferring its admission to trading from the London Stock Exchange to NYSE Euronext London. Eurotunnel will become the first company admitted to trading on NYSE Euronext London.
Eurotunnel’s admission to the Official List will be unaffected:
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Posted in Equity capital markets |
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19 June 2012
Transparency International UK has published a 32 page guide to “Anti-bribery due diligence for transactions”, which can be downloaded here.
The guidance ”aims to help those operating in this area by providing a practical guide that draws on the expertise of leading practitioners in multinational companies, the legal profession, accounting firms and professional advisors” and contains:
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Posted in Companies Act 2006 and company law, Lobby groups |
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19 June 2012
With the European Commission consulting on introducing legislative measures to increase the number of women on company boards, the House of Lords EU Sub Committee on Internal Market, Infrastructure and Employment has launched an inquiry into “Gender balance in the boardroom – is there a role for the EU?“
The House of Lords inquiry will consider:
- “Is gender imbalance on company boards an EU issue, or should it be a matter for national governments?
- What is the case for gender diversity on boards? Does it bring economic benefits, does it benefit corporate culture, or is it simply the right thing to do?
- Are quotas the only option? What other measures could the EU employ?
- Can or should gender diversity be incentivised?
- What are the positive and negative effects of legislative quotas?
- What impact have quotas had elsewhere in Europe?
- What does success look like in this area?”
The inquiry call for evidence is here. The deadline for submitting written evidence is Tuesday 10 July.
See also: Women on boards: one year on from the Davies Review
Posted in Consultations, Corporate governance, Directors |
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19 June 2012
The final text of The Prospectus Regulation 2012 (SI2012/1538) has been published, together with an explanatory memorandum.
The Prospectus Regulation amends the Financial Services and Markets Act 2000 as part of the UK implementation of the EU Amending Directive, which amends the prospectus regime established by the 2003 EU Prospectus Directive. We discuss the Amending Directive and its UK implementation in this post.
Posted in Equity capital markets, Europe, Financial services and market conduct |
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19 June 2012
The Financial Reporting Council has updated its guidance for directors of listed companies on ”Responding to heightened country and currency risk in interim financial reports”. The updated guidance, which was first published in January 2012, is here and the accompanying FRC press release is here.
The FRC summarises the purpose of this guidance as follows:
read more »
Posted in Regulators, Reporting and accounts |
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18 June 2012
The Serious Fraud Office arrested property entrepreneur Mr Tchenguiz and his brother Robert in March 2011, in a publicity-seeking raid on the morning of the Cannes MIPIM property conference.
After that the investigation descended into farce, culminating with the SFO apologising to Mr Tchenguiz, the Attorney General launching an investigation into the SFO’s operations and a judge criticising the SFO’s “sheer incompetence“.
Today the SFO, which apparently seriously considered placing agents in Annabel’s nightclub as part of its activities, informed Mr Tchenguiz that it is dropping its investigation. (Robert Tchenguiz remains under investigation.) Here’s today’s punchy statement from Vincent’s Consensus Business Group (via FT Alphaville).
UPDATE 31 July 2012: The High Court has declared that the search warrants issued to the Serious Fraud Office were unlawful as they were obtained by misrepresentation and non‐disclosure to the judge – summary of judgments here and SFO press release here.
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Posted in Risk management, UK government |
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18 June 2012
Shareholders in PLUS Markets Group plc today approved the sale of PLUS’s stock exchange business, PLUS-SX, to ICAP.
The lead up to the confirmation of the sale was confused, with PLUS initially announcing that all of its businesses were to close and then agreeing to sell the stock exchange business to ICAP, which in turn provoked vocal opposition from some shareholders.
The deal, which is conditional on FSA change of control approval, gives ICAP a licence to operate a regulated investment exchange (one of only five in the UK) and so accelerate the building of its listed derivatives business. The survival of PLUS-SX will preserve the listings of around 150 smaller companies. PLUS itself will become an Investing Company under the AIM Rules.
Posted in Equity capital markets, Financial services and market conduct, M+A |
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15 June 2012
In November 2011 we reported on the £6.3 million fine imposed on Coutts by the Financial Services Authority for mis-selling an AIG bond to a large number of wealthy clients.
These clients suffered a loss in their investment as a result of the collapse of AIG in 2008. The FSA held that Coutts breached Principle 9 of the FSA Handbook, which requires that a “firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely up on its judgement”.
Sky News is today reporting that Coutts has begun offering customers compensation for this mis-selling:
read more »
Posted in Financial services and market conduct, Regulators |
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15 June 2012
Rajat Gupta, former head of McKinsey and a past Goldman Sachs and Proctor & Gamble director, has this afternoon been found guilty of insider trading by a New York court.
This is the highest profile insider trading conviction for many years. As we observed in this post in October 2011, Mr Gupta is, or was, a high priest of the elite of finance capitalism.
Mr Gupta was found guilty on three counts of securities fraud and one conspiracy charge relating to the passing of tips to Raj Rajaratnam, former head of the Galleon hedge fund and who in October 2011 received an 11 year jail sentence for insider trading.
Mr Gupta will be sentenced in October 2012.
Posted in Financial services and market conduct, United States |
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15 June 2012
With the Chancellor of the Exchequer and the Governor of the Bank of England setting out their policy responses (last night’s Mansion House speeches here and here) to the continuing tightness of credit in the UK and anticipated liquidity problems following the Greek elections, and the ECB also hinting that it will make additional liquidity available to Eurozone banks, the retail forex trading OANDA is suspending its service on Sunday:
“The decision to halt trading is very much tied to the uncertainty in Europe and in particular, the Greek election. Given these events, there is the potential for extreme exchange rate volatility at a time when global currency markets are closed. OANDA’s concern is that exchange rates could undergo significant fluctuations as the exit polls are made public. If these fluctuations are wide enough, accounts that under normal conditions would be considered well-capitalized, could become subject to a margin call.
By halting trading and holding the closing prices steady during this period, we aim to shelter traders from the potential for price spikes.”
See also: Brokerage exits Greek stock market, credit insurer reviews [now pulls] cover for exports to Greece
A Eurozone exit: forex traders and retailers prepare
A Eurozone exit: Legal implications for companies and businesses
Posted in Europe, Financial services and market conduct, Risk management |
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15 June 2012
Posted in Lawyers, Private equity |
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14 June 2012
ICAP has today increased its offer for the PLUS Markets stock exchange business – and PLUS’s recognised investment exchange authorisation – by £500,000, following opposition to the deal from some PLUS Markets shareholders (see our story “Handbags at PLUS Markets”).
The shareholder vote to approve the sale to ICAP is on 18 June 2012.
Posted in Equity capital markets, Financial services and market conduct, M+A |
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14 June 2012
It’s hardly the whole story, but here is a clearly-written explanation (from the final report of the Sharman Inquiry) of why one of the basic purposes of banks – maturity transformation – makes them inherently unstable:
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Posted in Financial services and market conduct, Risk management |
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14 June 2012
The Sharman Inquiry on “Going Concern and Liquidity Risk: Lessons for companies and auditors” published its final report and recommendations on 13 June 2012. The final report is here and the Financial Reporting Council’s accompanying press release is here.
The Inquiry was established by the FRC in March 2011, as we reported here, to “identify lessons for companies and auditors addressing going concern and liquidity risk” arising from the financial crisis. Amongst the Inquiry’s terms of reference were:
• “How companies ensure the adequacy, timeliness and reliability of the internal information used to monitor going concern and liquidity risk; and
• Whether the going concern and liquidity risk disclosures required by IFRS, the UK Corporate Governance Code and the Listing Rules provide timely and relevant information for all stakeholders.”
The Inquiry issued its interim report in November 201 (see our summary here).
Purpose of a company’s going concern assessment
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Posted in Corporate governance, Financial services and market conduct, Regulators, Reporting and accounts, Risk management |
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14 June 2012
HM Treasury has today published a White Paper setting out how the Government intends to implement the Independent Commission on Banking’s recommendations that retail and investment banking in UK banks should be separated and the retail operation ring-fenced.
The White Paper is here. The Financial Secretary launched the White Paper with this statement to Parliament, the key passages of which are:
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Posted in Consultations, Financial services and market conduct, UK government |
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13 June 2012
What proportion of national laws originate in Brussels? 80%? 50%? 20%?
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Posted in Europe |
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13 June 2012
On 2 May 2012 it was announced that London-listed Kewill plc had accepted a takeover offer from Kinetic Bidco Limited, a newco vehicle owned by Francisco Fund Partners. The takeover was to be effected by scheme of arrangement, and the Scheme Court Meeting and the General Meeting were held on 25 May 2012, with the Kinetic takeover being approved by Kewill shareholders at those meetings.
The Scheme Court Hearing was duly scheduled for 13 June 2012 (today), which would have completed the scheme of arrangement and the takeover by Kinetic.
However,
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Posted in Companies Act 2006 and company law, Equity capital markets, Private equity, Takeovers |
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12 June 2012
Alexander Justham joins the London Stock Exchange Group (LSEG) as CEO of its regulated subsidiary, London Stock Exchange plc. Mr Justham (who the LSEG mysteriously announces in its press release likes to be known as “JJ”) was at the Financial Services Authority until 2011 as Director of Markets.
Tracey Pierce, Head of Primary Markets, is leaving the LSEG and is replaced by Alastair Walmsley, ex-Morgan Stanley.
The LSEG has also appointed a new CFO, David Warren, previously at Nasdaq OMX.
LSEG announcement here.
Posted in Equity capital markets |
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12 June 2012
The Companies Act 2006 introduced a new procedure by which a private company limited by shares can reduce its share capital by means of a solvency statement made by the directors. The procedure is set out in sections 642 to 644 of the 2006 Act.
The ICAEW has published useful short guidance on how to comply with some of these statutory requirements. That guidance appears to be no longer available for public access online, but this short note from Mayer Brown captures its main points.
The Company Law Committee of the Law Society published a memorandum in October 2008 on practical steps that directors can take before making a solvency statement, which can be read here.
See also: ICAEW legal and regulatory technical releases
Posted in Companies Act 2006 and company law, Directors |
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11 June 2012
An informative article in the Financial Times on the influence of proxy advisors in the UK, particularly topical in this so-called “shareholder spring”. (As an aside, it’s sad that by using that term, corporate governance commentators implicitly compare themselves to the brave citizens of Arab states who have literally fought, and died, for change.)
read more »
Posted in Corporate governance, Lobby groups |
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11 June 2012
The House of Common Library has published a paper on the Green Investment Bank (GIB). The paper covers the background to the GIB, its structure, priorities for investment and location, and the foundation of the GIB by means of the Enterprise and Regulatory Reform Bill.
From the Library’s summary of its paper:
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Posted in UK government |
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11 June 2012
HM Treasury has announced today that John Griffith-Jones, the current chairman of KPMG in the UK, has been appointed as the non-executive Chair designate of the Financial Conduct Authority.
An interesting choice, given that in March 2011 a House of Lords committee described the Big Four auditors as “culpably unaware” of the dangers of a bank meltdown in 2008.
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Posted in Financial services and market conduct, Regulators, UK government |
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