HM Treasury published on 10 August 2012 an initial discussion paper to support the review of LIBOR by Martin Wheatley, chief executive-designate of the Financial Conduct Authority. The discussion paper follows the Treasury’s setting of the Wheatley Review’s Terms of Reference on 30 July 2012.
The discussion paper is here. Accompanying press releases are here and here. A speech by Martin Wheatley given on the same date is here; in that speech, Mr Wheatley set out the scope of his review:
“The Commission today [26 July 2012] launched an in-depth consultation on issues arising in the area of investment funds. The consultation focuses on:read more »
Kay Review: Abolish quarterly reporting, rebate stock lending income and apply fiduciary standards through investment chain
The final report of “The Kay Rcview of UK Equity Markets and Long-term Decision Making” has been published today. The final report is here and the associated BIS press release is here. Professor Kay’s speech – with its emphasis that those engaged in the equity investment chain should operate to fiduciary standards – launching the report is here.
Professor Kay was asked by the Business Secretary in June 2011 to review whether the UK equity markets give sufficient support to “their core purpose of enhancing the performance of UK companies and providing returns to savers”. His answer is a pretty resounding “no”:
“…we conclude that short-termism is a problem in UK equity markets, and that the principal causes are the decline of trust and the misalignment of incentives throughout the equity investment chain”.
The report sets out principles “designed to provide a foundation for a long-term perspective in UK equity markets and describe the directions in which regulatory policy and market practice should move”, and then specific recommendations aimed at “providing the first steps towards the re-establishment of equity markets that work well for their users”.
Takeover Panel consulting on removal of residency test, impact of offer on pension schemes, and on profit forecasts, merger benefits statements and material changes in information previously published during an offer period
The Code Committee of the Takeover Panel has today issued three consultation papers:
1. Profit forecasts, quantified financial benefits statements, material changes in information and other changes to the Code, PCP2012/1 – amendments to Code provisions.
2. Pension scheme trustee issues, PCP 2012/2 – proposing to extend the provisions of the Code which apply to employee representatives to apply also to the trustees of the offeree company’s pension schemes.
3. Companies subject to the Takeover Code, PCP 2012/3 – proposing to remove the “residency test” for whether the Code applies to an offer.
The consultations close on 28 September 2012.
Prompted by the failure of the Royal Bank of Scotland and in the spirit of Barclays travails, HM Treasury today launched a consultation on possible sanctions for directors of failed banks. The consultation document is here and the accompanying Treasury press release is here.
The two principal measures suggested in the consultation document are:
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.
Remuneration of alternative investment fund managers: ESMA consultation paper, and “consistency of the rules for remuneration across financial sectors”
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.
Directors’ pay in quoted companies: draft regulations and Government consultation document published
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.
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.
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.”
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.
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.
Amending the prospectus regime: HM Treasury and FSA response to their consultation on UK implementation of the Amending Directive, and European Commission draft delegated regulations
HM Treasury and the Financial Services Authority published on 25 May 2012 a joint policy statement (PS12/9) summarising the responses received and policy decisions made in relation to their consultation paper CP11/28, “UK implementation of Amending Directive 2010/73/EU”. The FSA’s press release is here and PS12/9 is here.
The European Commission has today started a High-level Expert Group consultation on the structure of the EU banking sector. The one-page consultation document is here. The membership of the High-level Expert Group is here (Carol Sargeant representing the UK) and its mandate is here. The Group is to report back to the Commission by the end of summer 2012.
The advisory vote on the remuneration report at today’s AGM was lost by the insurer. It seems that institutional shareholders are to some extent pre-empting the results of the Government’s consultation on giving investors binding votes on executive pay.
Manifest, the proxy voting agency, reports that “only 12 other FTSE 100 companies have had more than 40% dissent on their remuneration report since records began” and that Aviva becomes only the fourth FTSE100 company to lose the advisory vote.
The chief executive of Trinity Mirror, Sly Bailey, has seen the writing on the wall and quit a week ahead of her AGM. Ms. Bailey managed to extract £12.7 million from the company whilst overseeing a 90% fall in the share price during her tenure.
UPDATE 8 May 2012: Following the shareholder vote against the remuneration report, the Chief Executive of Aviva has now resigned with immediate effect even though he personally was re-elected by 95% of those voting at the AGM on 4 May.
He gets a year’s salary “subject to mitigation” and £300,000 “in full and final settlement of all claims that he might have to bonus under his contract”, and pension, and vesting of shares from the 2009 bonus plan – but nothing from the deferred elements of the 2010 or 2011 bonus plans. Approximately £1.7 million, all taken together.
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.
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.
Reports Reuters Business.
Broad support for division of annual report into two parts: a Strategic Report and an Annual Director’s Statement
Proxy advisors: ESMA, concerned about conflicts of interest, starts consultation on possible regulation
The European Securities and Markets Authority publishes discussion paper on the proxy advisory industry; EU regulation is one option under consideration
Shadow banking: European Commission considers steps to regulate entities operating outside the regular banking system
European Commission publishes Green Paper on shadow banking
Government consultation on bringing “the Competition Commission and the OFT’s competition functions into a single organisation and to modernise its competition toolkit”
Policy options for implementing the Alternative Investment Fund Managers Directive
Consultation launched on the detail of the Government’s proposals on executive pay
Proposal for a Regulation on improving securities settlement in the European Union and on central securities depositories
Justice Commissioner suggests quotas could be set at 20%, 30%, 40% or 60%
Things we don’t need: European Commission launches consultation on the future of European company law
“The Commission …wants to check the pulse of stakeholder opinion on the purpose of European company law, and on its future”
Fundamental overhaul of UK GAAP: “A single book that sets out clear, concise and cost-effective accounting requirements”
Proposals from the ASB on the future of Financial Reporting Standards
A policy document, “A new approach to financial regulation: securing stability, protecting consumers“ that supports the draft Bill has also been published.
The draft Bill also announces the Government’s intention to move consumer credit legislation to the new Financial Conduct Authority.