15 October 2012
On 12 October 2012 ICSA announced that a “steering group of industry experts – companies, investors and other key stakeholders – has today launched ‘Improving Engagement Practices by Companies and Institutional Investors’, a consultation document on stewardship”. The ICSA press release is here and the consultation document is here.
From the press release:
“Areas covered in the consultation document include:
• Whether the nature of the discussion between a company and its investors needed to change, with more emphasis on a dialogue which built and encouraged a long-term relationship with, and commitment to, the company;
• what improvements can be made to the process of holding engagement meetings;
• whether companies and institutional investors should seek feedback on the quality of meetings, and how that might be most effectively done.
Respondents are also asked to comment on a list of practical measures designed to make meetings more productive.”
The Steering Group intends to issue guidance in March 2013.
See als0: UK Corporate Governance and Stewardship Codes: FRC confirms changes
Posted in Corporate governance, Equity capital markets |
Comments Off
2 October 2012
In a new consultation paper published today, the Financial Services Authority – in its guise as the UK Listing Authority – has announced that it is consulting on:
- changes to the free float requirements for both the premium and standard listing segments on the Main Market; and
- introducing a new controlling shareholder concept.
read more »
Posted in Consultations, Corporate governance, Directors, Equity capital markets, Regulators, UK government |
Comments Off
2 October 2012
The Financial Reporting Council issued on 28 September 2012 revised auditing standards which aim “to enhance communications to audit committees and auditor reporting”. From the FRC press release:
read more »
Posted in Companies Act 2006 and company law, Corporate governance, Regulators, Reporting and accounts |
Comments Off
1 October 2012
The Financial Reporting Council confirmed on 28 September 2012 that it is going ahead with changes to the UK Corporate Governance Code and the Stewardship Code. These changes were consulted on in April 2012, as we discussed here. The changes to both Codes are ”intended to increase accountability and engagement through the investment chain”. The FRC’s press release is here.
The new version of the Governance Code is here and the new version of the Stewardship Code is here. The updated Codes apply from 1 October 2012.
The FRC has also published an updated edition of its Guidance on Audit Committees to reflect the changes to the UK Corporate Governance Code, and will carry out further consultation on whether changes are needed to those parts of the UK Corporate Governance Code dealing with remuneration when the Government’s legislation on remuneration reporting and voting has been finalised. Any changes following this consultation will be effected in the next edition of the Code.
UK Corporate Governance Code
Here is the FRC’s summary of the changes to the Governance Code:
read more »
Posted in Companies Act 2006 and company law, Consultations, Corporate governance, Equity capital markets, Regulators, Reporting and accounts |
Comments Off
1 October 2012
No, according to this report in the New York Times on a recent study by two US academics who:
“…conclude, contrary to the prevailing line, that chief executives can’t readily transfer their skills from one company to another. In other words, the argument that C.E.O.’s will leave if they aren’t compensated well, perhaps even lavishly, is bogus. Using the peer-group benchmark only pushes pay up and up.
read more »
Posted in Corporate governance, Directors |
Comments Off
20 September 2012
Having been trailed at the end of August, the FT confirms this morning that the UK government is to consult on measures designed to encourage high-growth tech companies to list on London:
- Shares in public hands requirement to be reduced to 10% from 25%.
- Three year past accounts rule to be relaxed.
- Requirement for independent non-executive directors to be reduced.
The consultation will be announced today.
UPDATE: BIS has now given some more details of these “ambitious proposals with the London Stock Exchange to attract entrepreneurs and high-growth companies” to IPO in London:
read more »
Posted in Consultations, Corporate governance, Equity capital markets, UK government |
Comments Off
14 September 2012
The Times reported on 13 September 2012 that Legal & General Investment Management has banned remuneration consultants from meetings with company management:
“Sacha Sadan, the director of corporate governance at LGIM, said that when pay consultants were present, they tended to dominate proceedings. He added that LGIM, which owns 4 per cent of the stock market, was not alone in outlawing pay advisers from its meetings with management. “If the chair of the remco [remuneration committee] can’t explain the policy, then that means it is not right,” he said.”
See also: Vince makes his mind up: Final plans for reform of directors’ pay in quoted companies
Follow us on Twitter @CoFinLaw
Posted in Corporate governance, Directors, Lobby groups |
Comments Off
14 September 2012
leOn 12 September 2012 the Financial Services Authority announced that is fining Peter Cummings – former head of the HBOS Corporate division - £500,000 and banning him from holding any senior position in a UK bank, building society, investment or insurance firm. As the FSA said, “this is the highest fine imposed by the FSA on a senior executive for management failings”.
The FSA press release is here and the Final Notice for Mr Cummings is here. Mr Cummings’ very punchy rejoinder is here, his objections focusing on (i) the FSA’s apparent conflict of interest in being both the regulator responsible for HBOS during its downfall and the body standing judgement over Mr Cummings, and (ii) the seeming unfairness of Mr Cummings having been the only HBOS executive punished by the FSA in connection with its collapse.
The action against Mr Cummings follows the regulator’s public censure of Bank of Scotland in March 2012 when, as we discussed here, it found that between 2006 and 2008 HBOS’s Corporate division lost control, didn’t know what it was doing and continued with a flawed strategy as competitors exited and markets worsened.
The completion of enforcement action against Mr Cummings means that the FSA will now commence work on its report into the causes of the failure of HBOS in 2008, the purpose of which report will be to:
- “explain why HBOS failed and cover the FSA’s supervision of HBOS and explain the focus of the enforcement actions; and
- inform a wider internal and public understanding of the causes of failure during the crisis (to the extent not already covered by the RBS report)”
From the FSA’s press release on its banning of Mr Cummings:
read more »
Posted in Corporate governance, Financial services and market conduct, Regulators, Risk management |
Comments Off
13 September 2012
The London Stock Exchange has produced a new guide to “Corporate Governance for Main Market and AIM Companies”, which can be read here. Written by a number of law firms and financial and other advisers, it is a comprehensive overview, if not particularly detailed discussion, of the subject and associated areas such as:
• Corporate governance in an EU context
• Requirements for non-UK companies listing in London
• Inside information
• The Bribery Act 2000
• Managing directors’ conflicts
• The independent adviser’s role
• Financial communications and investor strategies
• Protection for directors and their companies.
See also: Corporate governance
Follow us on Twitter @CoFinLaw
Posted in Companies Act 2006 and company law, Corporate governance, Directors, Equity capital markets |
Comments Off
5 September 2012
The Government today launched new guidance for senior business leaders on tackling “the growing cyber threats to their companies”. The BIS press release is here. Excerpt:
read more »
Posted in Corporate governance, Directors, Risk management, UK government |
Comments Off
4 September 2012
The Financial Times reports today that Viviane Reding, the EU Justice Commissioner, will next month propose that listed companies “will be forced to reserve at least 40 per cent of their non-executive board seats for women by 2020 or face fines”. The FT points out that such rules could be adopted by majority voting, so the UK would not have a veto. The draft of the proposals obtained by the FT suggests that the proposals would apply to companies with more than 250 employees or more than Euro 50 million in revenues, with those failing to meet the mandatory quota being subject to “administrative fines” and, more seriously, potentially being barred from state aid and contracts.
read more »
Posted in Corporate governance, Directors, Europe |
Comments Off
20 August 2012
From efinancialnews.com via Nasdaq:
“One of the world’s largest investors is threatening to boycott any stock market listing that allows minority shareholders to control a majority of the votes through multi-tier share structures and will oppose those that already exist…
…The California Public Employees’ Retirement System, the US’s largest pension fund with $237 billion in assets under management, is drawing up new corporate governance criteria under which it will campaign to remove dual class, classified or plurality voting structures and not invest in initial public offerings which use them.”
read more »
Posted in Corporate governance, Equity capital markets, United States |
Comments Off
27 July 2012
The Parliamentary Commission on Banking Standards, established as the LIBOR scandal started to unfurl, yesterday issued its call for evidence, inviting responses by 24 August 2012 to the following initial questions:
read more »
Posted in Consultations, Corporate governance, Financial services and market conduct, UK government |
Comments Off
24 July 2012
Anthony Salz, former senior partner of Freshfields, has been appointed to lead a review of Barclays business practices (the Review). The Barclays press release announcing the Review is here and the Review’s terms of reference are here.
The Review was initiated following Barclays fine for the attempted manipulation of the LIBOR. The terms of reference assert that:
read more »
Posted in Corporate governance, Financial services and market conduct, Lawyers |
Comments Off
23 July 2012
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”.
read more »
Posted in Consultations, Corporate governance, Equity capital markets, UK government |
Comments Off
18 July 2012
The Commission was established as the LIBOR scandal started; its membership and mandate were announced yesterday evening. It is to consider and report on:
read more »
Posted in Consultations, Corporate governance, Financial services and market conduct, UK government |
Comments Off
11 July 2012
Via the Treasury Select Committtee, here is the Chairman of the Financial Services Authority’s 10 April 2012 letter to the Chairman of Barclays, in which the FSA remarked on its:
“…concerns about the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of intepretation of the relevant rules and regulations”.
Barclays’ response – which reads like that a boy who, whilst clever, is missing the wider point that his headmaster is making – is here.
See also: The implicit subsidy of UK banks by the government – Bank of England paper, May 2012
Posted in Corporate governance, Financial services and market conduct, Regulators, Risk management |
Comments Off
4 July 2012
The Times reports today (here, paywall) that:
read more »
Posted in Corporate governance, Directors, Lawyers |
Comments Off
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.
read more »
Posted in Consultations, Corporate governance, Equity capital markets, Europe, Lobby groups, Regulators |
Comments Off
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.
read more »
Posted in Companies Act 2006 and company law, Consultations, Corporate governance, Directors, Equity capital markets, Reporting and accounts, UK government |
Comments Off
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 |
Comments Off
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 |
Comments Off
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
read more »
Posted in Companies Act 2006 and company law, Corporate governance, Directors, Equity capital markets, UK government |
Comments Off
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 |
Comments Off
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
read more »
Posted in Corporate governance, Financial services and market conduct, Regulators, Reporting and accounts, Risk management |
Comments Off
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 |
Comments Off
24 May 2012
The Enterprise and Regulatory Reform Bill was published yesterday and contained within it at section 57 is confirmation that the Bill will start the process of giving shareholders of quoted companies a binding vote on directors’ remuneration.
read more »
Posted in Companies Act 2006 and company law, Corporate governance, Directors, UK government |
Comments Off
23 May 2012
Facebook’s IPO is turning into a legal and PR disaster. Here is a round-up of what’s gone wrong so far:
read more »
Posted in Corporate governance, Equity capital markets, Financial services and market conduct, Private equity, Regulators, United States |
Comments Off
16 May 2012
The Financial Times reports today that Michel Barnier, the European Commissioner for the Internal Market and Services, will propose that shareholders should get a binding vote on directors’ pay in quoted companies when he makes his final recommendations on corporate governance in listed companies in autumn 2012.
For the UK, the suggestion simply replicates the Government’s own proposals for a binding vote confirmed in the May 2012 Queen’s Speech.
In his interview with the FT, Mr Barnier also suggests that:
read more »
Posted in Companies Act 2006 and company law, Corporate governance, Directors, Equity capital markets, Europe, Financial services and market conduct, Regulators |
Comments Off
15 May 2012
The CFO of Francesca’s Holding Corp. has been removed after using Facebook and Twitter to disclose potentially price sensitive information. Apparently he thought he was being amusing.
The CEO of Best Buy left just before it emerged that the company had been investigating his “intense” relationship with a junior employee. Now the cover-up has caused the Chairman to go as well. (The Daily Mail gets to the heart of the matter in its inimitable style.)
And the CEO of Yahoo left after a hedge fund pointed out that his CV claimed he had a degree he hadn’t got.
Posted in Corporate governance, Directors, Risk management, United States |
Comments Off
14 May 2012
The CEO of Yahoo has left the company with immediate effect, after a hedge fund found material inaccuracies in his CV. He hardly gets a mention in the press release announcing his departure.
Posted in Corporate governance, Directors, United States |
Comments Off
6 May 2012
Oh dear…he said (and repeatedly filed at the SEC) that he has a degree in “accounting and computer science” – very useful if you want to run Yahoo. However, a hedge fund agitating for change and board seats at Yahoo has found out that it is actually only an accounting degree. Less useful. The fund is calling for the CEO, Scott Thompson, to be fired by Monday 7 May.
UPDATE 8 May 2012: Mr Thompson has now apologised for the disruption caused by disclosure of his incorrect CV, if not for the incorrect CV itself.
UPDATE 14 May 2012: He has now left Yahoo.
Posted in Corporate governance, Directors, United States |
Comments Off
6 May 2012
Caffyns plc, a family-controlled company (page 57 of 2010 Annual Report) with three classes of security on the UKLA Official List and a Premium Listing on the London Stock Exchange, is facing a derivative claim and an unfair prejudice action from a shareholder action group.
read more »
Posted in Companies Act 2006 and company law, Corporate governance, Equity capital markets |
Comments Off
3 May 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.
Posted in Companies Act 2006 and company law, Consultations, Corporate governance, Directors, Equity capital markets, Reporting and accounts |
Comments Off
25 April 2012
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:
read more »
Posted in Corporate governance, Financial services and market conduct, Regulators, Risk management |
Comments Off
24 April 2012
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?
read more »
Posted in Corporate governance, Directors, Financial services and market conduct, Regulators, Risk management |
Comments Off
20 April 2012
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 »
Posted in Consultations, Corporate governance, Equity capital markets, Regulators, Reporting and accounts |
Comments Off
19 April 2012
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
Posted in Corporate governance, Equity capital markets, M+A, United States |
Comments Off
18 April 2012
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%.”
Posted in Companies Act 2006 and company law, Corporate governance |
Comments Off
