Standards & Guidance
Briefs .....
The UK’s private equity industry is to develop a voluntary
code to improve the transparency and disclosure of companies in which it
invests. The British Private Equity and Venture
Capital Association (BVCA) has formed a working group, chaired by Sir David
Walker, senior advisor at Morgan Stanley International, to examine how the
levels of disclosure in companies backed by UK private equity could be improved
and how it should communicate with stakeholders. The BVCA said the working group
would consult widely and produce its report by the autumn. Private equity firms
were recently criticised by the TUC's general secretary, Brendan Barber who
demanded more transparency and disclosure, particularly in relation to the
rewards paid to, and the tax paid by, top private equity executives.
The Institute of
Chartered Secretaries and Administrators (ICSA) has published an updated
guidance note
on electronic communications with shareholders. The note brings together the
provisions from the
Companies Act 2006 and the Financial Services Authority’s disclosure and
transparency rules. The clauses in the Companies Act relating to electronic
communications were brought in on 20 January 2007, to coincide with the
implementation of the European Transparency and Obligations Directive. The most
significant aspect of the provisions is the ability for companies to switch the
default communication method from hard copy to website. The guidance aims to
clarify the issues relating to the change in time for the 2007 AGM season. This
note is the first in a series the ICSA is publishing on the Companies Act.
The Australian Corporations and Markets Advisory Committee
is reviewing a recent decision in the Sons of Gwalia bankruptcy case that allows
shareholders to be placed on an equal footing with creditors. The ruling makes
it easier for investors to recover funds if they can prove they bought shares in
a company as a result of misleading conduct prior to the bankruptcy. However,
concerns have been expressed that this extension of shareholders’ rights may
complicate bankruptcy proceedings and come at the expense of other creditors.
Announcing the referral to the committee, Chris Pearce,
parliamentary secretary
to the Treasurer, said the ramifications of the case need to be carefully
explored for companies, shareholders and creditors.
A pan-European market for financial services is under threat from a “real
risk” that MiFID’s attempt to create a single rulebook could become a “practical
nightmare”, internal market commissioner
Charlie
McCreevy has warned. MiFID is part of the EU’s financial services action
plan, and one of its aims is to create cross-border competition between stock
exchanges, opening the market up to competitors like investment banks. McCreevy
said there is a danger that a single rulebook could be jeopardised as a result
of regulators in the 27 member states seeking to supplement it with manuals of
interpretive guidelines, all with different types and numbers of reporting
fields.
The US House
committee on education and labor has requested information from the
White House and
Sallie Mae on share sales made by Albert
Lord, the student loan company’s chairman, three days before the official
release of the president’s budget. The budget called for over $17bn in cuts to
the lending industry, and the committee’s letters noted this could have a
financial impact on companies such as Sallie Mae. The committee is asking for
details of communication between Sallie Mae, the White House and the Department
of Education about the lending industry from 1 November 2006 to 12 February
2007.
The
European Commission has hit five companies with record fines totalling €992m
for allegedly operating cartels in the installation of lifts and escalators. The
Commission has accused
Otis, KONE,
Schindler,
ThyssenKrupp and
Mitsubishi Elevator Europe
of between 1995 and 2004 rigging bids for procurement contracts, fixing prices
and allocating projects to each other.
Neelie
Kroes, competition commissioner, said it was outrageous the construction and
maintenance costs of buildings have been artificially swollen by these
companies. ThyssenKrupp was hit hardest, being fined a total of nearly €480m.
The company said it is considering whether to appeal.
The US Securities and
Exchange Commission (SEC) has filed civil actions against two former
executives of Engineered Support
Systems over their alleged participation in a fraudulent stock options
backdating scheme. The SEC alleges Gary Gerhardt, the military contractor’s
former chief financial officer, and Steven Landmann, former controller,
participated in a fraudulent backdating scheme that paid out over $20m in
unauthorised compensation. It is alleged Gerhardt and Landmann personally
profited by $1.9m and $518,972 respectively. Landmann has already settled the
action by agreeing to pay nearly $900,000 in fines and restitution.
New York Stock Exchange
(NYSE) Regulation has fined Deutsche Bank Securities
(DB) $1.28m for two rule breaches. The NYSE alleged that DB failed to ensure
that its research analysts'
conflicts of interests were disclosed on research reports or when they appeared
publicly. In a separate incident, a DB employee was alleged to have
used the password of his former employer to access confidential information and
shared this with other DB employees. DB was accused of failing to supervise the
employee.
The Swedish Corporate
Governance Board has recently published a
guide identifying distinctive features of Sweden's corporate governance
system. With international institutional investors now owning a significant
portion of Swedish companies, the Board wants to ensure that they are properly
informed about such aspects as AGM procedures. Corporate governance in
Sweden is predominantly set out within the
Swedish Companies Act, the
Listing Agreement between Stockholm Stock Exchange and listed companies and
in the Swedish
Code of Corporate Governance.
March 2007 |
