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The Environmental Audit Committee has today published its report Greening Finance: embedding sustainability in financial decision making: see here or here (pdf). The conclusions and recommendations are available here. The report calls on the Government to set a deadline for all listed companies and large asset owners to report on climate-related risks and opportunities (in line with the TCFD recommendations) on a comply or explain basis by 2022 (with appropriate changes to the UK Corporate Governance Code and UK Stewardship Code).

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A new edition of Japan's Corporate Governance Code was published today: see here (pdf). A copy of the new Code, with the changes highlighted, is available here (pdf). Also published today are Guidelines from the Financial Services Agency on investor and company engagement, designed to complement the new Code and the existing Stewardship Code: see here (pdf).

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Later this month - June 27, to be precise - the latest announcement concerning the number of women on FTSE350 boards will be made. In November 2016, the Hampton-Alexander review called for a minimum of 33% of FTSE350 board positions to be occupied by women. Ahead of the June 27 announcement, some of the explanations offered by CEOs and Chairs for not appointing women have been published (as heard by members of the Hampton-Alexander review team) have been published and these indicate why progress has been slow in some quarters. The comments included: "I don't think women fit comfortably into the board environment"' and "Most women don't want the hassle or pressure of sitting on a board".

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The Limited Liability Partnership Regulations, 2018, were notified earlier this month: see here (pdf). The Regulations add to the new framework - the Limited Liability Partnership Act, 2017 (pdf) - and contain provisions concerning the incorporation of LLPs.

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The Securities and Exchange Board of India began a consultation on the regulatory framework applicable to credit rating agencies last autumn: see here. An update was provided yesterday, including the publication of new guidelines: see here.

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The European Fund and Asset Management Association (EFAMA) has published an updated edition of its Stewardship Code (as it is now known: it was first published as the 'Code for External Governance' in 2011): see here (pdf). The Code operates on the basis of 'comply or explain' and it has been updated to bring its language in line with the changes recently made to the Shareholders Rights Directive.


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One of the members' bills recently successful in the ballot of those to be introduced was the Companies (Clarification of Dividend Rules in Companies) Amendment Bill. The Bill was introduced by Todd Muller MP - a copy is available here. The explanatory note can be viewed here. The purpose of the Bill is to make it clear that a company's constitution can create a class of shares in which some carry the right to dividends and others (known as 'dry shares') do not. This will be done through amending section 53 of the Companies Act 1993. The explanatory note accompanying the Bill cites as the classic example of such dry shares as being those belonging to a shareholder in a cooperative where the shareholder no longer supplies the cooperative.

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In 2009, Leekes Ltd acquired the entire share capital of another company, Coles of Bilston Ltd, with the Coles business being incorporated into that of Leekes. Coles had been loss making and Leekes was entitled under tax legislation to offset those losses against its trading income (see, now, section 944 of the Corporation Tax Act 2010).

The question for the Court of Appeal in a judgment given yesterday - Leekes Ltd v HM Revenue & Customs [2018] EWCA Civ 1185 - was whether these losses could be offset against (a) the trading income of the whole Leekes business or (b) the trading income derived from the business acquired from Coles. The court was unanimous in holding that it was (b). Lord Justice Henderson observed that this:
... is the only construction which the ordinary and natural meaning of the statutory language can bear, and it produces an obviously sensible result. If the construction advanced by Leekes [(a)] were correct, the result would be to place the successor company in a more favourable position than the predecessor, because it would enable the successor to utilise the accumulated losses of the predecessor against trading income derived from a business which the predecessor had never carried on. It is hard to think of any sensible reason why Parliament should have wished to confer such an advantage on the successor to a trade, and (had it done so) there would have been obvious potential for tax avoidance and the development of a thriving secondary market in corporate trading losses" (para. [28]).

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The Central Bank has published a second consultation paper concerning the corporate governance requirements for investment firms and market operators: see here (pdf). The consultation paper seeks to update the current requirements to deal with the consequences of MiFID II including the European Union (Markets in Financial Instruments) Regulations 2017 and the joint EBA and ESMA Guidelines on the assessment of the suitability of members of the management body andkey function holders.

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Judgment was given today by the Court of Appeal in JSC BTA Bank v Ablyazov & Anor [2018] EWCA Civ 1176. The judgment is noteworthy because of what is said about the operation of section 423 ("Transactions defrauding creditors") of the Insolvency Act 1986. Section 423 applies only where a transaction has been entered "for the purpose - (a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b)of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make" (emphasis added). With regard to "the purpose", Lord Justice Leggatt observed:
I agree with the point made in McPherson's Law of Company Liquidation (4th Edn, 2017), para 11-116, that there is no need to put a potentially confusing gloss on the statutory language. It is sufficient simply to ask whether the transaction was entered into by the debtor for the prohibited purpose. If it was, then the transaction falls within section 423(3), even if it was also entered into for one or more other purposes. The test is no more complicated than that" (para. [14]). 

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