On 5 May 2009 the European Commission published a further recommendation on the remuneration of directors of listed companies, focusing on the structure and determination of directors' remuneration. The recommendation, among other things, invites Member States to set a limit on directors' termination payments (in general no higher than the equivalent of two years of the fixed component of a director's pay); provide that termination payments should not be paid if termination is due to inadequate performance; require a balance between the fixed and variable components of a director's pay, and link variable pay to predetermined and measurable performance criteria; require that performance criteria promote the company's long-term performance and that the major part of any variable pay is deferred; allow companies to reclaim variable pay paid on the basis of data which subsequently proves to be manifestly misstated; and require a minimum vesting period for stock options and shares of at least three years, and that, after vesting, directors hold a number of shares until the end of their employment. Member States are invited to implement the necessary measures by 31 December 2009.

May 2009 -- UK - Further Banking Act 2009 statutory instruments published

A further flurry of statutory instruments in relation to the revised administration and insolvency regime for banking companies under the Banking Act 2009 was published on March 26 but is in effect retrospectivel to February 21, 2009 (the delay appears to be due to the instruments being laid before Parliament for approval). The Banking Act 2009 came into force on February 21 2009, to introduce a new ‘‘bank insolvency order’’ and bank administration system. The Act was accompanied at the time by a raft of delegated legislation (see (2009) 247 Co. L.N. 5).

May 2009 - Companies Act 2006: Company and Business Names (Miscellaneous Provisions) Regulations 2009

On 6 May 2009 OPSI published the final Company and Business Names (Miscellaneous Provisions) Regulations 2009, with an explanatory memorandum.  The regulations were made on 24 April 2009 and will come into force on 1 October 2009.

May 2009 - UK - Draft Bribery Bill published: could affect directors if enacted

A draft Bribery Bill was published on March 25 and if enacted it would, amongst other things, introduce a new corporate offence, which could affect company directors.

 The draft Bribery Bill follows the recommendations of the Law Commission’s report, Reforming Bribery (Law Com No.313) published on November 20, 2008 (see (2008) 243 Co. L.N. 5). The corporate offence could apply where a commercial entity (such as a company, partnership or any other body corporate) negligently fails to prevent bribery in connection with its business. The proposed corporate offence is aimed mainly at combating bribery in large-scale public procurement and tendering exercises, so as to encourage businesses to improve their corporate governance. The offence would be committed where a person performing services for the company (including its employees, agents and subsidiaries) bribes someone anywhere in the world in connection with the company’s business and those in the organisation with responsibility for preventing bribery negligently fail to do so. If there is no person(s) with specific responsibility for preventing bribery, the responsibility is deemed to be that of any senior officer in the organisation (including any director, secretary or manager of a company or a partner in a partnership). There is a defence available where the organization can show that on a balance of probabilities it had adequate procedures in place to prevent bribery.

May 2009 – UK - Takeover Code reissued

A new edition of the Takeover Code was published on March 30 to replace the May 2006 edition and include amendments to the Code made in 2008 and to date in 2009. The revised edition is available on the Takeover Panel website at http://ww.thetakeoverpanel.org.uk/wp-content/uploads/2008/11/code.pdf.

 The changes are mainly in respect of Schemes of Arrangement and Electronic Communications.

May 2009- UK - Greater transparency for pre-packs (SIP 16)

One of the more controversial aspects of administration in recent years has been the emergence of the “pre-pack” as the standard administration mechanism.  A pre-pack is a pre-packaged sale of business agreed immediately before the company enters administration.  The sale is then executed immediately on the company going into administration.  Questions have been raised as to whether this process is compatible with the spirit of informed creditor participation which underlies the modernisation of the administration regime by the Enterprise Act 2002.  The necessary secrecy while a deal to sell the business is being negotiated, combined with the apparent speed of the sale, raises the suspicions of creditors as to the relationship between the administrators and the purchasers, especially when the purchasers are members of the existing management.

 The issue is comprehensively addressed now by Statement of Insolvency Practice 16, Pre-Packaged Sales in Administration (SIP 16) which insolvency practitioners must abide by and which came into effect on 1 January 2009.

 SIP 16 sets out very detailed requirements as to the extensive disclosure required where there is a pre-pack sale.  The information to be disclosed to the creditors includes:

 ·the extent of the administrator’s involvement with the company prior to his appointment as administrator;

·any alternative courses of actions that were considered;

 ·an explanation of why it was not appropriate to continue trading and sell the business as a going concern;

·whether efforts were made to consult major creditors;

·details of the assets involved, the consideration for the transaction, the terms of payment, the identity of the purchaser and any connection between the purchaser and the directors, shareholders or secured creditors of the company.

 May 2009 - European Commission

The European Commission has announced three proposed measures of reform, in answer to the financial crisis affecting Europe. These are

1. The proposed Alternative Investment Fund Managers Directive, which would introduce an authorisation regime and harmonised regulatory standards for fund managers (including hedge funds and commodities)
2. Proposals for harmonisation of disclosure and selling rules for all retail packaged investment products.
3. Recommendation on remuneration in the financial services sector and proposed changes to the Capital Requirements Directive.

March 2009 ECJ Judgement - Retirement Age