Shareholders of a Cyprus company have the right to request that the directors convene an extraordinary general meeting (EGM), and the directors are legally obliged to do so within a specified time. For the EGM to be legally valid, it must be made only by those who hold at least one-tenth of the company's paid-up share capital and have the right to vote in general meetings. Further, it must be signed and deposited at the company's registered office and must be called within 21 days of the request.
According to a recent report, relative total shareholder return (rTSR) is still the most common performance measure used in long-term incentive plans for chief executive officers among S&P 500 companies. However, it has been suggested that rTSR does not adequately reflect individual or company performance, but rather frequently reflected market or industry trends as a whole. The report advocates a different approach based on operating performance measures, such as revenue growth.
The Institutional Shareholder Services recently published its updated 2018 Proxy Voting Guidelines, effective for meetings on or after February 1 2018. As expected, the guidelines support hybrid shareholder meetings and reject virtual-only meetings. Other updates involve overboarding, audit and remuneration committee compositions, threshold vesting levels for long-term incentive plans and share issuances without pre-emption rights.
The Centre for Audit Quality and Audit Analytics recently posted their annual Audit Committee Transparency Barometer, which measured the quality of proxy disclosures regarding audit committees among companies in the S&P Composite 1500. The report shows continued voluntary enhancements to transparency and broadly increased disclosure around audit committee oversight of the external auditor.
EU Directive 2017/828, amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, was recently published. The directive provides several options for member states when transposing the directive into national law. Depending on how the respective national legislature make use of these options, there will be minor or major changes to the national law.
The new law on the duty of vigilance for parent companies and principal contractors aims to improve the accountability of multinational companies, prevent serious incidents in France and abroad and allow parties to obtain compensation for losses which they suffer as a consequence of non-compliance. To achieve these aims, the law requires companies to draft an awareness plan and implement a monitoring and whistleblowing system. It also introduces penalties for non-compliance.
The Investment Association recently published its annual letter to remuneration committee chairs and updated its Principles of Remuneration. The association has encouraged voluntary disclosure of chief executive officer pay ratios in 2018 directors' remuneration reports, introduced a new requirement to defer bonuses in excess of 100% of salary and kept up the pressure on overall levels of pay. Many companies must take action before their 2018 annual general meeting.
Just in time for the beginning of proxy and shareholder proposal season, the Securities and Exchange Commission Division of Corporation Finance has posted Staff Legal Bulletin (SLB) 14I on Shareholder Proposals. The SLB addresses the scope and application of the rules regarding ordinary business and economic relevance exclusion, the proposals submitted on behalf of shareholders (shareholder proposals by proxy) and the use of graphics and images.
Shareholders of closely held companies often mutually agree on additional contractual rights and duties. However, the company itself cannot be a contract party to a separate shareholders' agreement. Apart from that legal restriction, such shareholders' agreements usually benefit from the contractual freedom of the parties. A recent Federal Court decision confirmed that such agreements may be recharacterised as abusive or contrary to the principle of good faith.
Parties that negotiate a contract for sale when they are based in different countries are not always aware of the legal nature of their negotiations and the possible legal consequences. As such, it is advisable that parties choose the law applicable to the contract being negotiated and the negotiations themselves as soon as discussions begin. In the event of a dispute, this will enable them to avoid the potential risk of the courts finding that the contract in question has already been concluded.
Recently, corporate cultures – or, more particularly, serious lapses in the same – have emerged as flashpoints, often with significant negative press coverage and severe economic consequences. A timely new report from the National Association of Corporate Directors suggests that boards should be paying more attention to the oversight of company culture – not just for scandal avoidance, but also "as a way to drive sustained success and long-term value creation".
The Beneficial Ownership of Legal Persons (Guernsey) Law 2017 came into force on August 15 2017. From that date, the incorporation or creation of any Guernsey entity requires details of its beneficial owner to be submitted to the Guernsey registrar of beneficial ownership of legal persons. Existing Guernsey entities must do the same by October 31 2017, with the exception of companies, which have until February 2018.
The ability to continue a foreign company as a BVI company or to continue a BVI company as a company under the laws of another jurisdiction quickly and seamlessly is just one example of the many flexible features of the Business Companies Act 2004. This feature is particularly useful in the context of corporate reorganisations, and counsel should be aware of the process and requirements for continuations and discontinuations.
International Shareholder Services recently released the results of its 2017-2018 global policy survey. The results reveal mixed views on multi-class capital structures, share buybacks and virtual annual meetings, but strong opinions on board gender diversity. However, although almost 70% of investors viewed as problematic the absence of any women on a board, making board diversity a reality seems to be a tougher proposition.
Georgia has sought over the past 15 years to have one of the most modern, user-friendly legal systems among the countries of the former Soviet Union. Amendments have recently been made to the Law on Entrepreneurs, which is the principal source of law in relation to all business entities, including companies, partnerships and unincorporated sole traders. The amendments impose new requirements for single-member companies and strengthen the pre-emption rights of shareholders.
In 2014 New York City (NYC) Comptroller Scott Stringer, who oversees the NYC pension funds, submitted proxy access proposals to 75 companies – and ignited the push for proxy access at public companies across the United States. The NYC Comptroller's Office recently announced the Boardroom Accountability Project 2.0, which will focus on corporate board diversity, independence and climate expertise. Will Project 2.0 have an impact comparable to that of the drive for proxy access?
According to research published by the Chartered Institute of Procurement and Supply, more than one-third of organisations required to complete a statement in compliance with the UK Modern Slavery Act 2015 have failed to do so. One of the knock-on effects arising from the lack of engagement with the statement requirement has been that the majority of businesses surveyed have few or no policies in place to tackle modern slavery.
Everyone agrees that 'fat-cat pay' needs reining in, even Theresa May's new-look caring Conservatives. Therefore, the recent announcement of the government's latest corporate governance proposals does not come as much of a surprise. However, thus far, there appears to be little by way of evidence of real necessity for the measures proposed, and caution should be taken with regard to seemingly unsupported assertions of this sort as a basis for actual law making.
Parliament recently passed a new law on the registration of beneficial owners of Austrian legal entities. After obtaining the necessary approval of the Austrian federal states, the law is expected to enter into force on January 15 2018. In disclosing the relevant information on beneficial owners, the register aims to detect and prevent money laundering, especially with regard to complex corporate structures, holding companies or private foundations and trusts.
Law 20,954, which amends the Corporations Act in Law 18,046, was recently published in the Official Gazette. The amendment provides that custodians of shares in public companies that hold shares on behalf of other parties must provide the Securities and Insurance Commission with the identity of those parties. Banks that act as custodians must report this information to the Superintendence of Banks and Financial Institutions.