Latest updates

How have companies adapted to CAMs?
Cooley LLP
  • USA
  • 21 October 2019

In a recent report, Intelligize examined data from a survey of 171 compliance specialists at public companies to examine how public company compliance officials are adapting their own corporate disclosure and processes to comply with this new regime. Among the issues considered were the impact of 'dry runs', changes to company disclosures and changes in controls.

Supreme Court of Cassation decision on activities of controlling entities
Grieco e Associati
  • Italy
  • 21 October 2019

Article 2497 of the Civil Code sets out that companies which provide direction to coordinate their subsidiaries are directly liable to the subsidiaries' minority shareholders for any damages caused to profitability and shareholding value by a violation of fair management principles. In this context, a recent Supreme Court of Cassation decision examined how to assess whether a corporate group exists and the scope of controlling entities' direction and coordination activities.

EY discusses voluntary audit committee disclosures
Cooley LLP
  • USA
  • 07 October 2019

Audit reports for most public companies will soon be required to disclose critical audit matters, which are intended to make the audit report more informative for investors. However, over the past several years, companies and their audit committees have gone a long way towards increasing the amount of audit-related information that they provide to investors voluntarily. While year to year the changes appear largely incremental, the change over the entire period is considerable.

Directors' confidentiality obligations
Schoenherr
  • Romania
  • 07 October 2019

Under Romanian law, the scope and duration of a director's confidentiality obligations must be agreed in the mandate agreement to be concluded between the director and their company. In order to mitigate any risks in this regard, mandate agreements should set out the specific circumstances in which directors can disclose confidential information to their company's parent undertaking or subsidiaries.

Simple joint stock company introduced to Commercial Companies Code
Kubas Kos Gałkowski
  • Poland
  • 07 October 2019

Parliament recently introduced the simple joint stock company to the Commercial Companies Code. This change aims to provide a simpler and cheaper option than standard joint stock companies regarding company formation, operation and liquidation and a more modern and flexible company model with a legal personality that will be particularly attractive to start-ups. However, the introduction of this new type of company has provoked divergent opinions.

Corp Fin changes approach to responding to no-action requests to exclude shareholder proposals
Cooley LLP
  • USA
  • 30 September 2019

The Securities and Exchange Commission (SEC) Division of Corporation Finance recently announced that it is revisiting its approach to responding to no-action requests to exclude shareholder proposals. In essence, the SEC may respond to some requests orally rather than in writing and, in some cases, may decline to state a view altogether, leaving the company to make its own determination.

Supreme Court of Cassation examines rules on reimbursement of company loans
Grieco e Associati
  • Italy
  • 23 September 2019

The Supreme Court of Cassation recently held that the postponement of loan reimbursements to company partners or shareholders applies not only in cases of court-assessed insolvency, but also if a company experiences temporary financial difficulties. The court also found that company management must refuse to reimburse loans to partners or shareholders if the company was experiencing financial difficulties when the loan was granted or the reimbursement was requested.

Deloitte looks at first round of CAMs
Cooley LLP
  • USA
  • 23 September 2019

AS 3101, the new auditing standard for the auditor's report that requires disclosure of critical audit matters (CAMs), is effective for audits of large accelerated filers for fiscal years ending on or after 30 June 2019. Deloitte has reported that an average of 1.8 CAMs were disclosed per audit report and that the most commonly disclosed related to goodwill and intangible assets.

Commercial corporate entities: a brief outline
Cocalis & Partners
  • Greece
  • 02 September 2019

An important consideration before doing business in Greece is choosing the most suitable corporate entity. However, there are several other key elements to consider. A one-stop service is available (with limitations) for the incorporation of all company types, provided that they use basic (ie, template) articles of association; however, there are no 'off-the-shelf' companies in Greece. This article outlines the basic types of Greek corporate entity (excluding maritime entities).

Board gender diversity reaches new milestone
Cooley LLP
  • USA
  • 26 August 2019

A new milestone has finally been reached for board gender diversity: there are no longer any companies in the S&P 500 with all-male boards. According to a publication on US Board Diversity Trends in 2019, 45% of new board positions among the Russell 3000 were filled by women in 2019. This is up from 34% in 2018 and a substantial improvement compared with only 12% in 2008. Under the new law, public companies will be required to have at least one woman on their board of directors by the end of 2019.

Will director-shareholders always be liable to repay unlawful dividends?
Squire Patton Boggs
  • United Kingdom
  • 19 August 2019

A series of recent cases have examined the circumstances in which a dividend can be challenged on the basis that it has been unlawfully paid. In one such case, the High Court considered a number of key principles regarding dividend payments and the circumstances in which directors can be pursued for dividends paid prior to an insolvency. This judgment provides some comfort to directors who rely on professional advisers to determine whether to declare a dividend payment.

FASB tentatively decides on new staggered approach to effective dates for major standards
Cooley LLP
  • USA
  • 19 August 2019

The Financial Accounting Standards Board recently signalled its intent to adopt a new two-bucket approach to stagger the effective dates for new major accounting standards. Under the new approach, the new standards' effective dates would be delayed for entities in bucket two (ie, smaller reporting and private companies, employee benefit plans and not-for-profit organisations) for at least two years after the effective dates for entities in bucket one (ie, other Securities and Exchange Commission filers).

Delaware Supreme Court allows Caremark duty of loyalty claims against directors to survive dismissal motion
Cooley LLP
  • USA
  • 12 August 2019

What does it take to plead a Caremark case that can survive a motion to dismiss? A recent case illustrates that a board can help establish one if it simply leaves compliance and risk oversight entirely to the prerogatives of management. However, the case is also a warning that directors should be proactive in conducting risk oversight and could face liability if they fail to make a good-faith effort to implement an oversight system and then monitor it.

Shareholders' agreements – enforceability issues
Kayum & Demir
  • Turkey
  • 12 August 2019

The enforceability of share options is one of the most controversial issues in the context of shareholders' agreements. There are a number of widely used solutions to improve the enforceability of share options in this regard, including inserting share options provisions into articles of association, establishing a holding company outside Turkey and inserting a statement on registered share certificates that shares are subject to transfer restrictions.

Directors' revocation and change of company control
Grieco e Associati
  • Italy
  • 05 August 2019

In a recent decision, the Supreme Court of Cassation stated that the revocation of members of a controlled company's board of directors due to the transfer of the majority shareholdings to a third party does not constitute just cause for a director's revocation. Consequently, a change in control of a holding company does not breach the duty of trust between the company and its board members.

E-financial statements are first stage of digital revolution in Polish corporate law
Kubas Kos Gałkowski
  • Poland
  • 29 July 2019

The legislature recently introduced a regulation on e-financial statements. As a result, all financial reports submitted by Polish companies (with the exception of entities preparing financial statements in compliance with the international accounting standards) must be drawn up electronically using files with an '.xml' extension as defined by the Ministry of Finance. Polish companies should take appropriate steps to mitigate the potential risks and comply with this revolutionary regulation as soon as possible.

FASB to consider delaying required adoption dates of new standards for some companies
Cooley LLP
  • USA
  • 29 July 2019

The Financial Accounting Standards Board will consider whether the adoption dates for new accounting standards should be delayed for small public companies and privately held businesses. Small business finance professionals at a recent Financial Accounting Standards Advisory Council meeting indicated that, while they may be comfortable following the same rules, smaller companies do not have the same resources as large public companies and need extra time to implement significant new accounting rules.

Spot survey shows use of ESG metrics in incentive compensation plans
Cooley LLP
  • USA
  • 22 July 2019

A compensation consultant recently conducted a spot survey of 135 companies which looked at the prevalence and type of environment, social and governance (ESG) metrics used in incentive compensation plans, including metrics relating to the environment, employee engagement and culture and diversity and inclusion. Efforts to link ESG factors to executive compensation have been a common thread in numerous shareholder proposals.

ISS takes early look at 2019 proxy season
Cooley LLP
  • USA
  • 15 July 2019

With 70% of the Russell 3000 annual meetings completed, Institutional Shareholder Services (ISS) has taken an early look at the 2019 proxy season. ISS found increases in opposition to director elections and say-on-pay proposals, as well as increases in the number of and withdrawal rates for environmental and social (E&S) proposals relative to governance proposals. In addition, the disparity between the levels of support for E&S proposals and the historically more popular governance proposals has narrowed dramatically.

Business judgement rule and liability of non-executive directors
Grieco e Associati
  • Italy
  • 15 July 2019

Italian corporate law establishes the liability of members of the board of directors of joint stock companies depending on whether they are chief executive officers or executive directors or independent and non-executive directors. Recent Supreme Court of Cassation and Milan Court of Appeal decisions focused on the liability of non-executive directors by affirming that they must be proactive and fulfil their duty to be as informed as possible to ensure a suitable standard of corporate governance.

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