The Supreme Court of Cassation has set out important principles regarding the duties of chairs and deputy chairs of company boards of directors. In particularly, chairs' duties are of an organisational nature and must be fulfilled in a neutral way with the aim of coordinating the board as an impartial body. The court also ruled on directors' right to be indemnified in the event of their revocation without cause before the expiration of their appointment.
A recent Rock Centre for Corporate Governance paper suggests that the disconnect between observed pay levels and the public's view of executive compensation is stark. The paper was based on a survey conducted in October 2019 of 3,078 individuals – nationally representative by gender, age, race, political affiliation, household income and state residence – to understand the views that US citizens have on executive compensation.
Law 2019-744 of 19 July 2019 seeks to simplify and update wide-ranging aspects of company law. The measures include changes to the approval process that public limited companies must follow in order to issue, in favour of a third party, a guarantee of the obligations of a subsidiary that they control. These changes aim to enable foreign subsidiaries of French companies to respond more quickly to international tender processes.
Despite being mandated by Article 66 of the Trade Law, which entered into force in 2014, a government regulation specifically focused on e-commerce has only recently been issued after having been under discussion since 2015. This article describes the key aspects of the regulation that directly affect e-commerce operators and consumers.
The Law of 30 August 2019 significantly amended the Commercial Companies Code and other laws. The main change regards the general dematerialisation of shares in private joint stock companies and limited joint stock partnerships. The amendment will enter into force on 1 January 2021.
A series of minor yet impactful amendments will shortly be introduced to the Companies Law, making it easier for investors and entrepreneurs to set up a new company. Parliament adopted the amendments in order to reduce the red tape surrounding company incorporation and encourage investment in the Romanian economy.
Studies of former partners of audit firms who have assumed management positions at audit clients have raised concerns, at least pre the Sarbanes-Oxley Act, about potentially lower audit quality, perhaps reflecting audit firms' reluctance to challenge aggressive accounting decisions made by their former partners. But what happens when a former partner joins the audit client's audit committee?
A recent Court of Cassation decision concerned the amendment of a company's articles of association to considerably increase the percentage of legal reserve and extraordinary statutory reserve before dividends were distributed in favour of shareholders. The question before the court was whether the amendment was grounds for a shareholders' withdrawal on the basis that it was an amendment of articles of association with regard to shareholders' voting rights or their participation.
In two recent cases, the English courts considered whether the duty of good faith should be implied into commercial contracts. These cases demonstrate that the issue of good faith is evolving in English law. Parties to relational contracts must therefore monitor developments to ensure that foreseeable risks are mitigated effectively in their contracts and commercial practices.
Division of Corporate Finance staff recently issued a new Staff Legal Bulletin 14K on shareholder proposals and the 'ordinary business' exclusion. The new bulletin contains an enhanced reminder that it has not been approved by the Securities and Exchange Commission and, like all staff guidance, has no legal force or effect, does not alter or amend applicable law and creates no new or additional obligations for any person.
Boards of directors are the administrative and representative bodies of joint stock companies. This article examines the general duties of directors in Turkey under the Commercial Code and the liability regime for directors, including social security-related liability, tax liabilities and potential exemptions to liability.
After a 10-year delay, a presidential regulation has finally been issued to give effect to key language provisions of the Law on the National Flag, Language, Coat of Arms and Anthem. Of primary interest to businesses are the provisions on contractual language, as they refer to the controversial requirement that agreements involving an Indonesian party must be written in Indonesian and that agreements involving a foreign party must also be written in the national language of the foreign party or in English.
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.
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.
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.
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.
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.
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.
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.
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.