Slide 1Composition and Remuneration of the Board of Directors
Management Rules and Authority
Disclosure of Information
Corporate Social Responsibility
Summary / Conclusion
The need for reform
Cadbury Report / Greenbury Report / Combined Code / Turnbull Guidance / Higgs Report / Smith Report
Key principles of Combined Code
Board composition
Private
Public
Listed
LSE
AIM
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Case law
Listed companies
Not Mandatory
City Code on Take-Overs and Mergers
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False market
What is the management / board structure?
Is there a one / two-tiered structure?
Who manages a company and what name is given to these managers?
Who sits on the board(s)?
Do employees have a right to board representation?
Is there a minimum / maximum number of directors?
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Are there age / nationality restrictions?
Are non-executive or independent directors recognised?
Does a part of the Board have to consist of them? If so, what proportion?
Do non-executive directors have to be independent of the company?
If so, what is the test for independence or what makes a director not independent?
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Corporate Governance and Board Composition (continued)
What is the scope of their duties and potential liability to the company, shareholders and third parties?
Are the roles of individual board members restricted i.e. can one person be chairman/CEO?
How are directors appointed? Is shareholder approval required?
Methods of removal of directors
Are there any restrictions on a director’s term of employment?
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Do directors have to be employees of the company?
Can shareholders view directors’ service agreements?
Are directors allowed or required to own shares in the company?
How is directors’ remuneration determined?
Does the remuneration need to be disclosed?
Is shareholder approval required?
How is a company’s internal management regulated?
Can directors exercise all the powers of the company or are some powers reserved?
Can the powers of directors be restricted?
Can the board delegate responsibility for specific issues to individual directors or a committee of directors?
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Corporate Governance in respect of Duties and Liabilities of Directors
What is the scope of a director’s duties and personal liability to the company, shareholders and third parties?
General Duties
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Corporate Governance in respect of Duties and Liabilities of Directors (continued)
Directors’ duties have been codified in CA 2006
General duties are:
Act within powers
Exercise independent judgment
Corporate Governance in respect of Duties and Liabilities of Directors (continued)
Exercise reasonable care, skill and judgment
Avoid conflicts of interest
Declare an interest in a proposed transaction
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Corporate Governance in respect of Duties and Liabilities of Directors (continued)
You should note the following:
Theft and fraud
Corporate Governance in respect of Duties and Liabilities of Directors
(continued)
Can a director’s liability be restricted or limited?
Is it possible for the company to indemnify a director against liabilities?
Can a director obtain insurance against personal liability?
If so, can the company pay the insurance premium?
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Corporate Governance in respect of Transactions with Directors and Conflicts
Are there general rules relating to conflicts of interest between a director and the company?
Are there restrictions on particular transactions between a company and its directors?
Are there restrictions on the purchase or sale by a director of the shares in the company of which he is a director?
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Corporate Governance and Disclosure of Information
Do directors have to disclose information about the company to shareholders, the public or regulatory bodies?
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Does a company have to hold an AGM?
What issues must be discussed and approved?
Can shareholders call a meeting?
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Corporate Governance and Minority Shareholder Action
What action can a minority shareholder take if it believes the company is being mismanaged?
What level of shareholding is required to do this?
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Corporate Governance and Internal Controls, Accounts and Audit
Are there any formal requirements or guidelines relating to the internal control of business risks?
What are the responsibilities and potential liabilities of directors in relation to the company’s accounts?
Do the company’s accounts have to be audited?
How are the company’s auditors appointed?
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Is there a limit on the length of their appointment?
Are there restrictions on who can be the company’s auditors?
Are there restrictions on non-audit work that the auditors can do for the company that they audit accounts for?
What is the potential liability of auditors to the company, shareholders and third parties if the audited accounts are inaccurate?
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Corporate Governance and Corporate Social Responsibility
Is it common for companies to report on social, environmental and ethical issues?
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Corporate Governance and Role of General Counsel
Is it common for the general counsel to be on the board or to have a formal role in corporate governance?
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How influential are institutional investors and other shareholder groups in monitoring and enforcing corporate governance?
List groups with significant influence in this area?
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BAE
Formal / transparent procedures relating to appointment
Formal / transparent procedures for setting executive remuneration
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Summary (continued)
Balanced assessments of the company’s position and maintenance of internal controls
Formal / transparent procedures for responsibilities including an audit committee
Maintenance of contact with shareholders
Separate resolutions on all substantial issues at general meeting
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Conclusion
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Why Steptoe & Johnson?
International law firm – offices in London, New York, Washington, Chicago, Los Angeles, Phoenix and Brussels
Focus on inward and outward investment in respect of Russian and CIS countries
Russian speaking lawyers in London office
Proactive / partner led service
Experience on private and public related transactions
Strong network of contacts in financial and professional community
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Michael Thompson
mthompson@steptoe.com TEL: +44 (0)20 7367 8070 FAX: +44 (0)20 7367 8001 99 Gresham Street London EC2V 7NG United Kingdom AREAS OF PRACTICE Corporate Transactions Telecommunications Media Law Technology Mergers, Acquisitions, and Joint Ventures EDUCATION London School of Economics LL.M., 1988 University of Southampton LL.B., 1984
Michael is a partner in the London office of Steptoe & Johnson and is head of the Corporate Group. Michael focuses on Russian and CIS businesses. Michael specialises in all aspects of corporate finance work including advising both in relation to AIM and Stock Exchange listings, acquisitions and disposals of public and private companies, venture capital (including management and leveraged buyouts), joint venture and shareholder agreements.
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agreaves@steptoe.com TEL: +44 (0)20 7367 8050 FAX: +44 (0)20 7367 8001 99 Gresham Street London EC2V 7NG United Kingdom AREAS OF PRACTICE Alternative Dispute Resolution Commercial Litigation, Insolvency & Creditors’ Rights Litigation Worldwide Arbitration & Dispute Resolution EDUCATION Essex University, L.L.B., 1983 Guildford Law College, Law Society Finals, 1984
Adam is a partner in the London office and specialises in commercial litigation and arbitration, particularly fraud and corruption and insurance and reinsurance disputes, principally in the English Commercial Court. Adam is recommended by the UK Legal 500 and has considerable experience in project managing large multi-jurisdictional disputes and obtaining or defending worldwide freezing injunctions. Jurisdictions with which he has worked include the UK, USA, Russia, India, Saudi Arabia, Iran, Lebanon, Brazil, Switzerland and various off-shore tax havens. In addition to the insurance/reinsurance industry, he has handled cases involving telecoms, aluminium, diamonds, construction, Islamic banking, media, information technology, shipbuilding, chemicals, pharmaceuticals, recruitment, investment, property development and accountancy.
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Egishe Dzhazoyan
edzhazoyan@steptoe.com TEL: +44 (0)20 7367 8057 FAX: +44 (0)20 7367 8001 99 Gresham Street London EC2V 7NG United Kingdom AREAS OF PRACTICE Litigation Worldwide Arbitration & Dispute Resolution EDUCATION St. Edmund’s College, Cambridge University, LL.M, 2007 Moscow State University, Ph.D, 2006 Moscow State University, J.D. with Distinction, 2002
Egishe is a Senior Associate in the London office, where he is a member of the International Dispute Resolution group. Prior to joining Steptoe & Johnson, Egishe practised for five years as a Russian qualified lawyer with a leading Moscow based law firm where he dealt with a number of high profile arbitration and litigation proceedings in various jurisdictions including Russia, USA, England, Sweden, Switzerland, Cyprus, BVI and France. He maintains a specific interest in Russian work and also has particular experience in representing clients in the telecom, metals and nuclear industries.
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Yuri Presniakov
ypresniakov@steptoe.com TEL: +44 (0)20 7367 8055 FAX: +44 (0)20 7367 8001 99 Gresham Street London EC2V 7NG United Kingdom AREAS OF PRACTICE Corporate Transactions International Dispute Resolution EDUCATION London School of Economics LL.M., 2006 University of Reading LL.B., 2005
Yuri is a solicitor based in the London office and has particular interest in Russia and Eastern European markets. Yuri is bilingual and has gained experience at law firms both in Russia and the UK and has gained experience in large scale corporate, litigation and arbitration involving Russian parties at Steptoe & Johnson. He has a Masters degree in Law from the London School of Economics and a Bachelors degree in Law from the University of Reading.
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mthompson@steptoe.com