IoD Directors' Briefing Your update on directorship and governance
Welcome to your first Directors’ Briefing of 2021. Many of us have been absorbed with the resurgence of the pandemic over the festive season, and the final chapter of the Brexit negotiations. However, there have also been significant governance developments. Lord Hill is examining potential changes to the UK listing rules. And major global investors have been committing themselves to renewed activism in support of achieving net zero targets and greater boardroom diversity.
In this edition’s Governance Perspective, I consider the arguments for making the UK equity market more attractive to science and technology-oriented IPOs through a reform of the London Stock Exchange’s listing regime. Potential changes could include a shift away from the current commitment to ‘one share, one vote’ despite the likely opposition of major asset managers.
Notwithstanding the challenging lockdown circumstances still prevailing, I wish you a productive start to 2021.
Dr. Roger Barker
Director of Policy and Corporate Governance
- Governance Perspective
- Companies
- Charities and Public Sector
- Policy and Regulation
- Audit
- ESG Issues
- Thought leadership, opinion and research
- Events
- Responding to the Coronavirus Crisis Resources for Directors
Governance Perspective
Governance Perspective: How can the UK stockmarket work better for innovative companies? Roger Barker, IoD Director of Policy and Corporate Governance, makes the case for reform to the UK listing rules – in order to better accommodate the needs of fast growing enterprises focusing on science and innovation.
Companies
Toshiba’s largest investor escalates clash with management | 17.12.20
In a relatively unusual case of investor activism in Japan, Toshiba has been subjected to two separate demands for an Extraordinary General Meeting. Investors are questioning Toshiba’s investment strategy and its administration of shareholder voting at its AGM in July. [Financial Times]
EasyJet board member steps down over her Wirecard role | 21.12.20
Nastassia Lauterbach has resigned as a non-executive director of Easyjet after less than two years’ service. The shareholder advisory group ISS had questioned her place on the board, given that she had been a member of the supervisory board of Wirecard, the scandal-ridden German technology company which collapsed last year. [Financial Times]
South Korean prosecutors seek nine-year sentence for Samsung head | 30.12.20
South Korean prosecutors are seeking a nine-year prison sentence for Lee Jae-yong, the head of the Samsung group, who faces a retrial on charges of bribery. It is alleged that he bribed Park Geun-hye, the former president who was impeached in 2017, in an attempt to secure control of the Samsung group. [Bloomberg]
Charities and Public Sector
Regulator concludes case into governance at the RSPCA | 04.01.21
The Charity Commission is now satisfied that the RSPCA has improved its governance, following earlier concerns that the governing council was too big and terms of office were too long. The Commission had also questioned the knowledge, skills and experience of trustees and their excessive involvement in day to day issues. [Gov.uk]
Policy and Regulation
South Korea threatens to jail short sellers | 10.12.20
South Korea is planning to jail and levy hefty fines on traders that illegally bet against stocks as part of a broader campaign against short selling that has dismayed hedge funds. [Nikkei Asia]
LSE advocates listing rules reform for fast growth companies | 06.01.21
The London Stock Exchange is urging the government to overhaul the rules for company listings in the UK in order to attract innovative companies. The review is being led by former EU commissioner Jonathan Hill. See Governance Perspective for a discussion of this proposal. [Financial Times]
Audit
Luckin Coffee to pay $180m in accounting fraud settlement | 16.12.20
US regulators have imposed Luckin Coffee with a $180m penalty after finding that the scandal-plagued Chinese company altered bank records and set up a fake database as part of an effort to fabricate its accounts. [Independent]
General Electric’s accounting tactics in SEC settlement | 02.01.21
General Electric has settled charges which allege that it had misled investors about its financial condition between 2015 and 2017. It will pay $200m to the SEC, the US regulatory body. [CNBC]
ESG Issues
Fund managers with $9tn in assets set net zero goal | 11.12.20
Thirty of the world’s biggest asset managers, which collectively oversee $9tn, have set a goal of achieving net zero carbon emissions across their investment portfolios by 2050.The group, which includes Fidelity International, Legal & General Investment Management, Schroders, UBS Asset Management, M&G, Wellington Management and DWS, will shun companies that do not properly prepare for a lower carbon economy. [Citywire Selector]
Norway oil fund to publish voting intentions 5 days before AGMs | 14.12.20
Norway’s $1.2tn oil fund will publish its voting intentions five days ahead of 12,000 annual meetings in 2021. This is likely to make the world’s largest sovereign wealth fund one of the most significant voices on corporate governance. [Reuters]
Push for diversity brings rush of business for executive headhunters | 23.12.20
Following Nasdaq’s announcement last month that companies listed on its exchange should have at least one woman and one member of an under-represented minority on their boards, companies have called in recruiting firms, asking them to broaden their searches beyond the usual suspects. [Financial Times]
Thought leadership, opinion and research
The Big Three and Corporate Carbon Emissions Around the World | 13.12.20
Jose Azar, Miguel Duro, Igor Kadach, and Gaizka Ormazabal from the University of Navarra examine the role of the three largest asset managers in the world—BlackRock, Vanguard and State Street Global Advisors—in reducing companies’ carbon emissions. Their results support the idea that the Big Three push the most polluting companies to reduce their CO2 emissions. [Harvard Law School Forum on Corporate Governance]
Towards an Optimal Model of Directors’ Duties in the Zone of Insolvency: A Comparative Assessment | 17.12.20
A study of directors’ duties in case of insolvency vary around the world. [University of Oxford Faculty of Law]
How Does the Board Oversee ESG? | 21.12.20
Paula Loop, Paul DeNicola, and Barbara Berlin from PwC consider how boards of directors can integrate an effective ESG strategy into their functioning. [Harvard Law School Forum on Corporate Governance]
Corporate human rights | 22.12.20
Granting human rights to corporations seems inherently strange—not only because corporations have neither body nor soul but also because corporations may accumulate tremendous social, financial and political power, whereas human rights are intended to protect the weak against the powerful. But what if by granting human rights to companies, we can actually serve the interests of human beings. This is the argument made by Aurelio Gurrea Martínez of Singapore Management University. [University of Oxford Faculty of Law]
Joe Biden must take a global lead on climate risk disclosure | 06.01.21
Laura Tyson argues that the Securities and Exchange Commission in the United States should follow the lead of the UK’s Financial Reporting Council, and demand that climate information should be reported in line with the recommendations of the Task Force on Climate-related Financial Disclosures, and the independent non-profit Sustainability Accounting Standards Board. [Financial Times]
What is Thought Leadership? | 07.01.2020
Thought leadership has become a battle ground for organisations in the race for brand profile, market share and client engagement. Seemingly everywhere thought leaders are striving to grab your attention. But what exactly is thought leadership and is the proliferation of activity that we are witnessing, from webinars, vodcasts, infographics, blogs and articles, really thought leadership, or more noise in an already crowded space? A new article by IoD Member William S. Harvey, professor of management at the University of Exeter Business School, explores this issue. [Emerald]
Events
New book by IoD Fellow, Gerry Brown, on directorship in the not-for-profits sector
In his new book – Make a Difference: Leadership, Change and Giving Back the Independent Director Way – Gerry Brown explains how working as an independent director could make a real lasting difference to the community and change the lives of thousands. It argues that many of us may have the skills to become an Independent Board member of a charity, a sporting body an educational institution or the NHS. An online launch to celebrate the publication of Make a Difference will take place on 26th January at 9am.
To join, please click here.
ecoDa and Mazars event: European Corporate Governance in the 2020s | 19.01.2021
The IoD’s European association, ecoDa, is partnering with Mazars in a live virtual event to look at corporate governance in Europe in the 2020s. The conversation will take account of recent developments in the European Union relating to obligations on sustainable governance for companies. This event will bring together board members, investors and regulators from across Europe to discuss the role we all have to play in fostering an ecosystem that promotes long-term sustainable success for the benefit of relevant stakeholders in a business and society at large. Speakers will include Dr. Roger Barker and the CEO of the FRC, Sir Jon Thompson. Date: January 19, 2021. Time : 16:00 – 18:00 CET.
Click here to register.
Responding to the Coronavirus Crisis
The IoD’s Coronavirus Resources Hub is being updated frequently.
New resources include:
- Directors and Corporate Governance Resources
- Coronavirus Business Support – UK Government website
- Coronavirus (COVID-19): UK government response
- Guidance for Employees, Employers and Businesses
- How to Access Government Financial Support
- Coronavirus Toolkit from BEIS
Resources for Directors
UK Corporate Governance Code (Financial Reporting Council)
The leading source of governance principles and recommendations for companies with a premium listing on the London Stock Exchange.
Wates Principles (Financial Reporting Council)
Key governance principles for large private companies.
Corporate governance: Board responsibilities at major banks (Bank of England)
Supervisory guidance from the Prudential Regulation Authority for the boards of regulated firms.
OECD Guidelines on Corporate Governance of state-Owned Enterprises (OECD)
The OECD Guidelines provide an internationally agreed benchmark to help governments assess and improve the way Governments exercise their ownership functions in state-owned enterprises.
The European Confederation of Directors Associations (ecoDa)
The umbrella body for directors associations in Europe.
The Global Network of Director Institutes (GNDI)
The umbrella body for directors associations around the world.
IoD Corporate Governance Team
- Dr. Roger Barker – Director of Policy and Governance ([email protected])
