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IoD Directors' Briefing: Your update on Directorship and Governance 12 - 26 November 2020

26 Nov 2020

Welcome to your fortnightly Directors’ Briefing providing an update on corporate governance developments around the world.

In this edition’s Governance Perspective, the Vice-Chair of IoD Jersey’s Technology Sub-Committee Ian Webb reflects on the cost of the lack of digital skills in the boardroom. Ian discusses the ways in which board-level technology competence can be strengthened.

As many of you will recall in the summer, we launched the IoD Centre for Corporate Governance. We’re now delighted to announce an event hosted by the Centre in which we will discuss the findings of a working paper issued by academics at the University of Bristol examining  Companies, Shareholders and Sustainability. Book here.

We’re also very pleased to invite you to take part in research being undertaken by the Centre’s Stakeholder Governance Working Group. The Working Group would greatly value the views and perspectives of IoD members on the value of stakeholder engagement and their experiences bringing stakeholder perspectives into boardroom decision making. The Working Group is gathering views initially via an online survey – to complete the survey please click here.

Companies
Charities and Public Sector
Policy and Regulation
Audit
ESG Issues
Thought leadership, opinion and research
IoD in the news and advocacy
Responding to the Coronavirus Crisis
Resources for Directors

Companies

  • 23 November | Petropavlovsk appoints KPMG to act as forensic investigator

The Russian FTSE 250 gold miner has appointed KPMG to undertake an deals between Petropavlovsk and its subsidiaries, and fellow mining company IRC and its subsidiaries in the three years to August 2020. The miner’s chair, James Cameron said: “Petropavlovsk has failed to deliver value to its shareholders and employees over many years, and we believe that poor governance and controls have been a major contributory factor”. [City AM]

  • 19 November | Chinese technology company labelled fraud by Muddy Waters

The US short-seller labelled Joyy, a Nasdaq-listed Chinese livestreaming platform, a fraud causing shares to fall as much as 26%. Muddy Waters said that the company relied almost entirely on bots. The short-seller’s allegations come after a turbulent year for US-listed Chinese tech companies. [Financial Times]

  • 17 November | Boohoo bolsters board with NED appointment in wake of criticism

The online fashion retailer has appointed Shaun McCabe to serve on its board after controversy related to its Leicester supply chain. McCabe, who also serves on the boards of Trainline and AO.com, will chair the audit and remuneration committees. [Telegraph]

  • 16 November | Aviva NEDs face reprimanded over preference shares

Non-executive directors at the insurer face having their pay docked after regulators censured the company over an issue concerning preference shares in 2018. All four of the insurer’s executive directors in post at the time of the issue had their bonuses docked last year. [The Times]

  • 15 November | Hut Group CEO to receive £830m windfall

Matthew Moulding will receive the sum in a share award after the price of the company rose to hit targets set at its IPO September. The prospect of the payment has provoked a strong reaction with  Luke Hildyard, the director of the High Pay Centre,  complaining of a “litany of corporate governance abuses” at the firm [Guardian]

Charities and Public Sector

  • 24 November | Universities UK calls on vice-chancellors to tackle racial harassment

The body representing university leaders has issued a call for  vice-chancellors to improve their understanding and awareness of racism among staff and students. The report, Tackling Racial Harassment in Higher Education, follows  an inquiry by the Equality and Human Rights Commission found that universities were failing to address tens of thousands of racist incidents every year. [Guardian]

  • 12 November | MPs accuse National Trust of straying from its purpose  

The criticism comes after the charity published a report documenting the links between National Trust sites and colonialism and slavery. In a Parliamentary debate, backbenchers urged the Government to consider a formal review of the Trust. However, the Heritage Minister said a Government review was not practical and would not achieve what the MPs’ objectives. [Civil Society]

Policy and Regulation

  • 23 November | Lord Hill to undertake review of UK listings regime

The former EU Commissioner is undertaking an review of the UK’s listings regime on behalf of HM Treasury that will examine the case for shares with special, or weighted, voting rights. The review is expected to present its findings early next year. [Board Agenda]

  • 22 November | Germany mandates boardroom gender quotas

Under the new requirements, management boards with more than three members must include at least one woman. Additionally, a minimum quota of 30% of women on supervisory boards  will be required for companies where the federal government holds a majority shareholding.  [Guardian]

  • 18 November | FRC calls for companies to foster LGBTQ+ inclusion

The regulator has called on firms to set clear policies and targets to nurture their next generation of LGBTQ+ leaders and diversify the workforce. The regulator issued guidance on how companies could flesh out disclosures under the UK Corporate Governance Code in relation to LGBTQ+ policies. [Reuters]

  • 13 November | FCA to take action against former Carillion executives

The regulator said that it planned to take action against some unnamed former executive directors of the collapsed contractor for breaches of its rules and principles. The FCA has a range of sanctions it could impose, including fines and bans from carrying out regulated activities. [The Times]

Audit

  • 23 November | EY staff given legal protection during Wirecard inquiry

Staff at the auditor of the collapsed payments firm have been provided with assurances that they will not be breaking the law by providing evidence to a German parliamentary inquiry into Wirecard. The deal will allow EY staff to discuss previously confidential matters with the committee leading the inquiry. [Financial Times]

ESG Issues

  • 19 November | Prince Charles calls for firms to appoint chief sustainability officers

The Prince of Wales has called on major businesses to appoint a chief sustainability officer at the launch of the new S30 Group. The S30 group is made up of leading C-Suite sustainability leaders from around the world. The Prince said "The role of the CSO is fast becoming one of the most important and influential roles in the corporate world and is increasingly central to market competitiveness". [Business Insider]

  • 16 November | Coalition overseeing $9tn in assets call on European firms to include climate risk in accounts

In a letter to audit committee chairs at 30 of Europe’s largest firms signed by JPMorgan Asset Management, Fidelity International and M&G Investments among others, investors expressed concerns that corporate accounts have become disjointed from businesses’ public statements on climate change. [Financial Times]

Thought leadership, opinion and research

  • 23 November | Varieties of Shareholderism: Three Views of the Corporate Purpose Cathedral

In this paper, Professor Amir Licht offers three views of the corporate purpose debate that bear on the role of law in it. These views underscore the difference and the tension between an individual perspective and a societal or national legal perspective to the purpose of the corporation. . [Harvard Law School Forum on Corporate Governance]

  • 16 November  | The Carillion shambles shows why non-executive directors should face scrutiny, too

In this comment piece,  The Times’ Patrick Hosking calls on the need to improve the scrutiny of NEDs arguing that shareholders are questioning what non-execs add and whether they should be held more accountable. [The Times]

IoD in the news and advocacy

  • Head of Governance and Policy Roger Barker appeared before the Commons Foreign Affairs Committee to provide evidence on blocking foreign asset stripping in the UK in light of the Government’s National Security and Investment Bill.
  • Responding to Lord Hill’s review into the UK’s listing regime, Senior Policy Advisor Carum Basra told Board Agenda there “may need to be a recognition that some founders will want to retain greater control. “However, the “floodgates” should not be opened to dual class shares and it should not be without strings. “Crucially, if we are going to allow more companies to issue shares with differential voting rights in the UK, they must sit apart from the premium segment. They should not benefit from passive investment flows intended for mainstream blue-chip companies with conventional  governance structures.”

Videos and Podcasts

  • 24 November | How can fraudsters in foreign listed companies be stopped? (Video)

Recent months have seen a number of prominent episodes of corporate fraud in large companies, previously market darlings. From Luckin Coffee case, a Chinese company listed in the United States to the NMC, an Emirati company listed in the United Kingdom, the common denominator of these companies is that they are all foreign issuers listed on the world’s most recognized and, in principle, regulated markets. This episode of Governance Dialogues, in conversation with Carson Block, founder and CIO of the investment research boutique Muddy Waters, which blew the whistle on these and other cases of corporate fraud, explores the risks that investors face in foreign companies listed on premium markets. [YouTube]

  • 19 November | The role of a Non-Executive Director in 2020s  (Video)

Jonathan Roe, Chair of Amigo Holdings Plc, discussed the role of the NED covering topics including the challenges of joining a board remotely and the dangers of group think. [YouTube]

Responding to the Coronavirus Crisis

The IoD’s Coronavirus Support Hub is being updated frequently.  

New resources include: 

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 

  • Carum Basra – Senior Policy Adviser (Corporate Governance) and Editor of Directors’ Briefing (carum.basra@iod.com
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