In this global overview, the authors outline key corporate governance developments of this year, analyze their significance, and predict their near-term trajectory.
In the US, shareholder activism continues to be in sharp focus despite headwinds. The proxy season provided another important reminder of the interplay between politics and corporate governance with the adoption of the Paris Agreement.
Board diversity continues to be a focal point. In March 2016, lawmakers released a public letter expressing disappointment that the SEC has not taken action to spur diversity of director candidates.
In December 2015, the Cybersecurity Act of 2015 was signed into law. This, coupled with significant data breaches at well-known companies and professional services firms, has boards questioning how to effectively manage the oversight of cybersecurity risks.
In the EU, the European Banking Authority, in December 2015, published its final guidelines on ‘sound’ remuneration policies and its opinion on applying the ‘proportionality’ principle.
It appears the UK Stewardship Code is poised to receive an update to the current ‘comply or explain’ system. Further, the Financial Reporting Council launched an initiative in 2015 to gather insight into corporate culture and the role that boards play in corporate practices.
In Hong Kong, after more than two years of incremental steps toward permitting dual-class structures, the process came to an abrupt halt. The rejection of dual-class structures is in stark contrast to the increasing insistence of US technology and media companies on dual-class structures.
In Japan in June 2015, the Corporate Governance Code came into effect as the second prong of reform aimed at implementing effective corporate governance in Japan. Japan still has a long way to go as it seeks to move its corporate governance practices closer to those of the EU and the US.
Brazil, in the midst of its worst recession in more than a century, appears to have several corporate governance reform measures on the horizon. The proposals include, among other things, requiring more independent directors; requiring enhanced shareholder disclosures; improving the system for selecting administrators; and requiring permanent audit committees.
Reproduced with permission from Law Business Research Ltd. This article was first published in Getting the Deal Through: Corporate Governance 2016, (published in June 2016; contributing editor: Holly J Gregory, Sidley Austin LLP) For further information please visit https://gettingthedealthrough.com/area/8/corporate-governance/.