Governance in Brief – November 04, 2021
Volvo Cars shares jumped as much as 22% in the first day of their trading on Nasdaq Stockholm as the company raised SEK 20 billion (USD 2.3 billion) in an IPO which valued the company at SEK 158 billion. The successful debut came after Volvo Cars cut the size of the offering by a fifth and priced it at the bottom of the initial range, in response to investors’ concerns over how much control China’s Zhejiang Geely Holding Group Co (“Geely”) would retain. Moreover, Geely agreed to convert its common shares of class A, carrying 10 votes per share, into a corresponding number of common class B shares, which are entitled to one vote per share. Prior to agreeing to convert the shares the enhanced voting rights would have given Geely 98% voting power despite its stake in the company dropping to around 84%. Additionally, Geely decided not to exercise an upsize option that would have allowed it to increase the offering by 20%. The amended offering could result in a free float of 16% to 17.9% depending on whether an overallotment option is exercised. Volvo Cars shares closed at SEK 57.99 on November 2, up from the SEK 53 listing price.
Governance in Brief – October 28, 2021
Hong Kong’s Financial Reporting Council has launched an inquiry into Evergrande's accounts for 2020 and the first half of 2021, as well as an investigation into the audit of the firm’s 2020 accounts conducted by PwC. According to the regulator, as at the end of 2020 reported cash and cash equivalents amounted to RMB 159 billion, failing to cover the firm’s current liabilities of RMB 1,507 billion, in addition to the further borrowings of RMB 167 billion maturing in 2022.
Governance in Brief – October 21, 2021
The U.S. SEC has announced that it is reopening comments on a proposed rule that would claw back executive compensation in cases of financial restatement due to “material noncompliance.” The rule was initially proposed in 2015, as mandated by the Dodd-Frank Act, but has yet to be finalized. The clawback would apply to incentive-based compensation awarded to current and former executives during the three fiscal years preceding the restatement “regardless of whether the misstatement was due to fraud, errors, or any other factor.” The recovered amount would equal the excess compensation relative to the amount to which executives would have been entitled based on the restated financial statements. The clawback provisions would apply to compensation that is granted, earned or vested upon the attainment of a financial reporting measure, including stock price and total shareholder return. Additionally, under SEC’s proposal, stock exchanges would have to establish listing standards requiring public companies to adopt and comply with clawback policies. Issuers would be subject to delisting in case they fail to disclose their policies and comply with their provisions. The SEC is seeking public input on the proposed rule for a period of 30 days.
Governance in Brief – October 07, 2021
At its 2021 AGM, Frasers Group shareholders approved a GBP 100 million compensation scheme for incoming CEO Michael Murray, amid backlash from independent investors. While the remuneration policy was supported by nearly 85% of votes cast, there was around 49% dissent among independent shareholders.
Governance in Brief – September 30, 2021
The U.S. Department of Justice has opened an investigation into Zoom Video Communications’ deal to buy American software company Five9, citing potential national security risks posed by foreign participation. In July, Zoom had announced an all-stock deal to acquire Five9 for USD 14.7 billion, contingent on Federal Communications Commission (“FCC”) approval.
Governance in Brief – September 23, 2021
Philip Morris International Inc (“PMI”) secured nearly 78% of UK inhaler maker Vectura’s shares through a public tender offer. These developments mark a milestone in PMI’s pursuit of Vectura, which involved a bidding war with U.S. private equity firm The Carlyle Group and backlash from health groups.
Governance in Brief – September 16, 2021
Private market investors and global non-profit organization CDP launched the Private Markets Pilot which aims to increase environmental disclosure from private companies. The CDP platform will allow investors to benchmark private companies and compare them in terms of environmental performance.
Governance in Brief – August 12, 2021
Investors managing over USD 14 trillion of assets have released a set of expectations for companies through the Institutional Investors Group on Climate Change (“IIGCC”). These are set forth in a “position statement” calling for new corporate governance measures aimed at ensuring that companies can be held accountable for meeting their net zero emissions commitments.
Governance in Brief – August 05, 2021
Activision Blizzard Inc. faces an investor class action lawsuit alleging that it failed to disclose an investigation by the California Department of Fair Employment and Housing (“DFEH”), which ran for two years and culminated in the agency filing a separate civil suit against the company on July 20, 2021.
Governance in Brief – July 15, 2021
The OECD will review the G20/OECD Principles of Corporate Governance aiming to adapt these “to the post-COVID-19 reality.” The organization noted that the pandemic aggravated structural weaknesses in the “corporate sector” and concluded that strengthening corporate governance should be a priority to promote economic recovery.