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Fiduciary Duty Consultation – no major changes proposed

The Law Commission is running a public consultation on the "Fiduciary Duties of Investment Intermediaries". This was prompted by a recommendation in the Kay Review that examined the issue of "short-termism" in business and investment decisions. It suggested that this area should be examined. One question posed was whether the legal concept of "fiduciary duty" should be extended so that investment intermediaries had clearer moral responsibilities to their clients.For example, trustees of pension funds have a general legal obligation to act ...

Whitewash at British Smaller Companies VCT

British Smaller Companies VCT has called a General Meeting to approve resolutions to rectify past accounting errors that resulted in technically illegal payments of dividends and share buy-backs back in 2006-2008. In essence the company did not have the reserves required. So these "whitewash" resolutions as they are called ask shareholders to waive any claims against the directors for these errors, and claims against shareholders who received the dividends when they should not have. This follows similar whitewash resolutions that were ...

BAE Systems – Typhoon deal shot down, and credit extended

There was bad news from BAE Systems yesterday - issued after close of trading which is always a negative sign. Firstly the prospective deal to sell Typhoons to the United Arab Emirates (UAE) is apparently a dead duck. That's perhaps not altogether surprising. But the worse news was that the pricing of a sale of the same planes to Saudi Arabia under the Salam contract has still not yet been agreed. The announcement says the parties are "actively engaged" but a "definitive ...

VCTs – Stopping the tax relief abuses

The Government has published its response to the public consultation on share buy-backs in Venture Capital Trusts (VCTs). In particular the proposals put forward were aimed at stopping "Enhanced Share Buy-Backs" where VCTs were buying back shares from investors and immediately reinvesting the cash paid to investors in a new shares issued to the same investors, thus enabling them to obtain tax relief on the same original cash more than once.There was a general acknowledgement in the responses to the consultation ...

B&B Finance Director fined

Christopher Willford, the Finance Director of Bradford & Bingley in 2008, has been fined £30,000 by the Financial Conduct Authority (FCA) for "failing to provide the board with up-to-date information about B&B's financial position" ahead of the right issue in May of that year. The FCA state that Mr Willford "failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm. Bad mortgage debts, arrears and repossessions had all risen while the net interest ...