Managing the Risks of Corporate Fraud: The Evidence from Hong Kong and Singapore

(11 December 2017)

Speaker: Associate Professor Wan Wai Yee, Singapore Management University

Since the Asian financial crisis of 1997, Hong Kong and Singapore have implemented reforms that promote independence and monitoring competency of the boards of directors of their listed companies. However, with the advent of the financial crisis of 2007/2008, a wave of fraud cases prompts the question as to the effectiveness of these reforms.

In the seminar, Associate Professor Wan reported on the findings from an analysis of 62 listed companies that suggest that fraudulent companies tend to combine the roles of chairman and chief executive officer and have fewer non-accounting finance experts. Otherwise, there are no material differences in the other corporate governance characteristics. The reasons for the limited role of independent directors in preventing fraud are due to the low threat of enforcement actions and their incentives to side with controlling shareholders. Thus, the results suggest that the high expectations of independent directors are only partially fulfilled.

The misuse of corporate vehicles: Concealing (and revealing) beneficial ownership

(23 November 2017)

Speaker: Professor Liz Campbell, Durham University

Serious criminality often is enabled and enhanced by the use of legal structures like companies, trusts and partnerships to conceal the “beneficial ownership” of assets. Features of corporate opacity help to generate, conceal and maintain the resources necessary for many criminal relations and actions. Recognition of this phenomenon is stimulating various legal amendments at the domestic and transnational level, relating to the registration of ownership and the directorship of companies, in an effort to improve transparency and oversight and thus prevent and deter crime. Critical issues remain under-explored regarding these laws’ likely effectiveness, as well as their implications for human rights. The presentation brought together insights from criminal law, company law and regulatory studies to provide a novel doctrinal and theoretical analysis of the key legal measures that seek to improve transparency and thereby reveal the beneficial ownership of assets implicated in serious crime.

Some Personal Reflections on International Financial Institutions and Working Within Them

(22 November 2017)

Hosts: Global Economic Law Network and Centre for Corporate Law and Securities Regulation, Melbourne Law School

Speaker: John Taylor, International Advisor and Member of the Development Board of the Centre for Commercial Law Studies, Queen Mary University of London

John Taylor, an Australian lawyer with a diverse range of international experience, has spent almost half of his professional career working for international financial institutions of which Australia is a member, including the Asian Development Bank, the World Bank and the European Bank for Reconstruction and Development. At these institutions, John held a variety of legal and banking positions and was the initial Deputy General Counsel, and then General Counsel, of EBRD.

In the seminar, John shared some of his professional experiences and impressions of these institutions and of the pros and cons of working within them.

The Commonwealth Bank, AUSTRAC and materiality: implications for continuous disclosure

(15 November 2017)

Speaker: Professor Ann O'Connell

Listed entities are subject to strict disclosure rules to ensure an informed market. Those rules are given statutory force by s 674 of the Corporations Act and breach of the rules can have significant consequences. The basic test for disclosure is whether a reasonable person would expect the information to have a material effect on the price or value of the entity’s securities. A class action has recently been launched against CBA concerning its alleged breach of its disclosure obligations. This involves consideration of what information must be disclosed and when and the application of the materiality test.

Corporate Misconduct: Does the Buck Stop With You?

(17 October 2017)

Speaker: Professor Pamela Hanrahan

Is the community demanding more accountability not just from the financial sector, but from all business executives and managers across the board? What are the policy arguments, and what are the future implications for regulators, business and most importantly – for you?

In the seminar, Professor Pamela Hanrahan examined this confronting and contentious topic with particular reference to the proposed Banking Executive Accountability Regime (BEAR), announced by the Government earlier this year.

Recent PPSA Reform Initiatives in Canada

(7 September 2017)

Speaker: Professor Anthony Duggan, Hon. Frank H. Iacobucci Chair, Faculty of Law, University of Toronto

The Canadian Conference on Personal Property Security Law has recently released a report making 21 recommendations for amending the provincial Personal Property Security Acts.

In the presentation, Professor Duggan discussed five of the recommendations, selected for their likely interest in the Australian context: (1) refinancing purchase money security interests; (2) the time for determining priorities; (3) licences as collateral; (4) payment of debts and transfers of negotiable property; and (5) mandatory serial number registration. The CCPPSL Report’s discussion of these and other issues should be of interest to Australian lawmakers as they work towards implementation of the recommendations contained in the Whittaker Report.

Related Paper by Professor Duggan

Insolvency Law Reform in Asia Seminar & Workshop

(4 September 2017)

Hosts: Allens Linklaters Melbourne; Asian Law Centre and the Centre for Corporate Law and Securities Regulation, Melbourne Law School

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Financial Regulation in the Trump Administration: Initiatives and Challenges

(16 August 2017)

Speaker: Timothy Spangler, Partner, Dechert LLP

The Trump administration has ushered in a period of immense regulatory reform that could have profound implications. In the seminar, Timothy Spangler, partner in the Financial Services Group at Dechert LLP and adjunct faculty at UCLA Law, provided his views concerning the impact of these reforms in the financial sector. He also examined the legal hurdles and challenges posed by those developments and how certain regulatory changes could impact on financial transactions and services.

The changing position and duties of company directors

(26 June 2017)

Speaker: The Hon. Justice Geoffrey Nettle, Justice of the High Court of Australia

The development of directors' duties spans the length of the 20th century, from the precepts of fiduciary obligation and the courts of Chancery to the Corporations Act 2001 (Cth). This lecture examined the obligations placed upon, and the roles expected of, company directors. The position of present-day company directors in Australia will be considered in light of the schemes regulating the conduct of other office-holders, including union and public officials, and the approaches taken in other jurisdictions.

Potential introduction of corporate whistleblowing bounties: What are the implications?

(23 June 2017)

Opening address by: The Hon. Kelly O'Dwyer, MP, Minister for Revenue and Financial Services

Whistleblowing regulation in Australia is under intense scrutiny. Late 2016 saw the launch of a Federal Parliamentary Joint Committee Inquiry into Whistleblower Protections, as well as a Treasury Review of Tax and Corporate Whistleblower Protections in Australia. One of the most contentious potential developments under review is the introduction of financial compensation or rewards for whistleblowers. Consideration of this reform has been stimulated by the apparent dramatic success of the United States SEC’s whistleblowing bounties system introduced in 2010 under the Dodd-Frank whistleblower reforms. Payments under this scheme so far total in the order of US$150M. The Ontario Securities Commission also introduced a paid whistleblower program, offering further evidence of regulatory interest in the capacity of whistleblowing rewards to increase the volume and quality of disclosures.

This seminar offered an unparalleled opportunity to hear the views of senior regulators, eminent practitioners, local and international academics and enforcement authorities on the implications of corporate whistleblowing bounty reforms in Australia.

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What Good is a NAP for Developing Countries?  An Assessment of Achievements and Prospects for National Action Plans on Business and Human Rights in the Global South

(16 June 2017)

Speaker: Associate Professor Joanne Bauer, University of Columbia

National Action Plans (‘NAPs’) represent the primary means by which States can meet their duty to protect and to provide access to a remedy under the UN Guiding Principles on Business & Human Rights (‘UNGPs’).  A looming question for the business and human rights movement and proponents of the UNGPs, therefore, is to what extent Global South countries will undertake a NAP process.  The development of NAPs only in the Global North, which are largely aimed at curbing harmful corporate conduct by multinationals in the Global South, is a clear impediment to the development of a global governance system that can avert corporate human rights violations, the very objective of the NAPs project.  By examining efforts to develop NAPs in two Global South countries, Kenya and Chile, this talk shed light on Global South perspectives on NAPs and prospects for UNGP diffusion in Africa, Asia and Latin America.

FinTech, RegTech and the Reconceptualisation of Financial Regulation

(24 May 2017)

Speaker: Professor Douglas Arner, University of Hong Kong

The regulatory changes and technological developments following the 2008 Global Financial Crisis are fundamentally changing the nature of financial markets, services and institutions. At the juncture of these two phenomena lies regulatory technology or ‘RegTech’ – the use of technology in the context of regulatory monitoring, reporting and compliance. RegTech to date has been focused on the digitization of manual reporting and compliance processes. However, the potential of RegTech is far greater – it has the potential to enable a close to real-time and proportionate regulatory regime that identifies and addresses risk while also facilitating far more efficient regulatory compliance.

This seminar discusses the inadequacy and lack of ambition of simply digitizing analogue processes in a digital financial world. The development of financial technology (‘FinTech’), the rapid developments in emerging markets, and the recent pro-active stance of regulators in developing regulatory sandboxes, all represent a unique combination of events, which could facilitate the transition from one regulatory model to another. This seminar proposes sequenced reforms that could benefit regulators, industry and entrepreneurs alike in the financial sector and other industries.

The Parameters of Business Judgment

(3 May 2017)

Speaker: Professor Joan Loughrey, School of Law, University of Leeds

Classifying a decision as a business judgment provides directors with a powerful shield from legal accountability. Yet what decisions are categorised as business judgments has never been closely considered, and the precise boundaries of the protection from liability enjoyed by directors have never been delineated.

This seminar examines how, if at all, the courts of England, Australia and Delaware have defined business judgment. It considers what a judgment is, an event or a process?  Are there different categories of business judgment? A comprehensive database search has been conducted of case-law in England and Wales on the directors’ duty of care and other causes of action in which business judgment or equivalent terms have been used, or in which the courts have reviewed directors’ decisions; key US and Australian decisions are also considered.

The Case against Excluding Tobacco from International Investment Agreements and the Search for Better Policy Options

(24 April 2017)

Speaker: Professor Bryan Mercurio, Faculty of Law at the Chinese University of Hong Kong (CUHK)

In recent years, critics of bilateral investment treaties and investment chapters in trade agreements have attacked these agreements on the grounds that they threaten a state's sovereign “right to regulate” and limit the “policy space” of governments. The worry is that investment rules will prevent governments from adopting domestic legislation or regulations designed to promote policies that are in the public interest (referred to as “regulatory chill”).  This concern is not new, but the proliferation of investment disputes in recent years has brought it into focus, and the criticism has intensified. The sensitivity of environmental and health-related cases, coupled with the lack of consistency among arbitral tribunals, threatens to derail the entire regime, with many calls to abolish the system of investor-state dispute settlement (ISDS). The system is facing a legitimacy crisis and is under serious threat. Governments have responded to the criticism in a number of ways. One such way, seen in two agreements (both involving Australia), have essentially excluded or “carved out” an entire industry – tobacco – from ISDS, in an effort to better protect a sub-set of measures taken for the promotion of public health from challenge.

This presentation focuses on the substantive reforms – greater drafting precision, and carve outs and exclusions from the use of ISDS. Carve outs and exclusions are problematic for a number of reasons, and unnecessary to achieve the goal of preserving policy space. Instead of blanket carve outs and exclusions, the presentation will propose that governments instead continue improving the treaty text so as to protect legitimate public welfare measures, such as the environment and public health. In particular, that broader “general exceptions” provisions should be utilized and would be helpful in this regard. Such provisions have a long history in international trade law, and already appear in a few investment treaties. The use of general exceptions provisions in IIAs should be expanded, and are more effective and appropriate than carve-outs and exclusions for preserving domestic policy space. When combined with more precise drafting of the obligations, general exceptions can go a long way towards addressing the criticisms of IIAs.

Algorithmic Regulation

(11 April 2017)

Speaker: Professor Karen Yeung, King's College London

Innovations in networked digital communications technologies, including the rise of ‘Big Data’, ubiquitous computing and cloud storage systems, may be giving rise to a new system of social ordering known as algorithmic regulation.

Algorithmic regulation refers to decision-making systems that regulate a domain of activity in order to manage risk or alter behaviour through continual computational generation of knowledge by systematically collecting data (in real time on a continuous basis) emitted directly from numerous dynamic components pertaining to the regulated environment in order to identify and, if necessary, automatically refine (or prompt refinement of) the system’s operations to attain a pre-specified goal.

This seminar offers a descriptive analysis of algorithmic regulation, classifying these decision-making systems as either reactive or pre-emptive, and offers a taxonomy that identifies 8 different forms of algorithmic regulation based on their configuration at each of the three stages of the cybernetic process: notably, at the level of standard setting (variable vs fixed behavioural standards); information-gathering and monitoring (historic data vs predictions based on inferred data) and at the level of sanction and behavioural change (automatic execution vs recommender systems).

Electronic Payments Fraud

(6 April 2017)

Speaker: Dr Liran Haim, Senior Deputy at the Israeli Ministry of Justice

Electronic payments fraud (which includes stealing, phishing, skimming, riding, and the like) constitutes a rapidly increasing risk for modern payment systems. Various actions taken by policy makers and the cybernetic industry have been unsuccessful in preventing the market loss caused by this fraudulent conduct. Electronic payments fraud is also a source of constant criticism in national reports and media outlets around the world which state that more should be done to mitigate this risk. Should electronic payments fraud be treated as an inherent risk in payment markets? What stands in the way of successful prevention of electronic payments fraud?

Dr Liran Haim discussed the swiftly growing risk of electronic payments fraud, the legal framework which governs the risk allocation of unauthorised transactions and possible solutions for Australia and other jurisdictions.

“Before the Revolution in Corporate Law”: The Brief Wondrous Life of the Yale Law School/Harvard Business School Combined Law-Business Program

(22 February 2017)

Speaker: Professor Christopher Nicholls, Faculty of Law of Western University in London, Canada

In 1933, in the depths of the Great Depression, the Yale Law School and Harvard Business School launched an innovative joint program: the “Law-Business Course”.  The program’s principal architect was Yale law professor William O. Douglas, best remembered today as the longest serving member of the US Supreme Court and one of the most provocative.  For a short time, this remarkable academic initiative brought together professional schools at America’s two foremost universities, foreshadowing the interdisciplinary approach to law and business education that animate modern JD/MBA programs. The creation and short life of this unique academic collaboration provide a fascinating glimpse into the intellectual dynamism of early twentieth century business law education and the politics and practical exigencies facing academic pioneers of that important era. The story also offers insights into a forward-thinking interdisciplinary perspective on business law education that would not be seen again in America for another several decades.

Value Creation in a Sustainable Manner

(12 January 2017)

Speaker: Professor Mervyn King SC, Chairman of the International Integrated Reporting Council, Chairman Emeritus of the Global Reporting Initiative and member of the Private Sector Advisory Group to the World Bank on Corporate Governance

Professor King delivered a presentation followed by an open forum discussion and broader analysis of the potential effects of local and international developments in climate change litigation. How will increased shareholder activism force corporate decision-makers to consider and manage climate change risks? Will it drive a longer term perspective and preserve corporate value?