Gouvernance | Page 7

Lecture de Leon Yehuda Anidjar sur le devoir de prudence et son intérêt dans le contexte de la COVID-19 : « A Firm-Specific View of Directors’ Duty of Care in Times of Global Epidemic Crisis » (Oxford Business Law Blog, 20 mai 2020).

Extrait :

In a recent paper, I discuss the directors’ duty of care in times of financial distress from a global perspective and focus on directors’ roles in different types of SMEs. I argue that while the economic crunch of the years 2007–2009 was a direct result of large governance deficiencies (Bruner, 2011), which generated various reforms that reinforced the monitoring role of directors, the current crisis will highlight the significance of the directors’ managerial roles. Accordingly, we can expect jurists and policymakers to design numerous regulatory reforms that will reinforce their advisory role in a fashion that will assist them in tackling the severe consequences of our current times. Moreover, supervisory authorities may decrease the regulatory burden imposed on directors to allow them to invest considerable managerial resources for supporting the survival of companies (as Enriques demonstrates concerning corporate law, and Chiu et al point out regarding financial regulation). 

Furthermore, I argue that the civil law on directors’ duty of care provides boards with a broader scope of discretion to confront the challenges associated with COVID-19 than the Anglo-American law. Delaware corporate law, for instance, posits that since directors, rather than shareholders, manage the affairs of the corporation, they should be protected by the business judgment rule. However, a recent empirical study demonstrated that challenges to business judgment in English and Welsh cases have been increasingly successful from the mid-nineteenth century until the present, with a marked increase in legal liability since 2007. This indicates that the proposition that English courts will generally not review directors’ business decisions is incorrect (Keay et al, 2020). In contrast, under the law applicable in countries such as Germany, France, Italy, and the Netherlands, the standard of care cannot be determined absolutely: it must address the specific situation for which the question of the due diligence of organ dealing arises. Accordingly, this standard is at the same time objective and relative, ie, a company comparable in size, business, and the economic situation shall serve as a model (as illustrated by, the Cancun ruling of the Dutch Supreme Court).

À la prochaine…

Alexis en a parlé dans un précédent billet, poursuivons donc la discussion entourant le Crédit d’urgence aux grands employeurs (CUGE). En ce 20 mai 2020, le ministre des Finances vient de dévoiler les détails.

Rappelons que pour en bénéficier, les entreprises devront :

• être ni insolvables ni en restructuration;
• ne pas avoir été reconnues coupable de fraude fiscale;
• démontrer ce qu’elles feront pour protéger les emplois et poursuivre leurs investissements au pays;
• publier des rapports annuels indiquant comment leurs opérations respectent les objectifs nationaux du Canada en matière de climat;
• s’engager à respecter les conventions collectives de leurs travailleurs;
• s’engager à assumer leurs obligations relatives aux régimes de retraite.

Des limites fermes concernant les dividendes, les rachats d’actions et la rémunération des dirigeants seront aussi imposées aux entreprises qui se prévalent du programme.

En jumelant l’apport de fonds publics à des conditions susceptibles de dessiner les futurs programmes de relance, le Canada envoie un message fort. Si d’autres États ont adopté une position proche du Canada (Pologne, Danemark, États-Unis), certains ont récemment fait marche arrière pour des raisons obscures (comme la France concernant les pratiques fiscales). Avec cette annonce de Bill Morneau, le Canada prend une posture qui dénote par rapport à sa timidité habituelle vis-à-vis des grandes entreprises (responsables de 27 % de l’emploi au Québec).

Les « plus »

Ces aides vont dans le sens d’une moralisation du capitalisme. Contrôle de stratégies financières court-termistes (touchant la rémunération, les dividendes, le rachat d’actions, les emplois) et exclusion d’entreprises reconnues coupables d’évasion fiscale vont dans le bon sens. La trop grande réserve des États en ces domaines s’est souvent montrée inefficace. À l’heure d’une relance verte voulue et annoncée le 23 avril par le gouvernement canadien, la déclaration du ministre fédéral en faveur d’une divulgation en matière de changement climatique est à marquer d’une pierre blanche. C’est en effet un signal de taille qu’il offre ici en s’inspirant de l’une des 15 recommandations du Groupe d’experts en finance durable qu’il avait lui-même mis sur pied en 2018.

Les « moins »

« Démontrer ce que l’on fera pour protéger », n’est pas protéger l’emploi. Il va donc falloir se méfier de la conformité de façade. Pourquoi se restreindre à la « fraude » fiscale ? Que faut-il entendre par « limites fermes » ? La vérification sera-t-elle faite par l’administratrice du CUGE (Corporation de développement des investissements du Canada) et sur quelle base ? De plus, ce plan d’aide doit aussi déclencher une discussion sur la pertinence d’avoir allégé dans le même temps la surveillance de l’environnement dans le secteur des sables bitumineux en Alberta.

Pour l’annonce du premier Ministre : ici

Pour le feuillet d’information : ici

À la prochaine…

Belle tribune de Yvan Allaire et Mihaela Firsirotu dans Financial Post : « What post-pandemic corporate governance might look like » (1er mai 2020).

Extrait :

Another challenge for boards of directors will come from the mood of the population as we emerge from the pandemic. Some flaws and irritants in our current economic system may well become intolerable. For instance, the expectation of continuous growth in earnings per share, the cost-driven global search for the cheapest labour and the disparity in income within both corporations and society may all come in for criticism and calls for reform.

Boards of directors need to be alert to early warnings of impending political and social disturbances, which may be harbingers of the next flock of black swans. If they do not effectively handle these new expectations, they can expect governments now flush with power to seize the initiative regarding work arrangements, executive compensation, wealth-sharing, offshoring, and so forth.

Contrary to what might be expected given the serious financial issues many businesses will face, the recent infatuation of large institutional shareholders with ESG (Environment, Social, Governance) drivers and their corollary, the stakeholder model of the corporation, is unlikely to abate. Too much wind already in those sails and new gusts from the pandemic will lead to calls for even swifter compliance by publicly traded corporations.

Management and boards should act pre-emptively in five areas. The corporation’s access to critical supplies should be closely monitored. All past decisions to outsource and off-shore operations in low-cost countries need to be reviewed and re-assessed.

Work arrangements should be adapted to post-pandemic circumstances, as well as to people’s legitimate quest for work balance and couples’ desire for burden sharing. Though doing so will be hard, boards also need to cut the Gordian knot of executive compensation and set an acceptable ratio of top management compensation to the salary of the median employee.

As most large institutional funds have become advocates of ESG, management and the board should make clear to shareholders what this and the above adjustments will mean for the management, governance and performance of the company.

In the end, the powerful forces of continuity, habit and normalcy may bring us back to the status quo ante. We may wake up from this nightmare unscathed. Perhaps! But a board of directors should not take such a “happy ending” for granted.

À la prochaine…

Le cabinet d’avocat Stikeman Elliott revient dans un billet court sur la mission du CA en contexte de pandémie : « COVID and Corporate Governance: A Broader Mission for Corporate Boards » (24 avril 2020).

Extrait :

The discussion focuses on the key challenges facing Canada’s corporate leaders as the reopening phase approaches:

• Focusing on issues that matter;
• Immediate crisis management and board readiness;
• Re-thinking strategy and risk management;
• Re-thinking incentive frameworks; and
• Re-thinking corporate purpose.

À la prochaine…

Le 30 avril 2020, Philip Gavin s’est interrogé sur l’intérêt de l’article 172 du Company Act pour les administrateurs et dirigeants dans le contexte de la COVID-19 : « Directors’ Duty under UK Law to Promote the Success of the Company during the COVID-19 Pandemic » (Oxford Business Law Blog).

Extrait :

A nuance to director’s duties in the United Kingdom is the expansive statutory delineation of s 172, which endows numerous considerations for directors when acting to promote the success of the company for the benefit of members. Given the unique circumstances of the present-day commercial sphere and the more humanitarian demands being put to businesses, having a statutory foundation upon which to base non-traditional business strategies may assist effective decision-making and financial reporting.

The initial three considerations enshrined within s 172 are (a) the likely long term consequences of any decision, (b) the interests of employees and (c) the need to foster business relationships with suppliers, customers and others. These factors are of particular relevance for firms who sought justification for voluntary shutdown of businesses prior to the wider governmental shutdown.

(…)

Where production changes become quasi-humanitarian in tone and companies internalise cost in the interim, directors may seek justification through s 172(1)(d) and (e), these being the impact on the community and the desirability of maintaining high business standards respectively.  Accordingly, directors can seek to frame these quasi-humanitarian efforts in long-term reputational terms, thereby engendering prospective communitarian goodwill.

Furthermore, as political pressure mounts, boards may evaluate reputational factors not simply in terms of market reputation, but also in terms of Governmental co-operation. This is particularly so where companies face increased intervention by public authorities through the Civil Contingencies Act. Comparatively, in a recent memorandum the Trump administration has attempted to exert control over the distribution of ventilators by the multinational conglomerate 3M. Cautious of such intervention occurring within their own enterprises, companies may shift business operations to such an extent to signal their compliance and co-operation with public authorities, thereby disincentivising the wholesale overrule of board discretion. 

Within jurisdictions with vaguer duties to act bona fide in the best interests of the company (Delaware, Australia, Ireland), directors may still engage in such quasi-humanitarian efforts. Nevertheless, utilising s 172 to steer directorial judgment may assist effective decision-making, and furthermore guide financial reporting, which mandates s 172 director’s statements.  Given that the tenor of 2020 reports will be likely dominated by COVID-19, UK directors will benefit from the homogenising structure of s 172 when making such disclosures in the coming months.

À la prochaine…