Governance in Brief – July 7, 2022

Posted on July 7, 2022

July 7, 2022 | Editor: Martin Wennerström 

Download PDF


Microsoft and Cisco targeted by tax transparency resolutions

Microsoft and Cisco Systems have come under shareholder pressure to bring their tax disclosure in line with the Global Reporting Initiative’s GRI 207 tax transparency standard, which requires granular country-by-country disclosure on non-U.S. profits and tax payments, as well as other financial data relating to tax risk appetite. A similar shareholder proposal received over 20% support at Amazon’s May 25 AGM, suggesting a growing interest in tax transparency amongst investors. All three of these resolutions were proposed by the Pensions & Investment Research Consultants Ltd. (PIRC) and the Centre for International Corporate Tax Accountability and Research (CICTAR), with the support of several European institutional investors. The proponents contend that Microsoft has failed to adequately break down its ex-U.S. profits, revenues, and tax payments, while characterizing Cisco’s disclosure of its governance and risk management as “not fit-for-purpose.” Similar proposals may follow at other upcoming AGMs as part of a larger campaign targeting 30 companies.


Indra Sistemas to revamp post-AGM board structure

Seven independent directors of Spanish defence company Indra Sistemas have been either ousted or resigned following a board reshuffle proposed by activist fund Amber Capital. At the June 23 AGM, shareholders dismissed four independent directors and voted against the re-election of a fifth director. Two additional independent directors resigned in the aftermath. The head of Spanish market regulator CNMV has described the events at the AGM as “worrisome.”

Nasdaq|Reuters|Indra Sistemas|



Activist representatives elected to Toshiba board

Toshiba’s 2022 AGM approved the election of two representatives of activist hedge funds Farallon Capital and Elliott Management, clearing the way for a possible privatization of the firm. Shortly after the AGM, a Toshiba director stepped down from the board over concerns that these new appointments would give the activist shareholders outsized influence over the board. The appointments come as Toshiba is reviewing its strategic options, which in addition to a go-private transaction also include multiple buyout offers. 



UK government overhauls financial reporting regime

The UK government has announced an overhaul of its corporate reporting and audit regime, whereby the Financial Reporting Council will be replaced by a new “Audit, Reporting and Governance Authority” (ARGA). ARGA will hold board directors accountable for significant failures and breaches of duty. The government plans to strengthen boardroom accountability for internal controls in the UK Corporate Governance Code and have ARGA enforce the audit-related duties and responsibilities of directors of Public Interest Entities (PIEs).

Lexology| UK Gov't (1) |UK Gov't (2) |

Recent Content

governance in brief

Governance in Brief – June 1, 2023

Citigroup to IPO Banamex after Mexican gov’t interventions hamper sales deal Citigroup has announced a plan to spin off its Mexican business, Banamex, after a failure to sell the unit to conglomerate Grupo Mexico. Citigroup had been in talks with German Larrea, CEO and Chairman of Grupo Mexico, for over a year in an attempt to orchestrate the sale of the bank, which was first announced at the start of 2022.

governance in brief

Governance in Brief – May 25, 2023

Activist investor pushes for leadership and strategy changes at NRG Energy Activist investor Elliott Investment Management has disclosed a 13% stake in the US-based NRG Energy and called for leadership and operational changes at the company to remedy its “meaningful underperformance.” The investor urged NRG to add independent directors with experience in the power and energy sector to its board, noting that it has already identified five executives to guide the operational and strategic changes.

governance in brief

Governance in Brief – May 19, 2023

EU court sides with Ryanair on Lufthansa’s 2020 bailout. The EU General Court, the second-highest court in the EU, has annulled the European Commission’s decision on the approval of state bailout for Deutsche Lufthansa prompted by the 2020 pandemic. The judgment found the EC erroneously considered that Lufthansa could not obtain financing on the markets and failed to ask for the implementation of an incentive mechanism for the airline to buy back the German Government’s stake.

governance in brief

Governance in Brief – May 11, 2023

JPMorgan Chase takes over failed First Republic Bank JPMorgan Chase has acquired the assets and deposits of First Republic Bank after California authorities seized and auctioned the troubled lender. The Federal Deposit Insurance Corporation (“FDIC”), an independent governmental agency established to maintain financial stability through the insurance of banks’ deposits, took possession of First Republic Bank after the lender suffered a severe liquidity crisis following the failure of SVB and Signature Bank earlier in March.