On June 1, the U.S. Public Company Accounting Oversight Board adopted a new auditing standard that will require auditor’s reports filed with the Securities and Exchange Commission to include a discussion of critical audit matters (CAMs) that arose during the audit. Auditor reports will also be required to include the year in which the auditor began serving as the company’s auditor. While the traditional pass-fail auditor’s opinion will also be retained, the addition of CAM reporting will fundamentally change the auditor’s report from a standardized document, with little variation across clients, to an individually-tailored report highlighting the most challenging aspects of each specific audit.
On 14 February 2017, amendments to the securities disclosure regulations on continuous disclosure requirements for listed companies in Japan were published and came into immediate effect. Under the Japanese disclosure framework, companies listed on a securities exchange in Japan are required to comply with disclosure obligations under two separate rules. The first is under the Financial Instruments and Exchange Act of Japan (FIEA) and the second is under the listing regulation of the Tokyo Stock Exchange (TSE). Each set of rules requires listed companies in Japan to prepare and disclose similar information but in different formats, and this incurs significant time and cost. The amendments seek to streamline and rationalize these rules.Read more…
In 2016, The Stock Exchange of Hong Kong Limited (the Exchange) continued to rank number one globally in terms of IPO fundraising, with 126 new companies listing and raising approximately HK$195.3 billion in total. In an effort to uphold the quality and reputation of Hong Kong’s stock market, the Exchange published its 2016 Listing Committee Report (the Report) on 20 March 2017, which included a review of the Exchange’s work in 2016 and an overview of its policy agenda for 2017 and beyond. The Report highlighted the main issues that the Exchange considered to be of greatest interest to the investing public and listed companies and outlined the Exchange’s position or proposed action in relation thereto.
According to the Report, the Exchange is focused on three areas in particular. These are: (a) suitability for listing; (b) backdoor listing; and (c) capital raising by listed issuers. Other substantial matters considered by the Exchange include, among others, the review of listing on the Growth Enterprise Market Board (GEM), pre-IPO investments and the expansion of the thematic approach to enforcement.Read more…
On 14 March 2017, Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan or OJK) issued new rules for public companies. Below are highlights of what the new rules say:
Reporting of Share Ownership in Public Companies (OJK Rule No.11/POJK.04/2017)
There are three significant changes introduced by the new rule:
- The new rule now officially recognizes the “indirect” share ownership concept. This is different with the previous rule, which, on the face of it, may be interpreted to apply only to direct ownership.
- While the threshold to report remains the same (i.e., once a party holds at least 5% shares), there is now another threshold to file a subsequent report. Under the previous rule, any change of ownership once a party exceeds 5% must be reported (which means an increase of even one share will trigger a reporting obligation). However, under the new rule the subsequent report must be submitted once there is a change of ownership of at least 0.5% (either in one transaction or in a series of transactions).
- OJK now provides a specific form for the report.
Amendment to Plan and Procedures to Conduct General Meetings of Shareholders (GMS) for Public Companies (OJK Rule No.10/POJK.04/2017)
While generally there is no significant change in the procedures for convening a GMS (e.g., timeline), the new rule adds provisions regarding:
- GMS of public companies that have different classes of shares (such as preferred shares or shares without voting rights).
- The appointment and dismissal of a public company’s external auditor (public accountant).
For more details on what these mean for public companies, please read our client alerts on the share ownership reporting rule and the amendment to conducting general shareholders meetings on bakermckenzie.com.