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News digest 26/08/16: FCA considers approving blockchain tech

26 August 2016 by Henry Ker

FCA considers approving blockchain tech - read more

The latest governance stories in the news

FCA considers approving blockchain tech

The Financial Conduct Authority has said it is considering approving a ‘small but significant number of firms’ using blockchain technology − the process which underpins bitcoin.

The FCA revealed several groups in its preapproval stage are developing consumer-facing and compliance products that use blockchain technology. They are involved in the FCA’s Project Innovate – designed to help new and established businesses, both regulated and non-regulated, to introduce innovative financial products and services to the market. In its first year, the project assessed 177 companies and approved 40 of them.

The main attraction for banks and other financial companies in blockchain is that it involves a decentralised public ledger of transactions which is theoretically immutable. This could be utilised in areas such as speeding up back-office settlement systems and could free up capital currently supporting trading – making as much as an estimated $20 billion dent in the $65−80 billion a year cost to the finance industry of clearing and settling trades.


ISS targets ‘male, stale and frail’ boards

The corporate governance and responsible investment adviser ISS is looking into company boards that have not been refreshed for a long period.

ISS is surveying clients for opinions on boards that have failed to appoint a new director in five years, where the average tenure of directors exceeds 10 or 15 years, or where more than 75% of directors have served 10 years or longer. Its findings could form the basis for changes in its investor voting guidelines.

The move comes amid widespread discussion around the prevalence of ‘male, stale and frail’ boards – those that comprise predominantly old, white men and have not had new appointments for a long time.

Marc Goldstein, Head of ISS’s Policy Steering Committee said: ‘The issue with board refreshment practices is not that one or two directors have been on the board for a longer period, but that the board doesn’t refresh periodically enough to add new blood. If there’s a mixture, that’s of less concern.’


Sports Direct pressured to launch independent review

The Investor Forum, the governance body that represents asset managers, says the Sports Direct should conduct a ‘thorough independent review’.

Investors have raised concerns about the company's underpayment of staff and an arrangement with founder Mike Ashley's brother over deliveries. They called for the company to look at issues involving its corporate governance and board oversight, related party transactions, employment practices, acquisition strategy and due diligence, and oversight of key supplier relationships and store management.

‘Governance failings are clearly resulting in declines in operating performance and long-term shareholder value,’ the Investor Forum said. A public call for an independent review is a highly unusual move by the group.

Reports by CityAM also reveal Glass Lewis, the shareholder advisory group, told shareholders to vote against Mike Ashley’s re-election to the board at the company's AGM.


Charity Commission powers ‘threaten the independence of charities’

The Charity Commission’s new powers ‘threaten the independence of charities’, according to the NCVO. The comments were made in response to the Commission’s consultation on new powers to disqualify trustees.

The NCVO stated the Commission’s current plan ‘leaves room for considerable subjective decision making’ and requested more detail on how it intends to use the new powers introduced by the Charities Act this year.

‘NCVO is in principle supportive of equipping the Commission with a discretionary disqualification power, but there need to be appropriate safeguards in place that provide clarity and transparency about how the power would be exercised’.

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