At the beginning of July, the Financial Reporting Council (FRC) published the UK Stewardship Code for institutional investors.

The aim of the Stewardship Code is to improve the quality of corporate governance through promoting better dialogue between institutional investors and the companies in which they invest. It sets out good practice on engagement with investee companies to which institutional investors should aspire and, as with the UK Corporate Governance Code, is to be applied on a "comply or explain" basis.

All institutional investors are encouraged to report if and how they have complied with the Stewardship Code. Overseas investors who follow other national or international standards can "explain" the extent to which they have complied with the Stewardship Code through disclosures made in respect of those standards and UK institutions that apply the Stewardship Code are encouraged to apply its principles to overseas holdings.

In addition, the FRC encourages those who provide proxy voting and other advisory services to disclose how they carry out their clients' wishes by applying the principles of the Stewardship Code that are relevant to their activities.

The Stewardship Code sets out seven Principles and gives guidance in relation to each Principle. The Principles are as follows:

Institutional investors are encouraged to disclose their compliance statements in relation to the Stewardship Code on their websites by the end of September and to notify the FRC when they have done so. From the beginning of October, the FRC will then maintain a list on its website of all those investors who have published a statement on their compliance or otherwise with the Stewardship Code.

The recent High Court decision in Gray and ors v G-T-P Group Ltd Re F2G Realisations Ltd (in liquidation) [2010] All ER (D) 80 (May) has highlighted that where an account is secured by use of a declaration of trust over the balance, this is tantamount to a charge and must therefore be registered with the companies registrar. Failure to do so within 21 days of creation will render the security void against a subsequently appointed liquidator, administrator or creditor.

This particular case concerned a company (the collection company) collecting payments from customers on behalf of another company providing flooring services (the service provider). An account was opened in the name of the collection company who agreed to transfer the balance to the service provider without deduction except for certain fees of the collection company for its collection services that it had a right to withdraw for its own account. It was held that the account was a simple trust account pursuant to which the collection company's right to withdraw funds to meet its own fees was equivalent to the contractual rights of a floating charge holder.

In the event that an account (subject to trust or charge) is blocked to withdrawals by the security provider, the requirement to register would be lifted by the Financial Collateral Arrangements (No. 2) Regulations 2003.

The Gray case considered for the first time whether a floating charge was capable of conferring sufficient transfer of control of the secured assets in the account to the security holder to amount to a financial collateral security interest falling within the Regulations.

In considering the terms of the EU Directive on which the Regulations are based, the Court interpreted the transfer of control as a requirement that the collateral taker had the legal rights to deal with the collateral, as opposed to merely having administrative or practical control over it. In this case the collateral provider had a contractual right to require that funds be transferred from the account to it on an ongoing basis and the collateral taker had only a right to make withdrawals in certain limited circumstances. Despite the fact that the account was legally in the name of the collateral taker, the obligation on the collateral taker to make regular payments from the account to the collateral provider led the Court to conclude that the collateral taker did not have control over the account for the purposes of the Regulations.

The Regulations convey certain advantages on the security holder by removing certain formalities in creation, namely the need to register the security. They also give certain advantages on enforcement, such as:

In practice, the key advantage to falling within the Regulations is the lifting of the requirement to register the security.

Comments of Vos J in the Gray case indicate that if a floating charge was crystallised through the charge holder taking control over a charged account before the onset of insolvency of a charge provider, this would be sufficient to bring the charge within the Regulations. However, this would be the only limited case where a charge which was at the time of creation a floating charge, could do so.

It is unclear why any rights of set-off did not apply on the particular facts of this case.

On 13 July 2010, the UK Treasury published a consultation paper seeking views on how best to implement the new banking levy.

The UK tax will apply to banks, including the UK operations of non-UK banks, which have "relevant aggregate liabilities" on their group's balance sheets of at least GB£20 billion.

"Relevant aggregate liabilities" means the total liabilities and equity shown on the balance sheet, less:

Key details of the UK levy are:

The new points arising from the consultation document include:

The new levy should be introduced from 1 January 2011. Draft legislation is not expected until the autumn and will be included in the 2011 Finance Bill.