Oxana Balayan named among the Top 30 Women in Law

Hogan Lovells partner Oxana Balayan has been named in the ‘Women Who Will’ 2020 report by Obelisk Support and Next 100 Years who champion the talent and potential of women in law around the world. The award recognises the top 30 women of the legal in-house community, private practice and other change makers from within the industry, with nominations being accepted from senior General Counsel and other senior leaders in law.

Clients, including LSE listed Polymetal International plc, a global leader in the production of gold and silver, nominated Oxana Balayan for her ‘inspiring leadership’, ‘fantastic and innovative achievements’ and ‘legendary dedication to clients’.

Hogan Lovells commitment to diversity and inclusion is integral to our success as a global law firm. Oxana Balayan has been a poster-woman for gender equality in Europe and Russia for many years. Oxana leads the Corporate and Finance practice in Russia and CIS at Hogan Lovells, is a successful business woman, a mother of two great children, a marathon runner and a relentless gender equality fighter.

At Hogan Lovells, we fully support this report which aims to shine a light on talented individuals and on the gender diversity of leadership in law and why it matters. Hogan Lovells vision is to become the market leader in D&I, and to create an inclusive environment where people of all backgrounds have the opportunity to thrive and belong.

Texas Super Lawyers recognises two Eversheds Sutherland partners

Eversheds Sutherland is pleased to announce that Partners Scott R. McLaughlin and Lino Mendiola III have been selected as top attorneys in the state by Super Lawyers. The designations are the result of an annual survey conducted by the publication, which focuses on professional achievement and peer recognition.

Mr. McLaughlin, a partner in the Houston office, is widely recognised as an authority for bet-the-company labour and employment cases. A “go-to” litigator for clients facing trade secret, fiduciary, discrimination, wage and hour, and “C-Suite” matters, he also has deep traditional labour experience, having handled litigation against unions, union elections supervised by the National Labour Relations Board, strikes and many labour arbitrations. Mr. McLaughlin regularly files lawsuits under the Computer Fraud and Abuse Act to recover information misappropriated by departing employees and has vast related experience in gathering, securing and preserving electronic evidence. He also has extensive experience in conducting internal sexual harassment, discrimination and fraud investigations, and provides day-to-day labour and employment advice and counsel to clients. With a national litigation practice, Mr. McLaughlin has a successful track record for defending Fortune 200 companies in multimillion-dollar claims before state and federal courts in numerous trials and arbitrations.

Mr. Mendiola, a partner in the Austin office and member of the US Executive Committee, advises clients in both litigation and transactional matters involving energy and regulatory law with a focus on the Texas electric energy market. With more than 24 years of commercial and regulatory litigation experience, Mr. Mendiola represents utilities, private equity investors and other clients in state and federal court and before the Public Utility Commission of Texas and other state agencies. He also advises clients on the regulatory aspects of complex energy transactions, including infrastructure development, asset sales and joint ownership arrangements. Additionally, Mr. Mendiola frequently counsels clients on state and federal contracting and procurement law, and advises governments and businesses on procurement and contracting matters, such as DBE/HUB/MBE/WBE regulatory compliance, supplier diversity program development, and issues relating to diversity, inclusion and affirmative action. He is nationally recognised in designing, implementing and defending affirmative action programs and routinely offers legal advice in disputes involving procurement policies.

Disclosure of Beneficial Ownership under the Companies Act

By Craig Douglas Oyugi, Partner at Africa Law Partners. A short summary of the salient issues arising out of the Companies (Beneficial Ownership Information) Regulations 2020.

Introduction

The Companies Act, 2015 (the Principal Act) was amended by the Companies (Amendment) Act, 2017 (Amendment Act) to include, amongst other things, the concept of “beneficial ownership” by including section 93A of the Principal Act. The Amendment Act establishes a register in order to record the information of beneficial ownership and control of Kenyan companies. The Companies (Beneficial Ownership Information) Regulations (the Regulations) were promulgated under Legal Notice 12 of 2020. The concept of beneficial ownership was established as part of Kenya’s efforts to battle corruption and increase transparency in the ownership and control of legal entities.

The Companies Registry of Kenya recently issued a notice stating the operationalisation of the beneficial ownership registry from 13 October 2020.

The effect of registering a “beneficial owner” has numerous implications across different spheres of practice. The following commentary aims to outline these effects in practice.

Who is a Beneficial Owner?

A beneficial owner under the Regulations must be a natural person and not a legal person. In order to be classified as a Beneficial Owner, a natural person must:

  • holds at least ten per cent (10%) of the issued shares in the company either directly or indirectly;
  • exercise at least ten per cent (10%) of the voting rights in the company;
  • hold a right to directly or indirectly appoint or remove a director of the company; or
  • exercise significant influence or control over the company.

This definition includes persons who may hold significant influence or control as a result of a variety of commercial arrangements or instruments such as provisions in the company’s constitutional documents, the rights attached to the shares or securities which a person holds, shareholder agreements or other agreements resulting in giving such person(s) material influence over the company and its affairs.

Obligations of a Company

The Regulations place the following obligations on companies:

      1. A company shall take reasonable steps to identify its beneficial owners and enter their details into a register of beneficial owners which is different from the register of members;

      2. The following information will be included in the register of beneficial owners;

         a. the full name;

         b. full name;

         c. birth certificate number (where applicable);

         d. national identity card number or passport;

         e. Kenya Revenue Authority personal identification number (where applicable);

         f. nationality;

         g. date of birth;

         h. postal, business and residential address;

         i. telephone number;

         j. email address;

         k. occupation;

         l. nature of ownership or control; and

         m. date on which a person became a beneficial owner.

      3. The Regulations require a company to file with the Registrar of Companies (the Registrar), within 30 days of preparation, a copy of the company’s register of beneficial owners. Furthermore, if there is any change in the composition of the company’s beneficial ownership, these changes shall be made on the register of beneficial ownership and filed with the Registrar as soon as the change occurs.

      4. Where a company believes that a person is a beneficial owner it is the company’s duty to investigate and notify the potential beneficial owner. Once notified, the beneficial owner must furnish their particulars within (21) days, failure to which the company must issue a “warning.”

      5. Once a warning has been registered against a beneficial owner’s interest and the beneficial owner persists in omitting their particulars a restriction is placed on the beneficial owner’s interest in the company and is registered in the company’s beneficial ownership register as well as with the Registrar.

Restrictions

The net effect of a restriction on a beneficial owner’s interest in a company is the inability to transact or benefit from the proceeds of their interest in the company. In practice, the restriction against a beneficial owners interests would mean that;

      (i) the beneficial owner would not be able to exercise any rights in respect of their interest;

      (ii) the beneficial owner would not be able to transfer their interest in the company; and

      (iii) no payments from the company can be made to the Beneficial Owner as a result of their interest.

Disclosure of Beneficial Ownership and Data Protection

Although companies have a duty to gather information regarding beneficial ownership, its disclosure is limited to the beneficial owner, the company and the Registrar. It must be noted that the information is not public information, and as such cannot be disclosed for the general public’s consumption. The company is prohibited from disclosing information gathered from a beneficial owner save for if the disclosure is;

      (i) required by the Regulations;

      (ii) for effecting communication with the beneficial owner;

      (iii) in compliance with a court order; or with

      (iv) the written consent of the beneficial owner.

Disclosure of information provided by a beneficial owner in any manner other than in compliance with the Regulations is punishable by a fine not exceeding Kenya Shillings twenty thousand (KES 20,000) or imprisonment for six (6) months or both.

Disclosure of Beneficial Ownership and Nominee or Trustee Shareholding

Companies, for a variety of reasons, have had interests of shareholders held through nominees and trust arrangements. In order to comply with the Regulations, companies will need to disclose who the beneficial owner under a nominee arrangement is and who the ultimate beneficiary is under a trust arrangement. In these instances, the beneficial owner would be the person that derives the true economic benefit from the legal interest in the company.

Conclusion

Transparency in the beneficial ownership of companies in Kenya is a reality. This will inevitably have an effect on ownership through nominees and trust arrangements. This poses additional considerations when structuring transactions where the non-disclosure of a beneficial owner is key. This would need careful consideration, on a case by case basis of the optimal structure to adopt.

Should you require any more information or assistance kindly contact Craig Douglas Oyugi or Samuel Mwendwa Kisuu.

This alert is for general use only and should not be relied upon without seeking specific legal advice on any matter.

Norton Rose Fulbright EMEA Chair, Farmida Bi, is awarded CBE

Norton Rose Fulbright’s Chair of Europe, Middle East and Asia, Farmida Bi, has been made a Commander of the Order of the British Empire (CBE) in the Queen’s Birthday Honours 2020 for services to the legal profession and to charity. Farmida is also Chair of the Trustees of The Patchwork Foundation.

The CBE is awarded to individuals for having a prominent role at national level, or a leading role at regional level. CBEs are also awarded for distinguished and innovative contribution to any area.

Peter Scott, Managing Partner, Europe, Middle East and Asia, said: “The firm is delighted for Farmida. She is a lawyer who specialises in innovative and market leading transactions, particularly in Islamic finance, and is a passionate advocate for social justice, who has worked tirelessly to champion social equality both within the firm and in our wider communities. It is great to see that Farmida’s work in the legal profession and her efforts to support the positive integration of disadvantaged and minority communities have been recognised.”

The New Company Law and the Constitutional Rights of Nigerians

The Companies and Allied Matters Act, 2019 (“the new CAMA”) recently signed into law by the President of the Federal Republic of Nigeria is a welcome development to Nigerian businesses. It has addressed the bottlenecks in formation of business entities and improved Nigerian corporate governance. It has also given leverage to small companies to thrive and incorporated technological innovations to the processes of the Corporate Affairs Commission (“Companies’ Registry”) to facilitate the ease of doing business in Nigeria.

However, the legislature in extending the powers of the Companies’ Registry to effectively regulate the activities of Churches, Islamic Religious Organisations, Charity and Non-Government Organisation which are registered as Incorporated Trustees (“associations”) has introduced some new provisions in the new CAMA which are capable of usurping the fundamental rights of citizens to their freedom of thoughts, conscience and religion, freedom of peaceful assembly and association and constitutional rights of access to Courts.

It is upon this premise that the Plaintiff, a Nigerian Citizen and Legal Practitioner, commenced Suit No. FHC/ABJ/CS/1076/ 2020; Emmanuel Ekpenyong Esq. v. National Assembly, Corporate Affairs Commission and Attorney General and Minister of Justice of the Federation at the Federal High Court, Abuja Division, challenging the constitutionality of some provisions of the new CAMA.

The Plaintiff contends that Section 839 of the new CAMA which gives power to the Companies’ Registry to remove trustees and appoint an interim manager to take over an association where it reasonably believes that there is misconduct, mismanagement, fraudulent practices, for protection of the property of the association and public interest; Section 842, Section 843, Section 844 of the new CAMA which gives the Companies’ Registry the powers to control the proceeds of a dormant account of an association and dissolve an association on account of its dormant account; Section 845, Section 846, Section 847 and Section 848 of the new CAMA which directs associations to keep and submit their statement of affairs and accounting records to the Companies’ Registry, infringes the Plaintiff’s freedom of thoughts, conscience and religion enshrined in Section 38 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) (“the Constitution”).

The Plaintiff opines that Churches, Islamic religious organisations, Charity and Non-Governmental Organisations give hope to the Plaintiff and the Nigerian people. The activities of associations augment the efforts of government. They act as watchdogs for the people and put the government in check. It is unfortunate for the provisions of the new CAMA to put the activities of associations under the complete whims and caprices of the Companies’ Registry which is an agency of the Federal Government.

The law provides for every association to have a Constitution which regulates the affairs of the association and protect them against misconduct, mismanagement, fraudulent or other activities which are contrary to the objects of the association. Hence, the Companies’ Registry has no business whatsoever in suspending trustees and appointing interim managers for them. This is a sure recipe for disaster. The activities of associations are not against public interest to warrant such draconian provisions.

The funds of associations are not public funds. They are contributions, offerings and freewill donations of members to carrying out their objectives. There is no legal justification for the Companies’ Registry to be interested in the dormant account of associations. Associations are non-profit making organisations. They are not business ventures as such the Companies’ Registry cannot be ingrained in the affairs of associations by expecting them to submit statement of affairs or accounting records to the Registry.

The Plaintiff has a freedom to his thought, conscience and religion alone or in community with others. The Plaintiff has a right to propagate his religion, worship, teaching, practice and observance in public or private and does not even need to register same with the Companies’ Registry to propagate same. Therefore, giving powers to the Companies’ Registry who is an outsider and complete stranger to determine the affairs of a place where the Plaintiff professes his thoughts, conscience and religion is an aberration which is in contravention of Section 38 of the Constitution.

Furthermore, the Plaintiff contends that Section 839, Section 843, Section 844, Section 845, Section 846, Section 847 and Section 848 of the new CAMA infringe his freedom to peaceful assembly and association. This is because the Companies’ Registry has a wide discretion to appoint interim managers to replace suspended trustees. The interim managers to be appointed by the Companies’ Registry may have nothing in common with the members of the association and the members will not have a right to challenge such appointment.

This will impair the rights of members of associations to actively participate in activities of their associations and determine its direction. The enormous and dictatorial powers given to the Companies’ Registry to intrude and interfere with the operations and management of associations is not legally justifiable. The use of phrases such as “is satisfied”, “reasonably believes”, “deem it necessary”, “public interests” in relation to the powers of the Companies’ Registry over associations are ambiguous phrases that can easily lead to an abuse of power by the Companies’ Registry and contravene the Plaintiff’s freedom to associate peacefully with other persons enshrined in Section 40 of the Constitution.

Again, the Plaintiff contends that the provisions of Section 851 of the new CAMA which gives powers to the Administrative Proceedings Committee to hear cases arising from the provisions of the new CAMA limits the Plaintiff’s constitutional rights of access to Courts. Section 6 (1) and 6 (b) of the Constitution confers judicial powers to the Courts. Section 36 (1) of the Constitution gives citizens the right to access an independent and impartial Court to determine their civil rights and obligations. Section 251 (1) (e) of the Constitution provides for the Federal High Court to hear any matter arising from the provisions of the new CAMA.

Hence, the provision of Section 851 of the new CAMA comes as a very huge surprise. The composition of the Administrative Proceedings Committee is made up mostly of employees of the Companies’ Registry who are involved or aware of the issue which caused the dispute in the first place. It is against the principle of natural justice for a person to be a judge in his own case. In most disputes arising from the provisions of the company law or regulations, the Companies’ Registry is usually a party to the dispute.

The Companies’ Registry cannot independently and impartially determine a dispute which it is also a party. If this is allowed the Companies’ Registry will be a party and judge in its own case. It is without doubt that Section 851 of the new CAMA is contrary to the Plaintiff’s rights of access to Courts enshrined in Section 6 (1) 6 (b), Section 36 and Section 251 (1) (e) of the Constitution.

In conclusion, the Plaintiff contends that his freedom of conscience, thoughts and religion, freedom of peaceful assembly and right to access to Court are so serious and the only way to ensure that the rights are protected in the circumstance, is for the provisions of Section 839, Section 843, Section 844, Section 845, Section 846, Section 847 and Section 848 and Section 851 of the new CAMA to be expunge from the new CAMA. The Plaintiff prays for an order of mandatory injunction of the Court directing the Defendants to expunge the offending provisions of the new CAMA.

Deloitte Legal announces new head of Legal Management Consulting

Deloitte Legal has today announced the appointment of Jack Diggle as lead partner for its Legal Management Consulting (LMC) arm.

Joining this month, Jack is responsible for expanding Deloitte Legal’s offerings in this space by developing new capabilities and building on Deloitte Legal’s existing technology, change and operations teams. Jack was previously vice president and global head of consulting at alternative legal services provider Elevate Services. He also headed up legal transformation at Barclays, leading the strategic change agenda for its in-house legal department.

In addition, Craig Conte and Tom Birdseye will be joining to help build out Deloitte Legal’s consultancy offerings to in-house legal teams, contracting functions and law firms. Craig Conte is a globally renowned expert in contract management and consulting using technology and a range of legal managed services. A qualified lawyer with more than 20 years’ experience spanning a number of US law firms and geographies, Craig’s recent roles include being global head of contracts consulting at Elevate and head of the contracts and commercial management service line at Capgemini.

Tom Birdseye is a legal management consultant with over 20 years’ experience in change and transformation. He will focus on expanding Deloitte Legal’s work with both in-house legal teams and law firms seeking to increase the efficiency and effectiveness of their operations. Most recently he was head of EMEA consulting at Elevate and prior to this he was global head of change management at Freshfields Bruckhaus Deringer.

The appointments follow the firm’s hiring of Emily Foges to head up its Legal Managed Services business, announced earlier in the summer.

Michael Castle, UK managing partner at Deloitte Legal, commented: “Today’s world requires a new approach to the delivery of legal services. Now more than ever, legal departments are having to address the challenge of dealing with increasing complexity and demand with the same or fewer resources.

“Jack, Craig and Tom have a wealth of experience between them which will help these departments and contracting teams rethink their operating models, achieve greater efficiencies and increase the value they deliver back to the business. They are recognised market leaders and these appointments will ensure that Deloitte Legal continues its commitment to provide new and integrated solutions for clients.”

Jack Diggle, lead partner for legal management consulting at Deloitte Legal, added: “General Counsel and legal departments are facing multiple challenges: a heightened regulatory environment, increased workloads and the acceleration of new digitally-enabled, agile operating models.

“By focusing on people, processes and technology, it is possible for legal and contracts teams to work in a smarter way to meet the challenges that lie ahead. I am looking forward to building on Deloitte Legal’s experience in this space and helping our clients’ legal operations.”

Globally, Deloitte Legal is made up of more than 2,500 professionals operating in more than 80 countries.

Deloitte Legal has more than 250 people in the UK, delivering technology-enabled legal solutions in areas such as employment, litigation, corporate and commercial and immigration, including more than 85 client-facing practicing lawyers.