Practical governance for subsidiary companies

Registration & welcome coffee

Being a director nominated by a shareholder

• To whom is your fiduciary duty?

• Loyalty to the subsidiary and unfettered decision-making.

• Confidentiality & information flow: dissociation of directorship and other group roles.

Taking into account the interests of the nominating shareholder & the Rozenblum precedent.

Independence on the Board of a subsidiary company

• Different models of group governance, their advantages & disadvantages, their impacts on director responsibility.

• The different roles of independence (objectivity, protection of minority shareholders or other stakeholders, etc.).

• The practical reality of independence: do you need independent board members?

A Board simulation to illustrate the pressure exerted on independent directors

Coffee break

Strategy & risk of a subsidiary

• Who has responsibility for strategy and risk appetite? Theory vs practice

• Exercising shareholder control whilst encouraging subsidiary entrepreneurship & innovation

• Dealing with the difference of interests between shareholder and subsidiary: obligations and practicalities

• Risk: subsidiary vs branch

• The role of group internal & external audits, limitations of their work: consequences for subsidiary directors.

• Practical oversight of related party transactions between shareholder and subsidiary

A Board simulation to illustrate the conflicts of interest arising for directors nominated by majority shareholders

Lunch break

Financing of the subsidiary

• The group context: efficient group financing structures & impacts on corporate governance.

• Loans and tax planning with other group companies: your responsibility as a director

Who decides dividends? The law vs practicality and the wider governance issues.

Remuneration of subsidiary management

• Who decides, who pays? An analysis of typical group remuneration packages.

• Aligning variable remuneration with subsidiary objectives vs group objectives.

• A Remuneration Committee simulation to illustrate remuneration issues in a subsidiary.

• Evaluation of management: who does this?

The issue of subsidiary directors subordinate to subsidiary management in group hierarchy.

Coffee break

Getting the most out of your Board

• The advisory capability on strategy.

• The quality and timing of information flow to the subsidiary Board.

• Composition: getting the right nominees from the shareholder & board member renewal processes.

• Carefully managing extra services provided by Board members.

Time and commitment: accumulating mandates within the group.

Michael Schweiger, Head I&TS Legal, Continental Europe at Royal Bank of Canada,

talking on the issues of being a director of a subsidiary