Welcome to the latest edition of Corporate Update, our fortnightly bulletin offering a five-minute read of the latest developments which we consider relevant to corporate counsel. Please get in touch with your usual contact if you want to explore any of the topics covered in more detail. If you would like to subscribe to this bulletin as a regular email, please click here.
In this issue:
FCA publishes Primary Market Bulletin 45
The Financial Conduct Authority (FCA) has published Primary Market Bulletin 45. This edition covers a number of areas and in particular:
- sets out plans to consult in the first half of 2024 on updating the Listing Rules on climate-related disclosures to refer to the UK-endorsed versions of the recently issued International Sustainability Standards Board (ISSB)’s Sustainability Disclosure Standards (IFRS S1 and S2). The FCA also plans to consult on guidance that will set out its expectations on transition plans disclosures for listed companies.
- reminds issuers that the Disclosure Guidance and Transparency Rules (DTRs) require the auditor of a third country issuer to be registered with the Financial Reporting Council (FRC) as financial statements that do not include an audit report by an FRC registered auditor would not be audited for purposes of the DTRs.
- reminds shell companies and SPACs that transitional arrangements allowing such companies to re-list after a reverse takeover with a minimum market capitalisation of only £700,000 (instead of £30 million) will end in December 2023; and
- highlights that multi-factor authentication is now mandatory for accessing the FCA's Electronic Submission System.
Guidance on Register of Overseas Entities updated
The Department of Trade and Business (DBT) has published its updated Guidance: Register of overseas entities - registration and verification which provides an overview of the Register of Overseas Entities and the process by which the registration requirements placed on overseas entities that own land in the UK can be satisfied, including guidance on the verification mechanism. The guidance has been updated to reflect technical amendments to the regime made by various regulations supplementing Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 (which established the Register).
Companies House has also updated its guidance on the Register of Overseas Entities to include details on how an overseas entity can apply to be removed from the Register, if it is not, or no longer, a registered owner of land or property in the UK. The guidance notes that the application will be rejected if the overseas entity is still listed on the land register as being the registered owner of land or property in the UK.
FRC announces latest round of Stewardship Code signatories
On 30 August 2023, the FRC announced that there have been a record number of successful signatories to the Stewardship Code following the latest round of applications, with 277 signatories representing £44.6 trillion assets under management. The FRC highlighted the continued growth in the assets other than listed equity covered by the Code as being evident of the strength of the flexible principles-base approach of the Code. The FRC also noted continued progress in the reporting of stewardship activities and outcomes by signatories, for example, in improving the board diversity at investee companies and improved disclosure related to climate change and biodiversity.
Retained EU Law (Revocation and Reform) Act 2023 (Revocation and Sunset Disapplication) Regulations 2023
On 4 September 2023, the draft Retained EU Law (Revocation and Reform) Act 2023 (Revocation and Sunset Disapplication) Regulations 2023 were laid before Parliament. Pursuant to powers under the Retained EU Law (Revocation and Reform) Act 2023 (the “Act”), the Secretary of State can, by 31 October 2023, make regulations to disapply the revocation provision to specified legislation (which would otherwise have been revoked under the Act). The Act also gives powers to the Secretary of State to revoke any secondary retained EU law without replacing it. These Regulations (made pursuant to those powers) will preserve certain specified instruments from revocation and revoke a further 93 pieces of retained EU law that are redundant, have been superseded or no longer have any legal effect at the end of 2023.
Two steps forward, no steps back – corporate criminal liability reform
Slaughter and May has published a briefing discussing reform of the corporate criminal liability regime included in the Economic Crime and Corporate Transparency Bill currently making its way through Parliament. The Bill would create a new offence of failure to prevent fraud and expand the ‘identification principle’ so that economic offences committed by a wider range of individuals can result in criminal liability for corporates.