21 Jul 2022

Corporate Update Bulletin - 21 July 2022

Corporate Update is our fortnightly bulletin highlighting the latest legal and regulatory developments which we consider to be of relevance to in-house corporate counsel. If you would like to subscribe to this bulletin as a regular email, please click here.

In this issue


UK Secondary Capital Raising Review Group publishes final report

On 19 July 2022, HM Treasury published the final report of the UK Secondary Capital Raising Review led by Mark Austin. The Review was convened to consider how to improve secondary capital raising processes for UK listed companies. In its final report, Mark Austin makes a series of 21 recommendations which are intended to represent broad consensus among companies, investors and the various other stakeholders and market participants. The Government, the FCA and the Pre-Emption Group have publicly welcomed the proposals.

Key recommendations include:

  • The principle of pre-emption, which is an important UK shareholder protection, should be preserved and enhanced.
  • Investors should permit companies to issue for cash each year up to 20% of their share capital on a non-pre-emptive basis.
  • A company doing a placing should consider carefully how to involve as many of its shareholders, including retail shareholders, as are possible.
  • On a rights issue or open offer by a Main Market company, a prospectus in connection with the admission to trading of the new shares should only be required where the company is issuing 75% or more of its share capital. A sponsor should not be required.
  • Generally, a company doing a pre-emptive fundraising should not have to publish at the time of an offer duplicative information that is already in the public domain.
  • The minimum period for which a rights issue or open offer must be open should be shortened.
  • Working capital statements in prospectuses should be allowed to be more graduated and/or refer to a wider range of assumptions.

Implementation of the recommendations will require co-ordinated steps to be taken by, among others, HM Treasury, BEIS, the FCA and the Pre-Emption Group. While some can be implemented relatively quickly, others will take much longer, particularly where primary legislation is required. Further details are set out in our client briefing (see Publications below).

FRC sets out next steps for reform of audit and corporate governance

On 12 July 2022, the FRC published a Position Paper setting out the next steps for reform of the UK’s audit and corporate governance systems. It details the actions the FRC will take to implement the reform following the Government’s response to the consultation on restoring trust in audit and corporate governance reform.

In particular, the FRC intends to revise the UK Corporate Governance Code to provide additional support to Code provisions where reporting is currently weaker. These include revisions to:

  • provisions relating to the need for a framework of prudent and effective internal controls around the year end reporting process;
  • reflect the wider responsibility of the board and audit committee for expanded Sustainability and ESG reporting;
  • introduce a new provision for boards to consider how audit tendering takes account of the need to expand market diversity; and
  • reflect proposed changes to legal and regulatory requirements set out in the Government response, for example, strengthening reporting on malus and clawback.

The FRC intends to consult on the revised Code from first quarter of 2023, and for the revised Code to apply to financial periods commencing on or after 1 January 2024.

Companies House announces intended launch date of Register of Overseas Entities

Companies House has announced that it intends to launch the new register of beneficial owners of overseas entities on 1 August 2022, although the commencement order confirming the start date for the new register has yet to be published.

FCA consultation paper on the proposed changes to equity markets

On 5 July 2022, the Financial Conduct Authority (FCA) published a Consultation Paper seeking views on proposed rule changes to improve trade execution and the information content of post-trade transparency for investors. These changes aim to improve the operation and resilience of UK equity markets. The consultation closes on 16 September 2022.

FRC publishes Report on the Influence of the UK Stewardship Code 2020

The Financial Reporting Council (FRC) has published a report on the influence of the UK Stewardship Code 2020 on practice and reporting. The report is based on surveys of 55 asset managers and owners who applied to become signatories to the Code. Key findings include the following:

  • Organisations are generally positive about the Code’s impact and were making material changes in stewardship practice and reporting since 2020.
  • All respondents had restructured to integrate stewardship within their investment decision-making, and saw improvements in stewardship reporting, specifically in relation to monitoring and engagement.
  • 77% of respondents thought that engagement between investors and companies had improved due to the Code’s influence.

Market Insights

Equiniti report on climate-related resolutions

On 5 July 2022, Equiniti published a report on the latest climate-related resolutions during the 2022 proxy season across companies in the UK, European and US, with a special focus on ‘Say on Climate’ resolutions. The report found that when climate proposals were submitted by management, they mostly received over 80% of support. However, when climate proposals were submitted by shareholders, only 38% of the resolutions passed.


Slaughter and May has published a client briefing looking at the recommendations made by the UK Secondary Capital Raising Review for improving secondary (follow-on) equity fundraisings and what they would mean in practice for companies listed on the London Stock Exchange.

Contact Information
Filippo De Falco
Partner at Slaughter and May
Alfred King
Senior PSL at Slaughter and May