23 Feb 2023

Corporate Update Bulletin - 23 February 2023

Welcome to the latest edition of Corporate Update, our fortnightly bulletin offering a two-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


Investment Associate updates its Share Capital Management Guidelines

The Investment Association (IA) has published an updated version of its Share Capital Management Guidelines. The updates (the first since 2016) reflect the new Pre-Emption Group Statement of Principles and Template Resolutions and also the recommendations of the UK Secondary Capital Raising Review (SCRR). Key points include:

  • IA members will continue to regard as ‘routine’ a section 551 authority to allot up to two-thirds of a company’s existing share capital, but as recommended by the SCRR, companies can stipulate that the second part of a section 551 authority (relating to up to two-thirds of the company’s existing issued share capital) can be used for all fully pre-emptive offers (for example, open offers) and not just rights issues.
  • The IA supports the updated PEG Statement of Principles allowing a company to disapply pre-emption rights in respect of up to 10% of its issued share capital for any purpose and an additional 10% for an acquisition or specified capital investment, plus up to an additional 2% plus 2% for a follow-on offer.
  • IVIS (the IA’s voting research service) will issue a ‘red top’ warning to companies that seek a routine disapplication of pre-emption rights in excess of 24% of their issued share capital or that seek a disapplication up to 24% that does not (i) follow the PEG Template Resolutions or (ii) include confirmations in the AGM notice that certain conditions specified in the PEG Statement of Principles relating to any non pre-emptive issue of securities pursuant to the general disapplication of pre-emption right have been complied with.

There are no substantive changes to the guidance on buyback authorities or scrip dividends. The IA also states that it expects companies that wish to be treated as “capital hungry companies” to disclose this fact in their IPO prospectus and IVIS will ‘amber top’ companies that fail to do so and subsequently seek to disapply pre-emption rights in excess of 24% of issued share capital.

Investment Association publishes ‘Shareholder Priorities for 2023’

The IA has also published its Shareholder Priorities for 2023, looking at progress made by companies against the 2022 priorities and setting out investors’ expectations for the coming year. The main areas of focus have carried over from 2022, with key priorities including areas such as the following:

  • Climate change: IVIS will continue to ‘amber top’ companies that do not make disclosures consistent with all four pillars of the TCFD framework. IVIS will ask more specific questions on disclosures relating to metrics and targets (in particular, in relation to disclosure of methodologies and framework used to set targets) and to scenario analysis (and the impact of the results of such analysis on a company’s business model and strategy). 
  • Audit quality: The IA continues to expect companies to demonstrate how they have assessed the quality of the audit they have received, including targeted disclosures on factors such as how the auditor has demonstrated professional scepticism and challenged management’s assumptions where necessary. 
  • Gender diversity: IVIS intends to ‘red top’ FTSE 350 companies in which women comprise 35% or less of the board of directors, or 30% or less of the Executive Committee. For FTSE Small Cap companies, the figure will be 25% for both the board and the Executive Committee.

PERG publishes 2022 Annual Report and Good Practice Reporting Guide

On 20 February 2023, the Private Equity Reporting Group (PERG) published its Annual Report for 2022 and the latest Good Practice Reporting Guide (GPRG).

The Report reviews the private equity industry’s compliance with the Guidelines for Disclosure and Transparency in Private Equity (otherwise known as the “Walker Guidelines”), which seek to increase transparency through enhanced reporting and disclosure by the largest UK portfolio companies and their private equity owners. Key findings from the Report include:

  • There were no ‘excellent’ disclosures overall, with just 60% of companies reviewed meeting a ‘good’ standard of disclosure. 
  • 11% of companies did not comply with any of the three components of the Walker Guidelines that apply to them.
  • All BVCA members published sufficient disclosures on their own websites to meet the requirements of the Guidelines on publishing information about themselves, their portfolio companies and their investors.

The GPRG provides guidance to private-equity owned portfolio companies on preparation of their annual report and financial statements by highlighting examples of good and excellent practice for each of the Walker Guidelines. This edition of the GPRG focuses heavily on non-financial reporting areas, such as climate change and gender diversity.

UKJT publishes legal statement on digital securities

The UK Jurisdiction Taskforce (UKJT) has published a legal statement on the issue and transfer of digital securities under English private law using a system deploying blockchain or distributed ledger technology (DLT). The statement focuses on the parts of digital securities that are potentially novel and distinctive, and discuss how well general legal principles apply. Although it was noted that digital equity securities pose more issues then digital bonds (debt securities) given the different nature of the relationship between a company and its shareholders, the UKJT concluded that digital securities (whether debt or equity) can, in principle, be issued by UK companies and governed by English law, using a blockchain or DLT-based system.


This material is provided for general information only. It does not constitute legal or other professional advice.

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