23 Mar 2023

Corporate Update Bulletin - 23 March 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

News

Chancellor delivers Spring Budget 2023

On 15 March 2023, the Chancellor, Jeremy Hunt, delivered the Spring Budget 2023. This was billed as a “budget for growth” with stated aims to boost innovation, drive business investment and hold down energy costs. Some headline points for corporates and businesses include:

  • Full expensing of capital allowances: From 1 April 2023 until 31 March 2026 investments made by companies in new qualifying plant and machinery (which currently qualify for 18% allowances) will qualify for a 100% first-year allowance. This means companies across the UK will be able to write off the full cost in the year of investment, known as “full expensing”. Companies investing in special rate (including long life) assets (items that currently qualify for 6% allowances) will also benefit from a 50% first-year allowance in the year of investment.
  • R&D measures: These include additional tax relief for R&D intensive SMEs (for which qualifying R&D expenditure constitutes at least 40% of total expenditure) and reforms to the R&D reliefs, the Small and Medium-sized Enterprise (SME) scheme and the R&D Expenditure Credit (RDEC).
  • Multinational top-up tax:  As announced at Autumn Statement 2022, the government will implement the globally agreed G20-OECD Pillar 2 framework in the UK, which includes the introduction of a multinational top-up tax which will require large UK headquartered multinational groups to pay a top-up tax where their operations in a foreign jurisdiction have an effective tax rate of less than 15%.

For more detail and commentary on aspects of the Budget, see various blog posts published on the European Tax blog (see Publications below).

FCA publishes Primary Market Bulletin 44

On 20 March 2023, the Financial Conduct Authority (FCA) published Primary Market Bulletin 44 - its newsletter for primary market participants. This edition covers three areas:

  • the FCA’s expectations on diversity and inclusion (D&I) on company boards and executive management;
  • when a prospectus is required where securities are issued pursuant to schemes of arrangement; and
  • regulatory news announcements with multimedia content.

The first area of focus follows the recent introduction of new Listing Rules (LR9.8.6R(9) and LR14.3.33R(1)) as well as amendments to the Disclosure Guidance and Transparency Rules (DTR7.2.8AR) in Policy Statement 22/3, requiring in-scope listed companies to disclose in their annual financial report whether they meet prescribed board diversity targets relating to sex or gender and ethnicity on a ‘comply or explain’ basis. These rules apply to listed companies for financial accounting periods beginning on or after 1 April 2022.

In the bulletin, the FCA sets out steps to help companies prepare for the relevant disclosures and its supervisory strategy for monitoring and enforcing compliance with the new rules. Companies were reminded of Listing Principle 1, which requires listed companies to take reasonable steps to establish and maintain adequate procedures and systems and of the need to retain records to support both the statement and numerical data disclosed. The FCA also expects companies to have considered certain steps in preparation for making the relevant D&I disclosures, including reviewing their governance arrangements for oversight of D&I targets and reporting, and establishing or enhancing their procedures and controls over data collection and reporting. The FCA intends to review its policy in 3 years to assess the impact of their rules on promoting transparency on key diversity metrics and supporting market integrity.

In relation to the third area, in light of certain primary information providers offering issuers the ability to include multimedia content within regulatory news announcements, the bulletin highlights the FCA’s view that multimedia content should not form part of any regulated information submitted for dissemination, as this risks breaching certain DTR and market abuse requirements, and creates a risk of harm to market users through a potential reduction in clarity.

Companies House changes policy on filing of resolutions

To improve the quality of information received by the Registrar, Companies House has stated that it will, from 13 March 2023, no longer accept a set of minutes which have a resolution embedded within them. A company will instead need to file a separate copy of the resolution in circumstances where a resolution was required to be filed under the Companies Act. Their previous practice was to accept minutes which included the resolutions that were passed.

For instance, if a company passes a special resolution at a general meeting, it should not send the minutes of that general meeting (which include the relevant resolutions passed). The special resolutions should be submitted as a separate document. Any sets of minutes that are submitted from 13 March will be regarded by Companies House as unnecessary material which is not easily separable and will therefore be rejected.

Industry Working Group (IWG) publishes the Report on Electronic Execution of Documents

Following the publication of its interim report on 1 February 2022, the Industry Working Group on Electronic Execution of Documents (IWG), comprising a multi-disciplinary group of business, legal and technical experts, has now published its final report on electronic execution of documents.   

The interim report analysed the current use of electronic execution of documents in England and Wales, set out best practice guidance and made recommendations for future analysis and reform in relation to six of the IWG’s eight terms of reference. The final report is published as a standalone report that addresses the Group's remaining terms of reference, being to consider the challenges arising from the use of electronic signatures in cross-border transactions and how to address them; and how best to use electronic signatures to optimise their benefits when set against the risk of fraud.

HM Treasury publishes Terms of Reference on the Investment Research Review

Following the Chancellor’s announcement of the launch of an independent review of investment research and its contribution to the competitiveness of UK capital markets in December 2022, HM Treasury has, on 9 March 2023, published the Terms of Reference on the Investment Research Review which set out the scope and objectives of the review.

The review will focus on two key objectives: firstly, to assess the link between levels of research and the attractiveness of the UK as a destination to list; and secondly, to evaluate options to improve the UK market for investment research and provide recommendations to this effect. The Economic Secretary to the Treasury also announced that Rachel Kent (senior financial services partner at Hogan Lovells) had been appointed to chair the review.

Legislation

Draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023 (Regulations) published

On 15 March 2023, the draft Register of Overseas Entities (Definition of Foreign Limited Partner, Protection and Rectification) Regulations 2023 were published alongside an Explanatory Memorandum, as a supplement to Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022 (ECTEA). Part 1 of the ECTEA established a register of overseas entities which is to include information about an overseas entity’s “registrable beneficial owners”. These Regulations aim to improve the effectiveness of certain aspects of the Register. In particular, the Regulations:

  • prescribe the characteristics of a ‘foreign limited partner’ for the purposes of ECTEA;
  • amend the criteria for granting applications for protection of personal information;
  • allow for information held within the Register to be removed following an application for rectification under certain circumstances; and
  • amend the protection elements of the Regulations.

Publications

Spring Budget 2023: Blog posts and other publications 

Slaughter and May has published various blog posts on the European Tax Blog commenting on various aspects of the Spring Budget 2023. These include posts on the relief for R&D expenditure, as well as on the new policy of “full expensing” and certain other measures falling under the “Enterprise” pillar of the government’s industrial strategy.  

You may also be interested in our 2023 HR Budget Briefing with further details on noteworthy tax and financial support measures affecting employees and their employers and this summary of key points for participants in the UK energy and infrastructure sectors published on our Sustainable Matters Blog.

 

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