Corporate Update Bulletin - 28 September 2023

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:


TNFD publishes its final disclosure recommendations on nature-related disclosures

On 18 September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) published the final version of its disclosure recommendations for organisations to report and act on evolving nature-related dependencies, impacts, risks and opportunities (the “TNFD Recommendations”), along with additional guidance. The TNFD Recommendations are the culmination of nearly two years of work, building on the Kunming-Montreal Global Biodiversity Framework and the Taskforce for Climate-related Financial Disclosures (TCFD), in close co-operation with other stakeholders.

The TNFD Recommendations include 14 disclosure recommendations and, consistent with the TCFD framework and ISSB Standards, are structured around the four pillars of governance, strategy, risk management, metrics and targets. While a voluntary framework at the moment, it is expected that the TNFD Recommendations will take a similar trajectory as TCFD disclosures – that is, it is likely that legislative and regulatory measures will be introduced in due course requiring companies to make nature-related disclosures that are aligned with the recommendations.

For further details on the TNFD Recommendations, please see this blog post.

CLLS/Law Society publishes joint response to consultation on the UK Corporate Governance Code

On 13 September 2023, the City of London Law Society (CLLS) and the Law Society published their joint response to the Financial Reporting Council’s (FRC) consultation on the revisions to the UK Corporate Governance Code (“UKCGC”). Some key points in the response include:

  • “Comply or explain”: It was emphasised that a key facet of the UKCGC was its “comply or explain” nature, which should not be reduced or undermined. There was a concern that a number of proposed revisions were introduced as “Principles” rather than “Provisions”. Under the Listing Rules, Principles operate on an “apply and explain” basis, in contrast to Provisions which are applied on a “comply or explain” basis.
  • Proportionality: The response emphasised the importance of any proposed changes being proportionate in what they require of companies both as regards to the nature of the requirements and the potential costs of complying with them. In this regard, it was noted that the FRC does not appear to be proposing to undertake an impact assessment in relation to the proposed changes to Section 4 UKCGC which would introduce additional reporting and assurance responsibilities and could result in a significant increase in costs for companies as well as additional board and audit and/or risk committee responsibilities.
  • Increased specificity: Concerns were raised that some new reporting requirements are “increasingly specific and detailed” in what they require from companies which may result in boilerplate disclosure.

CGI publishes response to consultation on the UK Corporate Governance Code

The Chartered Governance Institute (CGI) has also published its response to the consultation. While urging the FRC to be wary of diluting the strong governance environment in the UK, it also recognises the need for proportionality in any additional reporting and for proposed changes not to add to companies’ reporting burden. Some key points in the response include:

  • Materiality: It was stressed that that “materiality” should left to boards’ discretion and allowing input from other stakeholders, based on their own values and interests, is unhelpful.
  • Climate ambitions and transition plans: The CGI called on the FRC to provide guidance on how and what companies should report on their climate ambitions and transition plans, emphasising that consistent reporting is needed, although noting that duplication of equivalent regulations and guidelines such as the UK Sustainability Disclosure Standards is undesirable.

Market Insights

ONS publishes Q2 2023 data on UK M&A activity

On 5 September 2023, the Office of National Statistics (ONS) has published its bulletin on UK M&A activity for of the second quarter of 2023 (April-June). The provisional estimates suggest slightly subdued numbers of domestic and inward mergers and acquisitions (M&A) activity, although the number of outward acquisitions increased in the second quarter when compared to the first quarter. Values of both inward and outward M&A, as well as domestic M&A, all dropped when compared to the first quarter. Caution was advised as the numbers are provisional may be subject to upward revision until early 2024.

Case Law

Stephen John Hunt v Jagtar Singh [2023] EWHC 1784 (Ch)

High Court considers the point at which directors’ duty to consider creditors’ interests arises

In this case, which represented one of the first opportunities for the Court to consider the application of the Supreme Court decision in BTI 2014 LLC v Sequana SA and others, the High Court had to consider the point at which the director’s duty to consider the interests of creditors (the creditor duty) arises. The issue arose in the context of a liquidator’s claim against a director of a company which was said to be insolvent at the relevant time on the basis of a substantial (disputed) tax liability. The High Court (proceeding on the assumption that some knowledge component is required) held that where a company is faced with a claim to a current liability of such a size that its solvency is dependent on successfully challenging that claim, then the creditor duty arises if the directors know or ought to know that there is at least a “real” prospect of the challenge failing.

Although the Supreme Court had in Sequana rejected the language of "real risk" of insolvency, the judge distinguished Sequana on the basis that the company in that case had been solvent at the time the creditor duty was said to have arisen. In contrast, this case involved a situation where the company was substantially insolvent throughout the relevant period taking into account the tax liability. The tax liability in question should not be characterised as a contingent liability by virtue of it being disputed. 


Financial Regulatory Divergence between the UK and EU

Slaughter and May has published an interactive report tracking UK/EU regulatory divergence in relation to financial services. The report provides an overview of the state-of-play and some practical points to consider, before enabling users to navigate straight to specific areas of regulation they are interested in. The report also allows users to build their own custom report tailored to their needs.

Has the UK just abolished its 1.5% stamp duty charge?

Slaughter and May has published a blog post discussing HMRC’s draft legislation on removal of 1.5% charge on issues and certain related transfers published on 14 September 2023. The draft legislation to be included in the upcoming Finance Bill amends the relevant stamp duty legislation to remove the 1.5% charge to stamp duty and stamp duty reserve tax on the issue of shares and certain transfers to depositary receipt systems and clearance services with effect from 1 January 2024.


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