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
FTSE Women Leaders Review publishes report on gender balance
The FTSE Women Leaders Review (an independent framework which sets recommendations to improve the representation of women on boards and leadership teams of UK’s largest companies) has published a report on gender balance in FTSE leadership. The findings of the report show steady progress in getting women leaders to the top table of business in the UK. The report found that women’s board representation across FTSE 350 companies increased by nearly 3% in 2022 (standing at 40.2%), three years ahead of the 40% by December 2025 target set out by the Hampton Alexander Review. FTSE 350 leadership positions below the board level held by women stands at 33.5%.
In addition, 50 of the UK’s largest private companies have been included within scope of the review for the first time in 2022. The representation of women across the 50 private companies within scope stands on average at 31.8% for board level positions, and at 34.3% for leadership positions below board level. However, there is more polarisation at board level representation for these private companies, with almost a third performing strongly at 40% or more women, but just over half (27 companies) below 33%.
QCA publishes report on 10 years of the QCA Corporate Governance Code
The Quoted Companies Alliance (QCA) has published a report marking the tenth anniversary of the QCA Corporate Governance Code. The report highlights the benefits for companies and investors of adopting the QCA Code and looks at how reporting against the 10 principles of the Code has improved since 2018. The Code was last updated in 2018 and is expected to be updated again this year.
Centre for Finance, Innovation and Technology launched
On 28 February 2023, the government announced the creation of the Centre for Finance, Innovation and Technology, which is backed by a £5.5 million funding from the Treasury and the City of London Corporation. The establishment of the centre was one of the key recommendations of the 2021 Kalifa Review of UK Fintech. The Centre will focus on driving forward financial innovation in the UK by bringing together expertise from the finance and technology industries to identify and address opportunities and barriers to growth in the fintech sector.
Court rules on attestation requirements for execution of deeds
In this case, the High Court held that a deed of guarantee had been validly executed where a single witness observed three parties signing and signed herself under the simple words "witnessed by". It did not matter that there were no words confirming that the witness had observed the act of signing, witnessed all three signatures or signed in the defendants' presence.
The judge held that section 1(3)(a)(i) of the Law of Property (Miscellaneous Provisions) Act 1989 did not require the witness to attest (that is, sign a statement that the party has signed in their presence) in the signatory's presence or do so contemporaneously with the parties (assuming the witness did indeed observe the relevant signatory party signing). Even if there were such a requirement, it would be satisfied by the witness attesting on the same day, and irrespective of whether the signatory was present.
High Court considers whether invoking enhanced voting rights in an insolvency event constitutes unfair prejudice
This case concerned an unfair prejudice petition issued by Mr Paul Durose and certain other individuals who were some of the original shareholders in a company that had a business marketing, selling and exploiting the potential of a novel gas safety product. The company had entered administration on 14 October 2020 and was dissolved on 18 January 2022.
The second respondent (a private equity fund) had made a £7 million investment into the company for a 30% stake through a special purpose investment vehicle (the first respondent). The investment agreements, which included a new set of articles for the company, provided that in certain defined circumstances, including the occurrence of an “Insolvency Event” (defined to include any group company being unable to pay its debts as they fall due), the first respondent company could serve a “voting adjustment notice”, which would then entitle it to be treated as having 95% of members’ voting rights. The articles also allowed the first respondent in these circumstances to remove and replace directors.
The High Court considered whether the petitioners had been unfairly prejudiced on the basis that the second respondent had engineered an insolvency event, allowing it to invoke the enhanced voting rights and gain control of the company. The Court dismissed the petition and held that the respondents had simply acted in accordance with agreed terms and it was fair and just to hold the petitioners to the terms of the legal agreements.