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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
News
Government sets agenda for coming Parliamentary session
On 10 March 2022, the Queen’s Speech, which sets out the government’s proposed legislative agenda for the current Parliamentary session, was delivered. Bills covered that may be of interest to corporates include the following:
- Economic Crime and Corporate Transparency Bill: This will grant the registrar of companies new powers to query, decline or remove information submitted to, or already on, the register and provide Companies House with increased investigation and enforcement powers.
- Brexit Freedoms Bill: This will create new powers to make it easier the government to amend, repeal or replace retained EU law, as well as remove the supremacy of retained EU law as it still applies in the UK.
- Financial Services and Markets Bill: This will implement the government’s proposed post-Brexit financial services regulatory framework, which will involve revoking retained EU law on financial services and replacing it with a UK approach, and amending the regulators’ objectives to place a greater focus on growth and international competitiveness.
- Modern Slavery Bill: This will increase accountability of companies in addressing modern slavery in their supply chains by requiring companies’ modern slavery statements to cover certain areas and to be published on a public registry. Civil penalties will be introduced for non-compliance.
However, the long-awaited Audit Reform Bill remains in “draft” form (which means that it has been published only for pre-legislative scrutiny) and is unlikely to become law during this session.
Calls for Evidence on framework for climate transition plans and on update of Green Finance Strategy published
On 10 May 2022, the UK Transition Plan Taskforce published a Call for Evidence on its proposed sector-neutral framework for private sector transition plans. The Taskforce was launched by HM Treasury in April 2022 with a mandate to develop a gold standard for climate transition plans that certain financial institutions and listed companies will be expected to publish in 2023. In the Call for Evidence, the Taskforce is seeking views on matters including the proposed definition of a transition plan, proposed principles to guide a credible transition plan, and the key elements any private sector transition plan should cover. Responses should be received by 13 July 2022.
Separately, the government has also issued a Call for Evidence to support its update of the Green Finance Strategy (first published in July 2019), planned for publication in late 2022. Responses are due in 22 June 2022.
Guidance on supply chain disclosures in annual reports published
The FRC Lab has published Insight: Supply chain disclosures which sets out some questions and resources that may be useful for companies to consider when preparing disclosures on their supply chains in their financial reports. It is noted that investors are likely to look for information that helps them understand the context of the supply chain and the impact of supply chain uncertainties, risks and opportunities on long-term value creation and the actions management are taking to address these.
FCA updates permitted electronic format for annual reports
The Financial Conduct Authority (FCA) has published the final instrument to implement its changes to the Disclosure Guidelines and Transparency Rules (as consulted on previously) to allow companies to use a more up-to-date electronic format for their annual financial report. The changes took effect on 3 May 2022 and apply to reports filed with the FCA's National Storage Mechanism on or after that date.
LSE consults on creation of new Voluntary Carbon Market and other amendments
On 11 May 2022, the London Stock Exchange (LSE) launched a consultation seeking views on the creation of its new Voluntary Carbon Market (a market offering to support publicly traded carbon funds), which was announced during COP26 in November 2021. The consultation also covers certain administrative amendments to the Admission and Disclosure Standards, including clarification that the LSE will continue to have jurisdiction over delisted issuers in relation to breaches of the Standards that occurred prior to delisting. The consultation will end on 11 July 2022 and the LSE expects to announce final rules in September 2022.
Publications
Putting the G in ESG – how activists target governance issues
Slaughter and May has published an article discussing how activists are making increasing use of governance issues when targeting companies. The article looks at the reasons behind this development, the sorts of failures that make companies vulnerable, and how they can protect themselves.