5 min read
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:
News
House of Lords Financial Services Regulation Committee announces inquiry into the FCA’s consultation on publicising enforcement investigations
On 9 May 2024, the House of Lords Financial Services Regulation Committee announced that it is examining the Financial Conduct Authority's (FCA) proposal to publicise enforcement investigations as included in the FCA’s consultation paper CP24/2. The FCA stated in its consultation that the aims of the proposal were to "increase transparency about our enforcement work and its deterrent effect and to disseminate best practice" but the proposal has drawn strong criticism from the industry and others, including from the Chancellor.
The Committee had previously written to the FCA expressing its concerns and is currently seeking views on the proposal ahead of gathering evidence from the FCA on the proposals. Written submissions can be made to the Committee until 4 June.
House of Commons Library publishes briefing on reforms to Companies House and company registration regime
The House of Commons Library has published a research briefing on the government’s plans to reform Companies House and the company registration regime in the UK. The briefing analyses the following:
- The ease of incorporating a company (especially in comparison to other countries) and the accompanying risk of fraud.
- The Economic Crime and Corporate Transparency Act 2023 and related secondary legislation which will need to be enacted.
- The cost of the reforms and adequacy of the funding.
- Potential outstanding challenges.
Open consultation published on The Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2024
The Department for Culture, Media & Sport has published an open consultation on the draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2024 following amendments brought by the government to the Digital Markets, Competition and Consumers Bill to create a new foreign state intervention regime for newspapers and periodic news magazines.
The Regulations will create targeted exemptions for specific types of passive investment up to a low threshold. The consultation is inviting views on the exceptions and thresholds that would apply to state owned investment organisations, diversified businesses, retail investment products, and small shareholdings by an associated person. The consultation is open until 23 May 2024. A summary of the responses will be made public.
Adoption of European Sustainability Reporting Standards (ESRS) postponed
The EU Council has adopted a Directive of the European Parliament and of the Council amending Directive 2013/34/EU as regards the time limits for the adoption of sustainability reporting standards for certain sectors and for certain third-country undertakings. The Directive will postpone the adoption of sector-specific sustainability reporting standards for EU companies and general sustainability reporting standards for non-EU companies to 30 June 2026 to allow companies to focus on the implementation of the first set of ESRS and limit the reporting requirements to a necessary minimum.
Case Law
Drax Smart Generation Holdco Ltd v Scottish Power Retail Holdings Ltd [2024] EWCA Civ 477
Court of Appeal decides on sufficiency of notice of warranty claim
The Court of Appeal has allowed an appeal against a High Court decision that a purchaser’s (Drax) breach of warranty claim under a share purchase agreement was time-barred by a clause that required Drax to notify its claim before a specified date stating in reasonable detail the nature of the claim and the amount claimed. The High Court had considered the purchaser’s notice of claim to be insufficient as the claim set out in the notice was quantified based on loss sustained by the acquired company, rather than on the diminution in value of the acquired shares. The High Court judge had taken the view that the fact that the claim was based on the difference in value of the shares was both 'part of the nature of the claim' and also an essential part of the explanation which would be needed in order to provide the necessary 'reasonable detail' of Drax's calculation of the claim, and this fact had not been stated in the notice.
The Court of Appeal disagreed, finding that there was nothing in the language of the clause relating to notice of claim or its commercial purpose which required Drax to spell out that the damages claimed was based on the difference in value of the acquired shares as a result of the alleged breach of warranty. With regards to the amount of the claim, all that was required by the notice of claim was a statement of "...the amount claimed (detailing [the purchaser’s] calculation of the Loss thereby alleged to have been suffered)". The notice did state the amount claimed and provided details of how it had been calculated, and nothing further was required.
Publications
EU Listing Act – briefings for equity and debt issuers
Slaughter and May has published two briefings on the European Commission’s proposed legislative changes relating to the simplification of the EU listing regime. This includes changes to the EU Market Abuse Regulation and EU Prospectus Regulation (expected to come into force later this year), and a proposed new EU Directive to require EU MTFs to permit listing companies with a dual class share structure, which member states will have to implement within two years (that form the package of proposals referred to as the “EU Listing Act”). The briefings discuss the impact of the changes on equity issuers and debt issuers, and how UK rules are likely to develop in parallel with EU legislation or diverge away from it.