Corporate Update Bulletin - 20 February 2025

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
• Case Law

News

CLLS Financial Law Committee issues note on execution of legal assignments

On 10 February 2025, the Financial Law Committee of the City of London Law Society (CLLS) published a note on the execution of legal assignments under section 136 of the Law of Property Act 1925 (LPA 1925). The note sets out the Committee’s opinion on the execution of legal assignments by attorneys on behalf of both English and foreign companies and limited liability partnerships (LLPs) following the decision in Frischmann v Vaxeal Holdings SA [2023] EWHC 2698 (Ch).

In that case, which involved the assignment of the benefit of two loan agreements and a guarantee given by an individual, the High Court ruled that the requirement under section 136 LPA 1925 for an assignment to be (i) in writing, and (ii) “under the hand of the assignor” required the signature of the individual assignor, and signature by an attorney on the assignor’s behalf would not suffice. The assignment therefore took effect as an equitable assignment.

In the Committee’s view, in relation to assignments by an English company or LLP, the section 136 requirement is satisfied where the assignment is executed by that company or LLP acting by its attorney, as envisaged by section 47 of the Companies Act 2006, or by an overseas company acting by its attorney. This opinion is based on several factors, including the fact that unlike an individual, a company cannot write its own name, and has by implication, a general power to appoint and act by agents, as reflected in the Companies Act.

FCA publishes further consultation on public offers and admissions to trading

The Financial Conduct Authority (FCA) has published a consultation paper (CP25/2) on further changes to the public offers and admissions to trading regime. This consultation is a follow up to the FCA’s CP24/12 on the public offers and admissions to trading regime published in July 2024, as well as its final Listing Rule reforms. This series of FCA consultations follow the Public Offers and Admissions to Trading Regulations made by Parliament in January 2024, which provide a new framework to replace the UK Prospectus Regulation and which give the FCA greater discretion to set rules in this area.

Most of the proposed changes relate to non-equity securities. Most notably for equity issuers, the FCA is proposing to remove the requirement to submit an application to list further shares of the same class, requiring issuers to make only a single application to list all securities of the class, including existing securities and future issuances. The FCA would treat further issuances of the same class as automatically listed when the securities are formally issued. Issuers will still need to apply directly to the London Stock Exchange (or any other relevant recognised investment exchange) to admit their listed securities to trading. In relation to debt issuers, the FCA is proposing to align disclosure requirements for low denomination bonds with those for higher denominations.

Alongside CP25/2, the FCA also published a consultation paper on the new regulated activity of operating a public offer platform (CP25/3) setting out its proposed approach to authorising and regulating firms that operate a public offer platform (POP) (similar to a crowdfunding platform) under the Regulations. It is expected that the new regime for POPs will fully come into force in January 2026.

The consultations close on 14 March 2025, and the FCA expects to publish a policy statement and its final rules in summer 2025.

UK Finance publishes guidance on failure to prevent fraud for financial institutions

UK Finance has published guidance for firms in the financial services sector on the failure to prevent fraud (FTPF) offence introduced by the Economic Crime and Corporate Transparency Act 2023, which will come into force on 1 September. The guidance sets out sector-specific guidance for the purposes of interpretation of the FTPF and for the purpose of setting out examples of (i) reasonable prevention procedures and (ii) circumstances in which it would not be reasonable for a firm to have prevention procedures in place. The guidance supplements statutory FTPF guidance issued by the Home Office in November and is advisory rather than statutory so if there is a conflict between the guidance and the statutory FTPF guidance, the statutory guidance will take priority. The guidance is also not intended to be exhaustive and firms are not required to specifically consider it in determining their approach to addressing the FTPF offence or establishing reasonable prevention procedures.

FRC publishes report on assurance of sustainability reporting

The Financial Reporting Council (FRC) has published the final report from its market study report into the assurance of sustainability reporting. The 2024 study found that while the UK’s market on the assurance of sustainability reporting is functioning well, there are concerns over consistency in the quality of assurance amid growing demand.

The report found a growing preference amongst the largest companies to use the Big Four audit firms to carry out sustainability assurance in the UK market, which could have implications for future choice. Concerns were also raised about the immaturity of the UK sustainability assurance market and a lack of clarity on the UK’s regulatory position which could hinder investment, planning and capacity development. Many stakeholders have expressed the need for education and communication to bridge gaps in knowledge and understanding in the market and have called for UK regulatory requirements to be fully interoperable with other international regulations. Stakeholders would also like to see the development of a supervisory regime and an appointed regulator with a statutory role to oversee and monitor the market.

In light of these fundings, the FRC has proposed certain remedies including the timely development of a policy framework for sustainability assurance in the UK that will create certainty for providers and provide clarity on any alignment with international frameworks, as well as the creation of a holistic regulatory regime that brings together all the relevant elements for sustainability assurance such as standard setting, oversight, enforcement, monitoring of the market in one place to maximise certainty for companies, providers and investors.

Anti-Slavery Commissioner’s strategic plan for 2024-26 published

On 11 February 2025, the Independent Anti-Slavery Commissioner (IASC) published its strategic plan for 2024-26, which covers the current IASC’s three-year term. The plan sets out the IASC’s key objectives (centred around the prevention of slavery, the protection of victims, and the prosecution of offenders) and a series of actions the IASC intends to take to achieve them. Among other actions, the IASC intends to encourage the government to strengthen its policy response to forced labour in domestic and global supply chains and push for mandatory human rights due diligence legislation in the UK, while continuing to work with businesses to improve compliance with the Modern Slavery Act 2015 and promote best practice.

UK implementation plan for T+1 settlement and government response published

On 6 February 2025, the Accelerated Settlement Technical Group (ASTG) published the UK implementation plan for the first day of trading for T+1 settlement recommending that the first day of UK cash securities trading for settlement on a T+1 cycle should be 11 October 2027, which aligns with the timing proposed by ESMA for shortening the settlement cycle in the EU. The implementation plan also sets out a UK T+1 Code of Conduct which includes the categories of instruments and transactions to be covered by T+1 and any exemptions and a timetable of actions needed to enable the UK market participants to meet their T+1 obligations. 

On 19 February 2025, the government published its response to the ASTG implementation plan, accepting all the recommendations. The government also confirmed that it will introduce legislation to make T+1 the standard settlement cycle in the UK from 11 October 2027 and firms should therefore be preparing for that date to be the first day of trading under the new settlement cycle.

Case Law

EE Ltd v Virgin Mobile Telecoms Ltd [2025] EWCA Civ 70

Court of Appeal upholds decision that exclusion clause prevented claim for lost charges

On 4 February 2025, the Court of Appeal handed down its decision to strike out a claim for lost charges arising from an alleged breach of an exclusivity clause in a supply agreement between EE and Virgin Mobile. EE had claimed that Virgin Mobile had breached the exclusivity provisions of a Telecommunications Supply Agreement by migrating non-5G customers to a different network, to which the parties had agreed that only 5G customers could be migrated. EE claimed that it had consequently suffered a loss in revenue and sought damages in an amount of around £27 million. Virgin Mobile denied breach of the exclusivity obligations and argued that, in any event, the agreement contained an exclusion clause which provided that neither party could claim for “anticipated profits”.

The core issue was whether a claim in respect of anticipated profits was, on the true construction of the relevant clause, a claim for loss of profit other than “expectation loss” (i.e. the loss that consists in the value to EE of the contractual performance which would have been provided by Virgin Mobile but for the breach of contract). The High Court had ruled in favour of Virgin Mobile and gave summary judgement dismissing EE’s claim on the basis that it fell within the exclusion clause. The Court of Appeal upheld the High Court’s decision and ruled that claim was for “anticipated profits” and the exclusion clause therefore applied. In his leading judgment, Zacaroli LJ stated that there was no overarching principle of law that limited an exclusion of liability for loss of anticipated profits to losses other than expectation loss or diminution in price. Although in some cases similar wording had been found to be so limited, in other cases it had not and the wording of the exclusion in this case was clear and unequivocal. Virgin Mobile’s construction was further supported by other wording in the clause and the separate exclusion clause. Further, this conclusion was not to be rejected as uncommercial in circumstances where it was part of a carefully drafted agreement allocating risk between the parties and the parties were still left with valuable contractual rights enforceable by other remedies.