Corporate Update Bulletin - 23 January 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
• Legislation
• Case Law
• Publications

News

FRC publishes review of climate-related reporting for AIM and large private companies

On 21 January 2025, the Financial Reporting Council (FRC) published its first thematic review of the climate-related financial disclosures by AIM and large private companies required under the Companies Act 2006 (the Act). The review assessed the annual reports and accounts of 20 in-scope companies following the first cycle of mandatory reporting under the statutory requirements (which applied to accounting periods on or after 6 April 2022). Overall, although it was acknowledged that companies had sought to meet the relevant requirements, the quality of reporting was inconsistent. In particular:

• Some companies did not produce an analysis of the resilience of the company's business model and strategy considering different climate-related scenarios. Others did not undertake a sufficiently company-specific analysis.
• Broadly, companies did adequately explain their climate-related risk assessment and management process, and how it integrates with the overall risk management process. However, some failed to explain the way in which climate-related risks and opportunities were identified.
• Disclosures in relation to climate-related targets, and the assessment of progress against these targets using key performance indicators generally require improvement. Disclosures in relation to the governance of climate-related risks were sometimes unstructured and spread throughout the annual report and accounts.
• While some companies voluntarily based their disclosures on the TCFD framework, they failed to present all of the disclosures required under the Act. In addition, some referred to climate-related information presented outside the annual report instead of including all the relevant disclosures in the annual report as required.

The FRC expects companies to consider the examples of good practice and opportunities for improvement set out in the review and to incorporate them in their future reporting.

Companies House updates implementation timeline for ECCTA changes

On 21 January 2025, Companies House published an updated transition plan relating to its implementation of the key company law reforms introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). The updated transition plan confirms certain implementation dates including:

• From 25 February 2025: (i) Companies House should be able to expedite the striking off of companies where the Registrar has concluded the company has been formed for a false basis and (ii) firms and organisations (which need to be entities subject to UK anti-money laundering regulations) will be able to register as Authorised Corporate Service Providers allowing them to carry out verification services (ahead of the identity verification regime becoming mandatory later in the year) and Companies House filings on behalf of others.
• From 25 March 2025: Companies House should be able to allow individuals to voluntarily verify their identity.

It is expected that identity verification will become a compulsory part of incorporations and new appointments for new directors and persons with significant control (PSCs), and the transition phase for existing directors and PSCs to have their identities verified (which will happen as part of the annual confirmation statement filing) will commence, by Autumn 2025. The commencement of the provisions in ECCTA 2023 that create the identity verification and ACSP frameworks and the Registrar's new strike-off powers will require secondary legislation.

Revised merger control thresholds apply from 1 January 2025

The Digital Markets, Competition and Consumers Act 2024 (the Act) received royal assent in May 2024 and the new digital markets competition regime came into force on 1 January 2025. The Act has (amongst other changes) amended the Competition and Markets Authority’s (CMA) jurisdiction to review deals. Key changes introduced by the Act include:

• New “acquirer-focused” threshold: a new threshold has been introduced to establish the CMA’s jurisdiction over deals where (i) at least one party has an existing share of supply of 33% in the UK and UK turnover over £350m, and (ii) the other party has a sufficient UK nexus. As a result, transactions in which there is no horizontal overlap may still be subject to merger control review by the CMA.
• Updated target turnover threshold: the existing target UK turnover threshold has been increased from £70m to £100m.
• Safe harbour: a new safe harbour is introduced meaning that a de minimis exemption now applies to the share of supply test for small mergers where each of the parties’ UK turnover is under £10m.
• Mandatory merger reporting for large tech companies: Very large digital firms which are designated as having “strategic market status” under the Act’s wider digital markets regime are required to notify certain deals to the CMA in advance of completion and must not complete for a short period while the CMA decides whether to open an investigation. This is a departure from the CMA’s otherwise voluntary regime.

The new thresholds apply to all deals completed after 1 January 2025, unless they were already under formal review in 2024. Provisions in the Act concerning consumer protection regulation will come into effect later in the year.

NSIA 2021 Regulations report published

The Cabinet Office has published a report on the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (the Regulations). The Regulations set out 17 sensitive areas of the economy, which are subject to ‘mandatory notification’ requirements under the National Security and Investment Act 2021 (the Act).

The report states that the Regulations are generally achieving their objectives and have largely identified high risk activities warranting mandatory notification requirements without placing disproportionate burdens on businesses in a clear way. The Regulations also do not appear to be disproportionately covering activities that are unlikely to be called in (with some limited exceptions). A small number of additional activities may warrant inclusion (for example, in artificial intelligence or data infrastructure) and it was noted that there was scope for a few improvements to the drafting and guidance.

Legislation

Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2025

The Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2025 (the Regulations) came into force on 14 January 2025. An explanatory memorandum has also been published alongside the Regulations. The Regulations extend the Financial Conduct Authority’s (FCA) existing supervision and enforcement powers in connection with authorised persons under the Financial Services and Markets Act 2000 (FSMA) so they can be used in relation to requirements under the designated activities regime in Part 5A of FSMA. This allows the FCA to supervise designated activities by gathering information and launching investigations into persons carrying on designated activities, and to enforce its designated activity rules by publicly censuring or imposing financial penalties on persons that breach them. The Regulations also set out the procedure that will apply to the FCA giving directions concerning designated activities.

Publications

Horizon Scanning 2025

Slaughter and May has launched its 2025 Horizon Scanning Programme which provides an overview of the macro environment and international landscape to help clients navigate the most pressing issues and opportunities, and prepare for the year ahead. The programme includes over 30 short articles and podcast episodes covering five key Horizon Scanning themes: Capital Flows, Governance and Sustainability, Energy Transition, Digital and Crisis Management.