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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
Economic Crime and Transparency Bill receives royal assent
On 15 March 2022, the Economic Crime (Transparency and Enforcement) Bill received Royal Assent, becoming the Economic Crime (Transparency and Enforcement) Act 2022. The Act has been fast-tracked through Parliament in response to the invasion of Ukraine. For further details, see Legislation as well as our client briefing highlighted in Publications below.
Parker Review publishes updated report for 2022
The Parker Review has published Update Report: Improving the Ethnic Diversity of UK Boards setting out findings from its latest survey of FTSE 100 and FTSE 250 boards. The original 2017 report recommended that boards of FTSE 100 companies should have at least one non-white director by 2021, and boards of FTSE 250 companies should have at least one non-white director by 2024. The 2022 update shows that:
- 89 FTSE 100 companies had achieved the Review's 'one before 2021’ target by December 2021(compared with 74 in December 2020).
- 55% of FTSE 250 companies had ethnic representation on their boards by December 2021.
Legislation
Economic Crime (Transparency and Enforcement) Act 2022
The Economic Crime (Transparency and Enforcement) 2022 (ECA 2022) has been passed by Parliament. The primary purpose of the Act is to simplify the identification and tracing of, and enforcement against, ill-gotten wealth. The ECA 2022:
- introduces a new beneficial ownership register of overseas entities that own UK property (Part 1 ECA 2022)
- strengthens the Unexplained Wealth Order regime (Part 2)
- streamlines the process for implementing sanctions against individuals (Chapter 2 Part 3) and gives Office of Financial Sanctions Implementation (OFSI) power to enforce sanctions breaches on a strict liability basis (for civil actions only) (Chapter 1 Part 3).
Parts 1 and 2 and Chapter 1 Part 3 ECA 2022 will be brought into force by commencement regulations, which have not yet been published. The provisions in Chapter 2 Part 3 came into force on 15 March 2022.
Market Insights
Office for National Statistics - UK M&A
The ONS has published its Q4 statistical bulletin relating to UK mergers and acquisitions (M&A) activity for the fourth quarter of 2021. The quarter saw a noticeable decline in volume of monthly activity from 200 deals in October 2021 to 77 deals in December 2021. During this period:
- Domestic M&A (UK companies acquiring other UK companies) was valued at £2.9 billion, £0.6 billion higher than the previous quarter (£2.3 billion).
- Estimates for the total value of inward M&A were £10.9 billion, lower than the third quarter of 2021 (£12.4 billion) while the value of outward M&A was £3.4 billion, a decrease of £28.6 billion from the previous quarter (£32.0 billion).
Case Law
MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm)
Court clarifies reasonable endeavours obligation to overcome force majeure event
This case involved a standard shipping contract which provides that an event would not constitute force majeure if the affected party could use reasonable endeavours to overcome the event. The ship owners invoked the force majeure clause as a result of US sanctions imposed on the charterers which would prevent the charterers from making payment in US dollars, as required under the contract. The charterers claimed that, in refusing to accept an offer of payment in Euros, the owners had failed to use reasonable endeavours to overcome the effect of the sanctions.
The High Court held that an obligation to use reasonable endeavours to overcome a force majeure event did not require a party to accept payment in a different currency to that specified in the contract. It is established case law that a reasonable endeavours obligation does not require a party to accept non-contractual performance in order to circumvent the effect of a force majeure or similar clause, and that principle was equally applicable to the method of payment.
Publications
Evolution not Revolution: The Economic Crime (Transparency and Enforcement) Act 2022
Slaughter and May has published a briefing discussing the main measures of the Economic Crime (Transparency and Enforcement) Act 2022 – the introduction of a new register of overseas entities, amendments to Unexplained Wealth Orders and updates to the sanctions framework. The Act was fast-tracked through Parliament in response to Russia’s invasion of Ukraine, but despite the circumstances of the Act’s arrival, the various measures introduced may be more evolutionary than revolutionary.
The Russia-Ukraine crisis - Implications for energy markets
Slaughter and May has published a client briefing considering the implications of the Russia-Ukraine crisis for energy markets. On 8 March 2022, the UK, US, and EU announced reviews of their energy policy with a view to reducing dependence on Russian oil and gas. This briefing explores what happened and what it might mean for energy markets.