Corporate Update Bulletin - 6 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
• Legislation
• Case Law
• Publications

News

Changes in scope of application of Takeover Code take effect

With effect from 3 February 2025, the Takeover Code has been amended so that broadly, it will apply only to UK-registered companies (i.e., companies registered in the UK, Channel Islands or Isle of Man) whose securities are admitted to trading on a UK regulated market, UK multilateral trading facility or a Channel Islands or Isle of Man stock exchange (or companies which had securities so admitted at any time the two years prior to the date on which they become subject to a Code transaction).

Companies which are within scope of what was paragraph 3(a)(ii) of the Introduction to the Code (known as “transition companies”) for example, unquoted public companies, will be subject to transitional arrangements for a transition period of 2 years (until 3 February 2027). During this period, the Code will generally continue to apply to a transition company in the same way as it did prior to the amendments and the residence test (which determines whether the Code applies to such companies on the basis of whether their central management and control is considered to be in the UK, Channel Islands or Isle of Man) will continue to be relevant.

The Takeover Panel has also published a new Note to advisers in relation to cancellation of admission to trading and a revised Note to advisers in relation to re-registering a public company as a private company, to reflect these changes to the jurisdictional framework for the Takeover Code. 

FRC launches market study examining SME audit and reporting challenges

On 3 February 2025, the Financial Reporting Council (FRC) announced the launch of a market study examining the audit market for small and medium sized enterprises (SMEs) in order to understand how the SME audit market is working, including any burdens arising from reporting and audit requirements, as well as the market forces driving the consumption of audit services by SMEs. The study represents the first phase of a broader FRC campaign to support UK SMEs in accessing audit services and securing the capital that they need for growth.

The FRC is also interested in the effect of the existing regulatory environment on the market but will take into account any relevant regulatory developments, examples of which include the change in company size thresholds from 6 April 2025 and the expected consultation in 2025 on changes to reporting and audit requirements, following the outcome of the non-financial reporting review.

Corporate entities that qualify as small or medium under the Companies Act 2006 definition as of 6 April 2025, and that have not elected to apply any legislative exemptions from audit, fall within the scope of the market study. Stakeholders are invited to submit comments and evidence on the SME market study by 25 April 2025, and the study is expected to conclude by the end of the year.

PLSA publishes its 2025 Stewardship and voting guidelines

The 2025 Stewardship and Voting Guidelines (members only access) have been published by the Pensions and Lifetime Savings Association (PLSA). Key areas considered by the PLSA in the 2025 Guidelines include recent political and economic events that have a direct impact on stewardship issues for investors, the impact of changes to the UK listing regime and AI developments on shareholder rights, developments in sustainable finance and social factors, and issues relating to ethnicity and disability pay reporting.

Companies House updates guidance on ability to suppress residential addresses

On 27 January 2025, Companies House updated its guidance to reflect the new ability for individuals to apply to the registrar to suppress a usual residential address, which was previously used as a registered office address. The following Companies House guidance have been updated:

• Guidance: Your personal information on the Companies House register;
• Guidance: Restricting the disclosure of your information (Scottish limited partnerships and Scottish qualifying partnerships); and
• Guidance: Removing your home address from the Companies House register.

In addition, Companies House has published updated versions of its Fees Determination and Form SR01: Apply to remove your home address from the Companies House register.

European Commission proposes new category of EU company for sustainability reporting purposes

A new category of EU Company – the ‘small mid-cap’ has been proposed by the European Commission, as part of an ‘omnibus’ package of measures to simplify the administrative burdens and streamline sustainability-related reporting. This is in order to make the bloc more competitive internationally. Small mid-caps would be bigger than SMEs, but smaller than large companies, and could benefit from a lighter-touch regulatory regime in a way similar to how SMEs do. Around 31,000 companies in the EU are expected to benefit. This marks a further point of divergence with UK company categorisations. Further details are expected later in February. 

Legislation

Regulations for new identity verification regime and ACSPs made

On 23 January, the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025 (the IDV Regulations) with accompanying Explanatory Memorandum and the Unique Identifiers (Application of Company Law) Regulations 2025 (the UID Regulations) with accompanying Explanatory Memorandum were published. These Regulations were made on 20 January 2025 and form part of the new identity verification regime introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023). The IDV Regulations set out the provisions regarding the procedures for identity verification or reverification by the registrar or an authorised corporate service provider (ACSPs), the framework relating to certain duties, the suspension, cessation, and termination of the status of authorised corporate service providers (ACSPs) and the allocation of unique identifiers (UIDs) to verified individuals and ACSPs. The UID Regulations give the registrar powers to allocate UIDs to individuals associated with business entities other than companies registered under the Companies Act (such as LLPs or unregistered companies), allowing them to issue a single unique number to any verified individual for all necessary purposes. 

The various parts of the IDV Regulations and the UID Regulations will come into force in line with when the relevant provisions in the Companies Act relating to identity verification and authorisation of ACSPs (as introduced by the ECCTA 2023) come fully into force. 

Reporting on Payment Practices Regulations published

On 23 January 2023, the Reporting on Payment Practices and Performance (Amendment) Regulations 2025 (SI 2025/75) were published with explanatory memorandum. There have been no changes to the revised draft regulations published on 7 October 2024. The Regulations (which will come into force on 1 March 2025) introduce requirements on a qualifying company or a qualifying LLP to publish certain information about their payment practices and policies in relation to retention clauses in construction contracts they have with their suppliers.

Regulations changing references to retained EU law to assimilated law published

The Retained EU Law (Revocation and Reform) Act 2023 (Consequential Amendments) Regulations 2025 has been published with Explanatory Memorandum and becomes effective on 27 February 2025. The Retained EU Law (Revocation and Reform) Act 2023 made changes to the way in which retained EU law that remains in it is interpreted, by abolishing EU interpretive effects at the end of 2023, the supremacy of EU law and general principles of EU law. Following the abolition of these EU interpretive effects, retained EU law that remains in force was renamed “assimilated law”. This instrument makes consequential changes to secondary legislation to reflect these changes by removing references to “retained EU law” and replacing them with “assimilated law” and also removing references to general principles of EU law. 

Case Law

WH Holding Ltd v E20 Stadium LLP [2025] EWHC 140 (Comm)

High Court sets aside expert determination

In this case, the High Court set aside an expert determination on the basis of manifest error. This is significant because expert determination is usually binding and successful applications to set it aside are relatively unusual. 

The relevant dispute arose in relation to whether the Defendant (E20) was entitled to a £3.6 million profit share on an option agreement which it had entered into. This related to a contract between the Defendant, the Claimant (WH Holding) and West Ham Football Club, which contained an expert determination provision with a manifest error carve out. When asked to opine on the dispute, the expert determined the issue in favour of E20. WH Holding disagreed, arguing that the expert had made two manifest errors relating to: (a) E20’s calculation of the profit share; and (b) whether the relevant agreements constituted a single transaction.

In his judgment, the judge provided a useful discussion on the meaning of the term ‘manifest’, stating that: “to be ‘manifest’, errors must be so obvious and obviously capable of affecting the determination as to admit no difference of opinion”. Agreeing with the Claimant, the judge stated that the expert determination in this case was “obviously wrong”.

Key Choice Financial Planning Ltd v Evoy [2025] EWHC 4 (Ch).

Court finds that company has no power under its articles to forfeit shares for an outstanding liability unrelated to amounts owed on specific shares

This case concerns an appeal brought by Key Choice Financial Planning Ltd (the Appellant) from a Court order declaring that a purported forfeiture of shares was ineffective. The Respondent, Mr Evoy, who had previously been a director of the Appellant, held 57 shares in the Appellant, which were fully paid. The Respondent also owed a large cost liability to the Appellant which had arose in respect of a previous litigation. As a result of the outstanding cost liability, the Appellant forfeited the Respondent’s shares in the Appellant, and claimed that the authority to do so arose under its articles of association (the Articles). A district judge held that the Articles did not provide it with the authority to make such a forfeiture and the Appellant appealed this decision.

The High Court dismissed the appeal, holding that the Appellant’s power to forfeit the Respondent’s shares were limited to calls in respect of those shares only and did not extend to other debts owed by the Respondent to the Appellant. The Articles were largely based on the Model Articles for private companies limited by shares (which do not include provisions on forfeiture) but included provisions based on the Model Articles for public companies relating to calls and forfeiture in substantially modified form. The judge concluded that the wording of the provisions on call notices and forfeiture was inconsistent and held that, in relation to such inconsistency, the Articles must be consistently construed and that rival meanings ought to be resolved by looking at ‘commercial common sense’. As a result, he concluded that it was not the case, based on the Articles, that a call notice could be issued in respect of any debt of a shareholder, but was limited to calls in respect of amounts owed on specific shares.

Publications

ESG developments in 2025

Slaughter and May has published a webpage setting out key ESG developments expected in 2025, covering the UK and, at a high level, the EU, as well as the key dates relating to those developments (accurate as of January 2025). Although many dates are provisional, the timeline will be updated on a quarterly basis.