12 min read

Welcome to the latest edition of Corporate Update.

Corporate Update is our fortnightly bulletin offering a quick read of the latest developments which we consider relevant to corporate counsel. Please get in touch with your usual contact or any of the contacts listed below 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.

Publications

Contract Law Update - April 2026

We have published the latest edition of our Contract Law Update series, which provides our insights into key developments in contract law for corporate and commercial practice. Among other topics, this update covers: agreements made subject to contract, confusion clauses and time of the essence. In each case, the briefing provides detailed analysis and key takeaways for practitioners.

ICO enforcement trends

The Information Commissioner’s Office ("ICO") is clear that it expects all organisations to learn from its previous enforcement actions. As part of Slaughter and May’s Horizon Scanning series, we have released a podcast on the lessons for organisations from the ICO’s recent GDPR enforcement. 

New EC draft merger guidelines: ten things we learned and what they mean for business

On 30 April 2026, the European Commission ("EC") published its highly-anticipated draft merger guidelines. We have published a briefing on the ten key takeaways and their practical implications for dealmakers. The new rules are expected to open doors for positive argumentation but will require parties to start building their cases at the earliest stages of deal planning. 

Digital Markets Act: cloud services and AI in focus

We have published a briefing on the EC’s first review of its flagship digital regulation, the EU Digital Market’s act ("DMA"). The EC has concluded that the DMA does not currently require revision but identifies cloud services and AI as enforcement priorities. Our briefing examines the EC’s approach to enforcement in these sectors, including its ongoing investigations into Amazon Web Services, Microsoft Azure and Google.

 

News

Market Watch Issue 85: FCA encourages firms to use information-sharing powers

On 29 April 2026, the FCA published Market Watch Issue 85. The issue sets out how the Economic Crime and Corporate Transparency Act 2023 ("ECCTA") can be used to share information about customers or former customers to prevent, detect and investigate economic crime. At the conclusion of the issue, the FCA urges firms to consider two specific points: (i) how ECCTA’s information sharing measures apply to them; and (ii) when it would be appropriate to share information to combat the risks of economic crime. Firms should be aware that, as part of its routine engagement, the FCA will ask whether and how they are using ECCTA, and if they have encountered any barriers.

Accounting Directive (2013/34/EU): EC consults on sustainability reporting requirements

As part of the broader Omnibus I simplification package, the EC has published two draft delegated acts under the Accounting Directive (2013/34/EU) aimed at cutting the administrative burden for businesses while maintaining high-quality sustainability disclosures:

Both consultations close on 3 June 2026. Following adoption by the EC, the delegated acts will be subject to a two-month scrutiny period (extendable by a further two months) by the European Parliament and Council before entering into force.

FRC concludes Carillion investigations

On 12 May 2026, the Financial Reporting Council ("FRC") announced sanctions against two former Group Finance Directors and three other former senior accountants of Carillion plc ("Carillion") for recklessly failing to act with integrity in the preparation of the company’s financial statements prior to its liquidation in January 2018. The announcement marks the conclusion of the FRC's Carillion enforcement programme, which also included sanctions in May 2024 against KPMG and two former partners in respect of the statutory audits. The sanctions are a reminder that reckless - not merely deliberate - failures of integrity in financial reporting can carry severe professional consequences for individuals at all levels of a listed company's finance team.

The FCA's parallel enforcement action against Carillion, the two former Group Finance Directors and the former CEO was covered in the Corporate Update Bulletin on 19 February 2026.

Legislation

Crime and Policing Act 2026: extension of corporate criminal liability

The Crime and Policing Act 2026 ("CPA 2026") received Royal Assent on 29 April 2026 and will come into force on 29 June 2026. The Act will expand the basis on which companies can be held liable in the UK for criminal offences committed by senior managers.

Sections 196-198 of the Economic Crime and Corporate Transparency Act 2023 currently attach criminal liability to an organisation for specified economic crimes committed by its senior managers. Section 250 of the CPA 2026 will repeal and replace these provisions, extending the scope to any criminal offence committed by senior managers. Under the new regime, a company will therefore be liable whenever a senior manager commits any criminal offence within the actual or apparent scope of their authority.

With commencement less than two months away, companies should consider mapping their senior management structures, clarifying the scope of authority across the senior tier and broadening their compliance frameworks to cover the full range of risks.

Case law

High Court judgment is reminder of the complexities of construing completion accounts provisions

In Nawaz-Khan v UAP Ltd [2026] EWHC 641 (Comm), the High Court considered a dispute concerning the calculation of the final purchase price in a set of completion accounts for a share purchase agreement ("SPA").

In this lengthy judgment, the key issue was the construction of two components of the purchase price formula - “claims provision” and “deferred fee income” - the sum of which were to be added to the purchase price. Finding in favour of the defendant, the court held that these terms referred to items that increased the value of the acquisition, rather than mere balance sheet entries. As no such items existed, nothing fell to be added to the purchase price.

A related issue concerned the defendant’s counterclaim for rectification of the SPA. Citing Thomas Bates & Son Ltd v Wyndham's (Lingerie) Ltd [1981] 1 WLR 505, the court granted relief on the ground of unilateral mistake: the defendant had believed that the purchase price formula provided for payment for the “claims provision” and “deferred fee income”, and the claimant had knowingly failed to correct that misapprehension.

Taken as a whole, the case serves as reminder of the complexities of using completion accounts. When planning a transaction, both parties should ensure that each element of the purchase price formula is clearly understood - ideally with the help of external accountants and worked examples.

High Court finds director capable of conspiring with his own company

In Lux Films Ltd v Fowler and another [2026] EWHC 963 (KB), the High Court considered the case of a departing director who began competing with the claimant company while still in post. The case is of particular interest because the Court held that, as a matter of civil law, it is possible for a director to conspire with his own wholly-owned company and so be liable for unlawful means conspiracy – an issue that had previously been undecided. In addition, the judgment also considers breaches of directors’ duties under the Companies Act 2006 and breach of confidence.

The first defendant, Andrew Fowler, was a director, employee and shareholder of Lux Films Ltd ("Lux"), a media production company. While still a director and employee of Lux, he diverted a number of clients and prospective clients away from Lux to the second defendant, Andrew Fowler Media Ltd ("AFML"), which was his own one-man company, using Lux's confidential information, reputation (including testimonials) and other resources.

Lux claimed damages, an account of profits and/or restitutionary relief from Mr Fowler for his breaches of fiduciary and statutory director's duties, and his misuse of confidential information. AFML of course did not owe duties directly to Lux, so Lux’s claims against AFML arose instead from its receipt and exploitation of the fruits of Mr Fowler’s breaches of duty and from its participation in the wrongful conduct, on the basis of (i) knowing receipt, (ii) Mr Fowler and AFML acting in combination to injure Lux by unlawful means (the economic tort of unlawful means conspiracy) and (iii) liability to account as a corporate vehicle for Mr Fowler’s breaches.

The tort of unlawful means conspiracy requires: (i) a combination or agreement between two or more persons; (ii) concerted action pursuant to that combination; (iii) the use of unlawful means; and (iv) loss caused to the claimant, with the requisite intention to injure. Mr Fowler and AFML argued - by analogy with the criminal law of conspiracy - that no conspiracy was possible, as Fowler and AFML were not independent psychological actors but were, in substance, one and the same person.

Clarifying the distinction between the criminal and civil regimes, Sweeting J held that the decisive question was whether there was evidence of concerted action, or “combination”, between two legal persons - not two independent psychological actors. Since Mr Fowler had acted unlawfully in his capacity as director of Lux Films to divert business opportunities from the claimant and had acted in his capacity as shareholder to cause AFML to receive those opportunities, the requirement for combination under civil law were met.

The case provides welcome clarification on a long-unsettled legal issue and carries an important message for directors: by using a corporate vehicle to capture the fruits of their own misconduct, a director exposes both themselves and that vehicle to liability in unlawful means conspiracy.

High court dismisses claim for fraudulent breach of warranty based on aggregation of executives’ knowledge

In Veranova Bidco LP v Johnson Matthey PLC & Ors (Rev2) [2026] EWHC 1021 (Comm) the High Court dismissed a buyer’s claim for fraudulent breach of warranty in a share purchase agreement ("SPA"). Despite finding that one of the warranties had been breached and was inadequately qualified by disclosure, the Court held that the buyer did not succeed in establishing fraud against any of four senior executives whose states of mind were attributed to the corporate seller.

The case arose out of the sale by the Johnson Matthey group of its health business to the claimant. The claimant alleged that the defendant sellers were in fraudulent breach of certain warranties in the SPA including a warranty that none of the target companies being sold were at the time of the sale renegotiating any “Key Contract” in a way that would adversely affect the target’s business.

The claimant asserted that the defendants had failed to disclose adequately that a major customer of the target business had invoked a price-match clause under a supply contract in relation to a drug, having received a competing offer from another supplier to purchase the drug for around half the price.

The Court held the Key Contracts warranty had been breached because as at the date of signing, the target business was renegotiating terms with the customer that would have an adverse effect on the business. General references in the disclosure letter to “pricing discussions” were not adequate as they failed fairly to disclose that the competing offer had been verified by management as bona fide and so the target business would need to match the cheaper price in order to retain the customer’s business.

However, by virtue of certain contractual limitations in the SPA, the claimant could only succeed in a claim for breach of warranty if it could prove that the claim arose from the fraud or wilful misconduct of the defendants. The claimant argued it was only necessary to show that the defendant knew the facts that made the warranty false, and that this would be the case if the facts in question were known to any of four Johnson Matthey executives and their knowledge was attributable to the defendant on established corporate attribution principles.

However, the Court disagreed, stating that it could not combine what the different executives knew to establish fraud on the part of the company. Conscious dishonesty by at least one individual was required and the Court would not combine the states of mind of different individuals. Instead, to establish fraud, it needed to be shown that a single executive:

  • knew the facts rendering the warranty false;

  • had sufficient knowledge of the warranty’s terms to appreciate the relevance of those facts; and

  • knew or was reckless as to whether the warranty was false.

Since the Court found that none of the executives was guilty of fraud, wilful misconduct or conscious dishonesty, the buyer’s claim failed.  The Court emphasised that the executives’ negligent failure to check did not amount to knowledge that the warranty was false, and that it was not reckless for the executives to rely on disclosure led by legal counsel and the business management team.