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Welcome to the latest edition of Corporate Update.

Corporate Update is our fortnightly bulletin offering a quick read of the latest developments 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

The European Commission’s Article 102 Guidelines

We have published a briefing on the European Commission’s recently adopted, and highly anticipated, guidelines on abusive exclusionary conduct under Article 102 TFEU (the Article 102 guidelines). The guidelines follow a period of extraordinary judicial activity which has reshaped the contours of Article 102, and the direction of travel is clear – the Commission enjoys ever more discretion in finding that conduct departs from competition on the merits and that it has an actual or potential effect on competition.

Modern Slavery in Transition

We have recently released a three-part podcast series in collaboration with leading Australian law firm, Mallesons, that explores the rapidly evolving modern slavery frameworks in the UK, Australia and elsewhere. The podcasts examine recent developments, from proposed enforcement reforms and mandatory due diligence obligations to trade restrictions, litigation risks and emerging global standards as well as increasing pressure on organisations to move beyond reporting and demonstrate meaningful action.

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News

The Investment Association softens stance on virtual company meetings

On 6 October 2026, the Investment Association (IA) published a press release and updated guidance (Guidance) in which it has softened its opposition to virtual AGMs and companies seeking to amend their Articles to permit virtual AGMs, and set out safeguards it expects companies to commit to. This comes in response to the government’s proposals to clarify the law on virtual-only meetings in its Modernising Corporate Reporting consultation. There are some ambiguities in the Guidance and, together with other City firms, we are seeking clarification from the IA on these points.

A major change in the Guidance is that the IA/IVIS will no longer object to, or red-top, a company seeking to amend its Articles to permit virtual-only meetings provided that the company commits to various assurances and safeguards set out in the Guidance. (The IA’s previously published position on virtual-only AGMs (December 2017) stated that IA members would not support, and IVIS would red-top, amendments permitting virtual-only meetings and that they expected any amendments to confirm that a physical meeting will be held alongside an electronic meeting element.) This is coupled with a new expectation that companies will regularly seek re-approval for the virtual element via an advisory shareholder vote.

The Guidance applies to AGMs of companies with year-ends on or after 30 September 2026. Key points from the Guidance are summarised below:

  • Preference for hybrid meetings: If companies wish to include a virtual element, IA members prefer a hybrid format (i.e. physical with an option to participate virtually) due to various concerns about virtual-only meetings. Recognising that hybrid meetings have cost implications, the IA accepts that offering both physical and virtual elements might not be appropriate for all companies given average attendance.
  • Virtual-only meetings: There is a range of views among IA members; some will only support virtual-only AGMs in exceptional circumstances, while others will consider the circumstances and support companies seeking approval for virtual-only AGMs in limited circumstances. In practice this spread of views will mean that it remains important for a company to consult with its major shareholders before seeking to amend its Articles. In either case, companies must provide an appropriate rationale and give sufficient shareholder safeguards for the conduct of the virtual component of the AGM, including that shareholders have the same rights as if attending a physical meeting.
  • Safeguards where virtual element used: For the virtual element of any meeting the IA expects companies to put in place a number of safeguards, including an expectation that the format should allow shareholders to be “seen and heard by the board directors and other shareholders”. This is a point we have raised with the IA for clarification as, in our experience, the majority of hybrid or virtual meetings are not structured so as to allow shareholders to be seen (and to add that functionality has significant cost consequences).
  • Amending the articles of association to permit virtual-only meetings: The IA is concerned that where shareholders have allowed the Articles to be changed to permit virtual-only AGMs, they do not then have a specific way to raise concerns with how virtual meetings are conducted. When proposing a resolution to amend the Articles, the company should state whether it is merely seeking flexibility for the future, or whether it expects to go virtual-only at the next AGM or at some time thereafter.
  • The IA’s Institutional Voting Information Service (IVIS):
    • will not object to proposals to amend articles to permit virtual-only meetings where the company confirms in the Notice of Meeting that “the virtual element of the meeting” will meet the shareholder expectations set out in the Guidance, including seeking reapproval every three years from first use;
    • will red-top any company seeking to amend its Articles that does not provide the assurances set out in the Guidance; and
    • will red-top any company that does not seek a re-approval of the virtual element after three years following first use or the date of the Guidance (the latter seemingly catches companies whose Articles already permit virtual-only meetings).
  • Regular re-approval for virtual element: Companies should seek regular re-approval from their shareholders for the continued use of virtual participation at the AGM. Re-approval should be sought by way of an advisory vote (ordinary resolution) tabled every three years, commencing on the third anniversary of the first virtual meeting. (This is a shorter period than the five years supported by the GC100 in its December 2025 guidance, and is also recurrent. The GC100 Guidance proposes a time-limited authority for virtual meetings of up to five years before seeking further one-off approval for an indefinite period.) The IA Guidance is unclear whether the expectation of three-year reapproval applies to hybrid meetings as well as virtual and we have asked the IA to clarify. 

FCA publishes final rules on sustainability reporting by listed companies against the UK Sustainability Reporting Standards on a comply or explain basis

On 30 September 2026, the FCA published Policy Statement PS26/19 to align listed issuers’ sustainability and climate disclosures with the UK Sustainability Reporting Standards (UK SRS). These comprise a climate standard, UK SRS S2, and a broader sustainability standard, UK SRS S1. The government published final versions of UK SRS S1 (general sustainability disclosures) and UK SRS S2 (climate disclosures) in February 2026. The UK SRS are based on the International Sustainability Standards Board standards IFRS S1 and S2, widely seen as setting a “global baseline” for sustainability and climate change disclosures. The rules will replace the existing Task Force on Climate-related Financial Disclosures (TCFD) aligned disclosures in the UK Listing Rules.

The rules will apply to accounting periods beginning on or after 1 January 2027, with first reporting in 2028. Companies will have an extra two years before they need to address non-climate topics under UK SRS S1, and an extra year before they need to address Scope 3 emissions under UK SRS S2.

The final rules adopt a “comply or explain” approach across the UK SRS, reflecting concerns raised by respondents about the cost to smaller listed companies of a mandatory regime. This is a significant change from the FCA’s January 2026 consultation CP26/5 (see Corporate Update Bulletin - 5 February 2026), which advocated for mandatory disclosure in relation to climate reporting under UK SRS S2.

We have published a blog in our Sustainable Matters series looking at the other key features of the new framework. The FCA is consulting on draft guidance on what a good “comply or explain” statement should look like (see Primary Market Bulletin 66); the consultation ends on 28 October. The FCA will also be hosting a webinar on the new rules on 19 October 2026.

The FRC publishes its Annual Review of Corporate Reporting 2025/26

On 29 September 2026, the FRC published its Annual Review of Corporate Reporting 2025/26. The review found that the quality of corporate reporting by FTSE 350 companies has been maintained, while the gap in quality between larger listed companies and other companies is narrowing. The proportion of FRC reviews leading to substantive enquiry letters also fell for the second consecutive year, reflecting a positive trend in reporting quality across the FRC’s risk-based sample.

The top five areas where the FRC asked companies substantive questions are:

  1. Cash flow statements: The most common issues related to classification within the cash flow statement. In many cases, the FRC’s questions could have been avoided by clearer explanations of transactions and the rationale for the treatment of related cash flows.
  2. Financial instruments: Three companies restated their primary statements as a result of FRC enquiries into financial instruments, two of which related to inappropriate offsetting. The FRC is planning a thematic review next year focusing on this area.
  3. Impairment of assets: Issues include unclear methods for determining key inputs and assumptions such as assumed growth rates and the rationale for adjusting cash flow projections in relation to intercompany loans. The FRC also sought clarification of the impairment methods used by companies.
  4. Fair value measurement: Most of the queries related to investment trusts, VCTs and other closed-ended entities.
  5. Revenue: Most queries related to the clarity of accounting policies and the significant judgments applied and were addressed by providing additional explanation and agreeing to enhance future disclosures.   

As well as analysing these trends, section 4 of the report also sets out the FRC’s key expectations for companies when preparing their next annual report and accounts. The report also signposts the FRC’s recently published research on the use of AI in corporate reporting and reminds preparers that they remain accountable for what is ultimately produced.

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Case Law

The Court of Appeal confirms that there is no freestanding fiduciary duty of disclosure

In G.I. Globinvestment Ltd v XY ERS UK Ltd [2026] EWCA Civ 1248, the Court of Appeal unanimously held that a fiduciary does not owe a positive, prescriptive duty to disclose all information relevant to its principal’s affairs.

The decision is a helpful clarification for directors, advisers and others in a fiduciary position. Whilst there is no positive fiduciary duty of disclosure, the burden of proving informed consent remains on the fiduciary, and simply putting the principal on inquiry is not enough. Clear and full disclosure of any interest therefore remains the safest course, particularly where the principal is less sophisticated. The case contains useful analysis on the relationship between disclosure and the no-conflict and no-profit rules and the detailed, fact-specific analysis needed to establish whether a sophisticated party has validly consented, on a fully informed basis, to conduct that would otherwise breach a fiduciary duty.

The dispute arose after members of a prominent Italian family, together with one of their family office investment vehicles, put substantial sums into an alternative investment fund. The fund then incurred heavy losses in the market turmoil that followed the outbreak of the Covid-19 pandemic. The case related to a fiduciary duty claim brought against XY ERS UK Limited (XY), which had acted as the claimants’ investment consultant. XY was owned by Mr Migani, who had also founded the fund and owned its general partner; a sister company he also owned acted as the fund’s investment adviser.

The appellants argued that XY had breached its fiduciary duties by failing to disclose the investment adviser’s role, its ownership and the fees it received.

The Court of Appeal dismissed the appeal for the following reasons:

  • Disclosure can prevent liability under the no-conflict and no-profit rules because it allows the fiduciary to obtain the principal’s informed consent, but non-disclosure does not give rise to a freestanding claim.
  • On the facts, the clients had given informed consent. They knew the owner was behind the fund, owned its general partner and was deriving significant financial gains from that.
  • The sufficiency of disclosure can depend on the sophistication of the recipient. Where an experienced investor in fact draws an inference from what they are told, that must be taken into account.

Court considers postponement and conduct of a contested AGM

In MILFAM LLC v Morrow and others [2026] CIGC (FSD) 54, the Grand Court of the Cayman Islands made a number of findings in relation to a contested AGM that demonstrate important principles applicable to general meetings. The Court relied heavily on English authorities, so the decision is likely to be persuasive in the UK.

The background facts are unusual. MILFAM, a substantial shareholder in NYSE-listed Scully Royalty Ltd (Scully Royalty), nominated its own candidates to replace the incumbent board at the company's upcoming AGM. It circulated a nomination notice in advance of the meeting and published a proxy statement to solicit proxies in support of its nominees. After a dispute over the nomination notice, which the board argued had not been validly served, the directors purported to postpone the meeting and announced the postponement three days before it was scheduled to be held. MILFAM went ahead on the original date regardless, having issued a press release that the purported postponement was invalid. With no directors present, its proxy holder (Mr Sun) proposed a resolution to appoint himself as chair, which was passed unanimously. Resolutions to appoint MILFAM's nominees were passed, while resolutions to re-elect the incumbent directors failed. Mr Sun then continued to chair the other business before closing the meeting.

The court considered three principal questions:

  1. Was the postponement valid? The court held that the board had no power to postpone the AGM. It is established law that directors cannot postpone a duly convened meeting unless the articles expressly provide for a power to postpone. The board's general management powers did not give it that authority. Nor did a passing reference to "adjournment or postponement" in the article on nomination deadlines. The judge treated that wording as administrative only, and as too weak a basis for a substantive power. Following Re Euro Accessories and Belize Telecom, he stressed that articles are public documents that are rarely negotiated, so they must be read according to their natural meaning.
  2. Can shareholders appoint a chair in the absence of any directors? Shareholders cannot appoint a chair where the articles reserve that power to the directors, even if no director attends the meeting. The articles of Scully Royalty clearly provided that where the chair of the board was absent, only the directors present had the power to appoint the chair of the general meeting. The ‘appointment’ of Mr Sun as chair was therefore invalid, and the business conducted and the resolutions purportedly passed at the meeting were also invalid. Although the model articles under the Cayman Companies Act provide that members present can elect one of their number to be chair in the absence of directors, Scully Royalty’s articles had disapplied these. (Note also that English law differs from Cayman law in that under the Companies Act 2006, members of English companies have statutory rights to require a general meeting to be called, and can call it themselves if the directors fail to do so, or can ask the court to order a meeting.)
  3. Did the nomination notice and proxy statement make adequate disclosure? The judge also found that MILFAM's materials had not adequately disclosed its relationships with two nominees. Applying the Re Jessel Trust test, he held that this omission would have been enough on its own to invalidate their election. He confirmed that the same disclosure standards apply to circulars issued by shareholders and by management.

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