Corporate Update Bulletin - 3 July 2025

Welcome to the latest edition of Corporate Update, 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 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

News

Government launches consultation on UK Sustainability Reporting Standards

On 25 June 2025, the Department for Business and Trade (DBT) published a consultation seeking views on the exposure drafts of UK Sustainability Reporting Standards: UK SRS 1 and UK SRS 2. The UK SRS will form the foundation of the UK’s future sustainability disclosure regime and are based on the sustainability reporting standards (IFRS S1 and IFRS S2) published by the International Sustainability Standards Board (ISSB) in June 2023. The ISSB Standards were developed with the aim of creating the standard global baseline for sustainability reporting for companies.

The government has made international comparability a priority and is therefore aiming to limit divergence from the ISSB Standards as far as possible. As such, the government is proposing that the UK SRS incorporate only minor amendments to the ISSB standards, including:

• The removal of the transition relief in IFRS S1 permitting delayed reporting in the first year on the basis that permitting the delayed disclosures compromises connectivity with other narrative reporting, including financial statements.
• The extension of the transition relief in IFRS S1 permitting reporting entities to defer the disclosure of sustainability-related risks and opportunities beyond those on climate by one year – the UK is proposing to make this relief available for 2 years. At the same time, the government opted not to extend the relief in relation to scope 3 emissions reporting, holding this to one year only.
• The removal of the “effective date” from the standards (both ISSB standards provide that an entity shall apply the standards for annual reporting periods beginning on or after 1 January 2024). Instead, the timetable for applying the standards depends on subsequent rules or regulations put in place by the government or the FCA.

This consultation is part of the first phase of three consultations regarding the UK’s framework for sustainability reporting, with separate consultations on the introduction of requirements relating to climate-related transition plans and the oversight regime for assurance of sustainability-related financial disclosure also announced (see below). These will all close on 17 September 2025. Further consultations will also be announced in relation to future transition plan requirements and the disclosure of commercially sensitive information. 

Consultation on climate transition plan requirements announced

As part of the package of consultations regarding the UK’s framework for sustainability reporting announced by the government, the Department for Energy Security and Net Zero (DNEZ) has also published:

• A consultation related to the introduction of climate-related transition plan requirements: The government had previously committed to mandating “UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”. This consultation seeks views on how transition plan requirements could be taken forward and in particular, views on the role of transition plans alongside UK SRS, as well as the use of the Transition Plan Taskforce disclosure framework. The consultation also explores the possibility of extending the scope of the current commitments placed on financial institutions and FTSE 100 companies, whilst allowing small to medium-sized companies to remain exempt.
• A consultation on developing an oversight regime for assurance of sustainability-related financial disclosures: This consultation seeks views on proposals for the planned Audit, Reporting and Governance Authority (ARGA) to be given responsibility for creating a voluntary registration regime for entities that offer third-party assurance services for sustainability-related disclosures.

IFRS Foundation publishes fresh guidance on transition related disclosures

On 23 June 2025, the IFRS Foundation published  new guidance on transition-related disclosures which  seeks to help entities in preparing disclosures relating to climate-related transition plans in accordance with IFRS 2 (Climate-related disclosures) . The guidance builds on disclosure-specific material developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024.  Although IFRS 2 does not require an entity to have a transition plan, it does require an entity to disclose information on its transition plan if it has one and requires entities to provide material information about sustainability-related risks and opportunities. This would likely include information about its transition plan on the basis that it relates to how an entity mitigates and adapts to climate-relation transition and risks.

The guidance explains, among other things:

• what an entity’s climate-related transition is – i.e. the process by which it sets targets, takes steps and deploys resources to respond to climate-related risks and opportunities, within the context of that organisation’s overall strategy;
• the information that it is necessary to disclose when applying IFRS S2, if the entity has strategic goal to transition to a lower-carbon and/or climate-resilient economy. This would include information about changes (or expected changes) to its business model, any mitigation and adaptation efforts being implemented, how an entity plans to achieve its climate-related targets, key assumptions used in developing its plan and dependencies on which the plan relies, and resources required in its response to climate-related risks and opportunities.

This guidance may become particularly significant in the context of the global adoption of the ISSB standards, setting international expectations around transition plan disclosures in ISSB-adopting jurisdictions.

Government publishes UK’s Modern Industrial Strategy

On 23 June 2025, the Department for Business and Trade published UK’s Modern Industrial Strategy policy paper  which sets out the ten-year plan to increase investment in what it views as the eight sectors with the highest potential – these include sectors such as advanced manufacturing, life sciences, clean energy, clean energy and financial services. The government will prioritise regulatory reform to support the above sectors. Notably, the paper sets out plans by the government to reduce regulatory burdens for businesses, including a commitment to take forward measures to streamline and modernise company law and ensure that the competition regime not only protects consumers but also encourages investment and innovation.

In relation to company law, the government has said it will publish a consultation on streamlining non-financial reporting requirements under the Companies Act 2006, as well as consulting on the design and implementation of a UK corporate re-domiciliation regime (which would allow companies to move their place of incorporation to the UK and therefore make it easier to relocate to the UK).

The paper also notes the strategic steer that the government has given to the Competition and Markets Authority (CMA) to promote growth in the eight sectors and more widely. The government has stated that it will consult on further reforms to the merger jurisdiction tests. In relation to the subsidy control regime, the government plans in Summer 2025 to increase the threshold at which subsidies must be referred to the CMA from £10 million to £25 million in order to help the CMA focus on the largest subsidies with greatest impact, although for certain sensitive sectors, the threshold will remain at £5 million. In respect of the National Security and Investment Act, the government will (i) launch a 12-week consultation on updating the definitions covering the 17 areas subject to mandatory notification; (ii) update guidance to ensure that there is clarity for investors on how the regime works; (iii) shortly announce specific new exemptions to the mandatory reporting regime; and (iv) explore opportunities to bring greater transparency to the reporting process.

Competition and Markets Authority publishes consultation on proposed changes to its mergers guidance

On 20 June 2025, the CMA launched a consultation, which seeks responses in relation to the following documents, published as part of its proposed amendments to its guidance on the regulator’s jurisdiction and process for the UK merger control regime under the Enterprise Act 2002 (the so-called ‘CMA2’):

• Draft revised guidance on the CMA’s jurisdiction and procedure and draft revised merger notice;
• Draft CMA2; and
• Draft mergers notice template.

The main changes proposed under CMA2 relate to the 4”Ps” (pace, predictability, proportionality and process) that underpin the CMA’s new approach. Broadly, the proposals relate to increasing the pace at which the CMA makes decisions by introducing a 40 working-day KPI for pre-notification and 25 working-day KPI to make straightforward clearance decisions and to improving predictability by clarifying its approach to jurisdiction, in particular in relation to the material influence and share of supply test. The CMA is also seeking to increase proportionality by clarifying its “wait and see” approach to global mergers (i.e. mergers that affect broader than national markets).

London Stock Exchange outlines plans for its Private Securities Market

On 26 June 2025, the London Stock Exchange (LSE) published Market Notice N05/25, announcing the intended changes to the Rules of the London Stock Exchange (the "Rules") and the trading system in anticipation of the launch of its Private Securities Market (which remains subject to regulatory approval from the FCA), its new trading platform operating under the new PISCES regime.

As the Rules are designed to apply across all of LSE’s markets and trading platforms, a limited number of new rules/amendments will be required to incorporate the requirements of the Private Securities Market.  Whilst UK MAR will not apply, in order to maintain orderly markets, the LSE will prohibit member firms from engaging in manipulative trading practices on the Private Securities Market and will provide guidance to support member firms' own compliance.

To access the Private Securities Market, firms will be required to register as “Registered Auction Agents" (RAAs). Further rules regarding the conduct, responsibilities and functions of RAAs will be published in the future.

Legislation

Secondary legislation relating to implementation of ECCTA 2023 reforms published

A number of secondary legislation required to implement different aspects of changes introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) have been published and laid before Parliament. These remain subject to parliamentary approval. Some of the amendments introduced by the various regulations are consequential amendments flowing from changes being introduced by the ECCTA 2023.  Of particular note is the Companies Authorised to Register, Unregistered Companies and Overseas Companies (Application of Company Law) Regulations 2025 (published on 30 June 2025) which will extend the identity verification regime in relation to directors and PSCs to companies authorised to register, unregistered companies and overseas companies which are opening a UK establishment.

Three further sets of draft regulations (the Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations 2025, the Register of People with Significant Control (Amendment) Regulations 2025 and the  Limited Liability Partnerships (Application and Modification of Company Law) Regulations 2025) supplement certain requirements and/or make other consequential amendments arising from future ECCTA 2023 reforms expected later this year including the identity verification regime, the abolition of local registers and their application to limited liability partnerships. 

Data (Use and Access) Act receives Royal Assent

The Data (Use and Access) Act 2025, which amends UK GDPR, the Data Protection Act 2018, and the Privacy and Electronic Communications (EC Directive) Regulations 2003 (PECR), has received Royal Assent.  This is a wide-ranging Act which includes provisions to enable the growth of digital verification service and includes some significant changes to the UK’s data protection and privacy legislation. Changes to data protection law will be commenced in stages between two to 12 months after Royal Assent, but certain changes will come into force with immediate effect and in particular:

• Organisations will only be required to undertake reasonable and proportionate searches for information, upon receiving a subject access request; and

• Rules relating to automated decision making will be relaxed, with decisions made with no meaningful human involvement now only being prohibited for decisions relating to sensitive categories (such as biometric data).

Case Law

NOAL SCSP & Ors v Novalpina Capital LLP & Ors [2025] EWHC 1392 (Ch)

Court rules that all debts must be fully paid within 12 months in a Members Voluntary Liquidation

In this case, the Court determined that the insolvency test applicable to the conversion of a members’ voluntary liquidation (MVL) into a creditors’ voluntary liquidation (CVL) under section 95 of the Insolvency Act 1986 was whether a company’s debts could be fully paid (with interest) within a 12-month period. The Court found that neither the balance sheet insolvency test nor the cash flow insolvency test should be used when making a statutory declaration of solvency under this section.

The MVL regime mirrors that under s 89 (1) of Insolvency Act 1986, under which a director can make a statutory declaration only where the director can form the opinion that the company will be able to pay its debts within 12 months of the date of the winding up commencing. The Court was, therefore, of the view that a liquidator has no discretion to keep a company in MVL beyond the 12-month period even where it is confident that all creditor claims will ultimately be paid in full, but for whatever reason (such as a delay in realising assets, or contingent liabilities) some debts will be settled only after the 12-month period has expired. The finding is contrary to a fairly established practice of companies entering MVL where contingent or disputed liabilities are not expected to be paid within 12 months but are provided for, for example by way of parent company guarantee.

Donaldson and Arden v the Financial Conduct Authority [2025] UKUT 00185 (TCC)

Upper Tribunal upholds decision to fine CEO and CFO for being knowingly concerned in breach of Listing Rules

The Upper Tribunal (Tax and Chancery Chamber) has upheld the FCA’s decision to fine the former CEO (Mr Craig Donaldson) and CFO (Mr David Arden) (the Applicants) of Metro Bank (Metro) for being knowingly concerned in a breach of the Listing Rules. The FCA had found that an unqualified statement in relation to Metro’s Risk Weighted Assets made in October 2018 as part of its third quarter trading update was knowingly made in error, but no attempt to inform the market was made. The share price of Metro dropped by 39% by the time that amended numbers had been published in January 2019. The FCA imposed a fine of approximately £10 million on Metro for a breach of Listing Rule 1.3.3R which requires an issuer to take reasonable care to ensure that any information it notifies to a [Regulatory Information Service]…is not misleading, false or deceptive and does not omit anything likely to affect the import of the information contained within it”. In addition, the FCA also fined the former CEO and CFO £223,100 and £134,600, respectively, for being “knowingly concerned” in the Bank’s breach.

The Tribunal found that to be “knowingly concerned” in a breach: (i) the person must have been actually involved in the contravention; (ii) the person must have had knowledge of the facts upon which the contravention depends; and (iii) it is immaterial whether the person had knowledge of the law unless he had received and was relying on independent legal advise that the activity concerned was not in contravention of the law and the advice was based on a correct and complete factual matrix.

Having found that Metro was indeed in breach of LR 1.3.3R, the Tribunal went on to find that, on the facts, the CEO and CFO were knowingly concerned in the breach. Despite the position taken by the Applicants that the figure relating to the risk weighted assets could be offset against certain mitigants, the Tribunal held that mitigants would not have changed the Risk-Weighted Assets themselves: the figures published at the time of the update would still have been materially wrong, and the Applicants knew that was the case. However, the Tribunal reduced the penalties imposed on them by 25% due to mitigating circumstances.