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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.

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We hope you enjoyed a breather over the summer. As we head into the “new term”, it feels like an opportune moment to look back over the most significant legal developments of the year so far and flag some important developments on the horizon.

1. New public offers regime and capital markets reform:  The year started off with a bang, as the much-anticipated new UK regime for public offers of securities and admissions to trading came into force in January. The regime has subsequently been refined throughout the year, including streamlined prospectus rules in March, removal of overlapping notification requirements for share issuances in April, and clarificatory amendments to the PRM rules in July. The FCA and LSE are continuing efforts to enhance the attractiveness and competitiveness of UK capital markets, with the amendments to the AIM rules published in August providing an example of these efforts in practice. Main Market IPOs should also become marginally quicker and simpler following recent changes to the rules governing investment research on an IPO. Looking ahead, the EU is in the process of reforming its market abuse regime, in particular by removing the need for EU-listed issuers to disclose intermediate steps in a protracted process (such as ongoing negotiations, board discussions or preliminary approaches); instead the disclosure obligation will only be triggered when the final event in the process occurs. For UK listed issuers, for now, disclosure of intermediate steps is still required, but sooner or later reform seems inevitable, although the FCA remains tight-lipped about when reform may come and what it will look like.  

2. The Employment Rights Act 2025: Regarded as the most significant upgrade to workers’ rights in a generation, the first phase of implementation took place in February with a wave of trade union measures. Further reforms were introduced in April including tougher collective redundancy penalties, expanded day-one rights for paternity leave, whistleblowing protections and general equality action plans. A single enforcement body – the Fair Works Agency – was also launched. Looking ahead, harassment-related reforms will take effect at the end of October, including making employers liable for harassment from third parties, and in January (among other things) the compensation cap for unfair dismissal claims will be removed, raising particular risks in the context of senior executive dismissals. Our dedicated hub page provides a central resource for navigating the Act and its staggered implementation.

3. Corporate Reporting: In a surprising U-turn, the Government scrapped its long-anticipated Audit Reform Bill in January in a move that was particularly welcome for large unlisted businesses that would have faced increased reporting obligations under the Bill. Since then, the Government has promised a consultation on streamlining the corporate reporting framework, but so far without concrete timings. A separate consultation on climate-related financial disclosures is expected in February 2027 but it is not clear whether the broader corporate reporting reforms will be dealt with as part of that or separately. Meanwhile, Provision 29 of the UK Corporate Governance Code 2024 came into force in January (having been delayed by a year), meaning that companies which comply with the Code should now be preparing for the board’s first formal declaration of the effectiveness of the company’s material controls in the next annual report. The FRC issued guidance in January and June to answer key questions about Provision 29 and to clarify the role of the auditors.

4. Corporate criminal liability extended: The Crime and Policing Act 2026 came into force on in June, expanding the basis on which companies can be held liable in the UK for criminal offences to cover any criminal offence committed by senior managers within the actual or apparent scope of their authority (previously limited to just specific economic crimes).

5. Dematerialisation of UK shares: The DEMAT taskforce published its final report in July, setting out an implementation plan towards the abolition of paper certificates and a fully digitised register. Our briefing sets out the steps for UK traded companies and the anticipated timings for achieving a fully intermediated model by July 2029. 

6. Competition regime reform: In January, the UK government launched a consultation to improve the speed and predictability of CMA investigations. The Competition Reform Bill was subsequently announced in the King’s Speech in May and is expected to progress through Parliament later this year and 2027. Meanwhile, in its June consultation, the CMA has signalled a greater openness to behavioural remedies, removing the previous presumption against them, and a willingness to consider efficiency arguments in its assessments, building on its 2024 Vodafone/Three decision. The EU has published draft guidelines indicating a similar trajectory on efficiencies and an openness to deals that help European companies to compete on the global stage.

7. Directors’ duties: In July, the Supreme Court gave its judgment in the case of Saxon Woods Investments Ltd v Costa, confirming the scope of the good faith requirement in the section 172 duty for a company director to act in good faith to promote the success of the company for the benefit of its members as a whole.  The decision has significant implications for boards on collective decision-making, delegation of authority and the limits of independent judgement.

8. Tax: There are some major changes in the pipeline.

  • In June, HMRC launched a consultation, ‘Modernising the taxation of distributions and repayments of capital from companies’, proposing various measures which will have an impact on the tax treatment of distributions made by companies to shareholders who are individuals or trusts. The proposals may affect planned capital returns, demerger timetables, and the tax treatment of distributions within international group structures. The consultation is at an early stage and HMRC has emphasised that it will not proceed without fully understanding the commercial impact. No legislative timetable has yet been set.
  • In July, the Government published draft legislation implementing the new Securities Transfer Tax (STT), which will replace stamp duty and SDRT. A consultation on the draft legislation is running until 7 September and it is expected that STT will be brought into force at some point in 2027 (a further update on timing is expected at the Autumn Budget, so we’ll have to wait and see until then).

9. Modern Slavery: In June, the Immigration and Asylum Bill 2026 was introduced to the House of Commons, having its second reading in July. The Bill proposes significant amendments to the modern slavery reporting regime and would provide for severe financial penalties for failure to comply with the reporting requirements “without reasonable excuse” (up to the 1% of total turnover per financial year). We will see whether the relevant provisions remain intact or are amended during its course through Parliament.

10. Investment trusts: In June the FCA published a consultation to change the UK Listing Rules applicable to closed-ended investment funds, designed to help strengthen the protections for minority investors against conflicts of interest, in response to recent shareholder activism. The consultation has now ended and the FCA is aiming to finalise the rules by the end of the year.

 

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News

FCA publishes guidance on misleading language in regulatory announcements and delayed disclosure of inside information   

On 28 August the FCA published Primary Market Bulletin 65, including a number of points that are relevant to listed issuers.

Misleading language in regulatory announcements

The FCA has raised concerns over a growing trend for issuers’ regulatory announcements to contain misleading statements and language which the FCA describes as “vague, exaggerated and flamboyant”, with some announcements resembling marketing material rather than regulated information.

It gives a number of examples of statements that have raised concerns, including:

  • unnecessary minor updates regarding the progress of commercial agreements and ventures which have previously been announced;
  • repeated and detailed updates on possibly favourable macroeconomic and political conditions, which are already in the public domain;
  • broad, sector-wide commentary to provide support for the issuer’s projects, without detailed information about the specific implications of these developments on the issuer;
  • incorrectly claiming support for a project from a public figure based solely on passing comments made during a meeting; and
  • sensationalist language in regulatory announcements, of the type normally reserved for promotional activity.

The FCA urges issuers to remember the distinction between regulated information and other marketing material.  Where an issuer announces regulated information (i.e. information the issuer is required to disclose under the DTRs, articles 17 to 19 of the UK Market Abuse Regulation (UK MAR), or the UKLRs), it is permissible to include non-regulated information, particularly if doing so will provide context or otherwise help investors understand what is being disclosed; but any non-regulated information should be relevant, concisely expressed and, like regulated information, be accurate and not misleading. Announcements of inside information should not be combined with marketing material. As a general rule, marketing material should be released through non-regulatory newswire services, the company’s website, social media channels or other appropriate communication outlets. Issuers should ensure they comply with the financial promotion regime.

Delayed disclosure of inside information

The FCA continues to monitor compliance with Article 17(4) UK MAR, which allows issuers to delay disclosure of inside information where (a) immediate disclosure is likely to prejudice the legitimate interests of the issuer, (b) delay of disclosure is not likely to mislead the public and (c) the issuer is able to ensure the confidentiality of the information. Issuers must notify the FCA of the delay when the information is eventually publicly disclosed (a DDII notification).

The review did not identify widespread or systemic failures in issuers’ compliance with article 17(4) but has identified some inconsistencies in how inside information is recognised and managed:

  • Issuers should not adopt a “blanket approach” to financial results – i.e. they should not automatically treat information relating to financial results as inside information. Instead, as set out in FCA Technical Note 506.3, for each set of financial results an issuer should assess whether there is any inside information, taking into account guidance previously given by the issuer, market consensus and other factors.
  • During prolonged delay periods, some issuers did not always re-evaluate whether the information remained inside information - including in instances where market expectations became clearer or when price sensitivity diminished.
  • One issuer misunderstood what inside information was and assumed that the beginning of a closed period for period reporting processes indicated that inside information existed, without assessing whether the information held was in fact precise and price sensitive.
  • Smaller issuers often placed greater reliance on third party advisers when applying the inside information framework. While third party assistance may be appropriate, issuers must maintain sufficient internal understanding to exercise an informed judgement. There were also some instances of errors being compounded by automated RegTech tools (such as automated insider list creation and submission of delay notifications). Issuers must ensure that use of such tools is accompanied by appropriate controls.
  • Where there is an unexpected development and, in reliance on DTR 2.2.9G(2), the issuer requires a short period to clarify the position before making a complete announcement, it is not necessary to file a DDII notification. If there is a risk of the inside information leaking before a full announcement can be made, the issuer should release a holding announcement.

New inside information declaration form for listings submissions via ESS

As noted in Corporate Update Bulletin - 20 August 2026, the FCA has issued a reminder that, from 21 September 2026, when a draft equity prospectus or circular is first submitted to the FCA for approval, the submitter will need to complete a new form declaring whether the document includes inside information and, if so, details of that inside information. The form will also be required where an issuer or its sponsor makes a request for guidance. Details of the new form, and the other documents that must accompany a submission, can be found on this FCA webpage. The FCA is introducing this requirement because the existing process was proving to be inefficient in identifying quickly when inside information was being included in the submission. 

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Case law

High Court finds shareholder-directors’ retirement letters constituted full and final settlement of claims despite no express settlement wording

In Evans & Ors v JNP Group Consulting Engineers Ltd [2026] EWHC 2175 (Comm) the High Court held that retirement letters signed by departing shareholder-directors operated as a full and final settlement of the parties' claims, despite containing no express settlement wording, thus precluding a counterclaim for breach of warranty by the defendant company.

The dispute arose from a restructuring in 2016 in which two LLPs were merged into JNP Group Consulting Engineers Limited (the Company). The claimants, formerly LLP members, became shareholder-directors of the Company, with their LLP capital accounts converted into Directors Loan Accounts (DLAs). Under two Business Sale Agreements, the LLP members had given warranties as to the recoverability of certain debts transferred to the Company. In 2018, the claimants signed retirement letters and received payments by reference to their DLAs. When they later claimed further exit-related sums, the Company counterclaimed for alleged breach of warranties given by the claimants in the BSAs concerning the recoverability of transferred debtors.

The court held that the retirement letters compromised the warranty claims. In reaching this conclusion, the court noted that the letters, prepared by the Company itself, comprehensively addressed the financial terms of the claimants' departure, including the recoverability of debts — the subject matter of the warranty claim. Further, the Company was aware of the alleged warranty breaches but did not reserve or exclude those claims. The court also considered it commercially unrealistic that the claimants would have accepted exit terms while remaining exposed to substantial Company claims.

Although it revolves on its facts, the case underlines the importance of careful drafting in shareholder or director exit arrangements. Where a company intends to preserve existing or potential claims, those claims should be expressly reserved. Otherwise, arrangements that comprehensively address the financial consequences of departure may be construed as a full and final settlement.

 

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