Corporate Update Bulletin - 5 June 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
• Publications

News

FRC publishes the UK Stewardship Code 2026

On 3 June 2025, the Financial Reporting Council (FRC) published the UK Stewardship Code 2026, following extensive consultation on its proposed updates to the 2020 version of the Code. The Stewardship Code is a non-binding code of practice aimed primarily at the investor community (asset managers, asset owners and service providers) that sets benchmarks to promote the effective stewardship of investee companies. Signatory firms, which currently include many of the largest global asset managers, are required to prepare a stewardship report on an annual basis setting out how they have applied the Code in their stewardship activities with companies. Industry feedback had been that the Code placed significant reporting burdens on signatories. The updated Code will apply from 1 January 2026. Key changes from the 2020 Code include:

• A revised definition of stewardship as “the responsible allocation, management and oversight of capital to create long-term sustainable value for clients and beneficiaries”. While the definition itself has not changed from the time of consultation, the supporting language has been revised to incorporate some of the language of section 172 of the Companies Act with respect to consideration of the economy, the environment and society.
• Streamlined reporting, with fewer Principles and shorter ‘how to report’ prompts, which would reduce reporting volumes.
• A more flexible reporting structure which more clearly separates the Policy and Context Disclosure which describes the firm’s stewardship policies and the Activities and Outcomes Report which describes how firms have applied the Code Principles. The Policy and Context Disclosure would only need to be submitted once every four years.
• Tailored Principles for different types of signatories, including asset owners, asset managers, and for the first time, for proxy advisors, investment consultants and engagement service providers. In particular, a specific Principle would apply to proxy advisors requiring them to ensure the quality and accuracy of their research, recommendations and voting implementation
• ·Optional guidance offering suggestions and examples to support implementation, particularly for those managing non-equity asset classes.

To help firms adapt, 2026 will be a transition year during which no existing signatories will be removed from the signatory list.

GC100 and Investor Group publishes revised version of Directors’ Remuneration Reporting Guidance

On 5 June 2025, the GC100, the industry association of general counsel and company secretaries of FTSE100 companies, and Investor Group published a revised version of its Directors’ Remuneration Reporting Guidance, designed to assist companies and their investors in the interpretation of the disclosures required by Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/373) (as amended) which came into force in 2013.

The updates to the guidance stem from evolving best practice and include new guidance on:

• Engagement with shareholders and consideration of shareholders’ views
• Environmental, social and governance measures in variable pay
• Consideration of general workforce pay
• Potential windfall gains

The updates also: (i) reflect changes made by the Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 which remove some of the SRD II-derived requirements from the directors’ policy and remuneration report regime, which overlap with pre-existing requirements that still apply; and (ii) clarify the overlapping requirements of the UK Corporate Governance Code on significant votes against any resolution, employee consultations and workforce pay and conditions. 

FCA publishes updated enforcement guide and final policy on transparency in enforcement proceedings

On 3 June 2025, the Financial Conduct Authority (FCA) published Policy Statement 25/5: Enforcement Guide and greater transparency of enforcement investigations (PS 25/5) setting out final revisions to its Enforcement Guide, including amendments to its investigation publicity policy. As expected, given the heavy criticism the FCA received during the consultation period, and following the publication of its letter to the House of Commons Treasury Select Committee stating that it will not proceed with its proposals to disclose investigations into a regulated firm where the ‘public interest’ test was satisfied, the FCA has revised its proposals and retained its current approach to only publicise such investigations in “exceptional circumstances”. The new Enforcement Guide is set out in Appendix 1 to PS 25/5 and comes into force on 3 June 2025.

FRC consults on adapting UK version of Proposed International Standard on Sustainability Assurance (ISSA) 5000

The FRC has issued a consultation  on its proposal to launch a UK version of ISSA 5000 published by the International Auditing and Assurance Standard Board (IAASB). In response to investor concerns that sustainability information disclosed through channels such as companies’ annual reports is not always as detailed as required to ground investment decisions, the ISSA 5000 standard was published by IAASB to serve as a comprehensive standard for any sustainability assurance engagement, and to enhance confidence investors, regulators and stakeholders have in sustainability information disclosed. The proposed UK standard would be available for use on a voluntary basis by UK assurance providers. It applies to sustainability information reported across any sustainability matter and prepared under multiple frameworks, including IFRS S1 and S2.

The FRC is proposing an effective date for assurance engagements on sustainability information reported for periods beginning on or after 15 December 2026, or as at a specific date on or after 15 December 2026. Earlier application would be permitted. Stakeholders are invited to submit comments by Thursday 31 July 2025.

Publications

Event-driven creditor activism – a corporate perspective

Slaughter and May has published a briefing considering the nature and incidence of event-driven creditor activism in the UK and Europe and the key risk indicators for claims. The briefing also outlines some strategies for anticipating and responding to activist claims when planning for disposals and other corporate events.