Happy New Year and welcome to the current edition of Capital Markets Update, the monthly briefing from the Corporate Group at Walker Morris rounding up the previous month's regulatory developments within the equity capital markets and looking ahead to future developments.
December's news
Takeover Panel Hearings Committee refuses third party investor's request to convene proceedings
On 1 December 2023, the Takeover Panel published Panel Statement 2023/13, setting out a ruling in relation to a takeover bid for OnTheMarket plc (OTM) made by CoStar Group Inc (CoStar). The Chairman rejected a request from an investor who was neither an OTM shareholder nor a party to CoStar's offer for OTM, to convene the Committee to review certain rulings made by the Panel Executive. The Chairman found that the investor did not have sufficient standing to request that the Committee be convened.
FRC announces areas of supervisory focus for 2024/25
On 6 December 2023, the Financial Reporting Council (FRC) announced its areas of supervisory focus for 2024/25, including priority sectors, for corporate reporting reviews and audit quality inspections. The FRC will prioritise the following sectors: constructions and materials; food producers; gas, water & multi-utilities; industrial metals and mining; and retail.
FRC publishes report on structured digital reporting
On 7 December 2023, the FRC Lab published a report on using a structured digital format to produce annual financial reports. The report reviews the mandatory use of the electronic reporting format set out in DTR 4.1.15-23 and Primary Markets Technical Note 507.1, which replaced the UK version of the EU Transparency Directive's regulatory technical standard for the European Single Electronic Format.
Changes to Rule 21 of the Takeover Code take effect
On 11 December 2023, changes to the Takeover Code relating to frustrating actions took effect. The amendments relate to Rule 21 which restricts a target board from taking certain actions without shareholder approval on the basis that those actions might result in an offer or possible offer being frustrated.
FCA publishes feedback relating to the new public offers and admissions to trading regime
On 12 December 2023, the Financial Conduct Authority (FCA) published feedback to its six engagement papers on the new public offers and admissions to trading regime. Government is in the process of finalising a new legislative framework that will replace the UK Prospectus Regulation. The FCA is continuing to develop policy proposals for making FCA rules that support the new public offers and admissions to the trading regime. The main exemptions and areas where the FCA will make rules include regulated markets, primary MTFs and public offer platforms.
Data Protection (Fundamental Rights and Freedoms) (Amendment) Regulations 2023 made
On 18 December 2023, the Data Protection (Fundamental Rights and Freedoms) (Amendment) Regulations 2023 were made and published, together with an Explanatory Memorandum. The regulations, which will amend references in UK data protection legislation to 'fundamental rights and freedoms' so that they refer to rights recognised under domestic UK law, will come into force immediately.
Takeover Panel publishes changes to Note 18 on Rule 9.1 Takeover Code on mandatory offer requirements
On 18 December 2023, the Takeover Panel published Panel Statement 2023/16 announcing the introduction of a new paragraph (b) to Note 18 on Rule 9.1 Takeover Code as a result of changes made by regulation 3 Resolution of Central Counterparties (Modified Application of Corporate Law and Consequential Amendments) Regulations 2023 (CCP Regulations 2023), which came into force on 31 December 2023.
FCA publishes Primary Market Bulletin 46
On 19 December 2023, the FCA published Primary Market Bulletin 46, its newsletter for primary market participants.
Register of Overseas Entities (Verification and Exceptions) (Amendment) Regulations 2023 made
On 19 December 2023, the Register of Overseas Entities (Verification and Exceptions) (Amendment) Regulations 2023 were laid before Parliament and published together with an Explanatory Memorandum. The regulations, which come into force on 15 January 2024, require that additional information that is required to be delivered to the registrar of companies under Schedule 6 Economic Crime (Transparency and Enforcement) Act 2022 with respect to transitional cases will need to be verified.
ISS announces updates to proxy voting guidelines for 2024
On 19 December 2023, Institutional Shareholder Services (ISS) announced the publication of its international Benchmark Policy Updates for 2024. Changes for the UK and Ireland are summarised in Appendix B and relate to board diversity, share issuance authorities and the definition of significant shareholder. The updated proxy voting policies will generally be applied for shareholder meetings taking place on or after 1 February 2024.
Regulations relating to rectification of addresses on Companies House register laid before Parliament
On 19 December 2023, three sets of draft regulations to be made under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) were laid before Parliament. They are: (i) the Registered Office Address (Rectification of Register) Regulations 2024 which will empower the registrar of companies to change a company's registered office address where satisfied that it is not an 'appropriate address' under s 28 ECCTA 2023 (s 105); (ii) the Service Address (Rectification of Register) Regulations 2024; and (iii) Principal Office Address (Rectification of Register) Regulations 2024, which give the registrar similar rectification powers in relation to registered service and principal office addresses notified to Companies House.
Legislation to amend high net worth individual and sophisticated investor exemptions in the Financial Promotion Order 2005 published
On 19 December 2023, the Financial Services and Markets Act 2000 (Financial Promotion) (Amendment) (No. 2) Order 2023 was published. The Order, which comes into force on 31 January 2024, implements changes to exemptions in the Financial Promotion Order 2005 for high net worth individuals and sophisticated investors.
FCA publishes detailed proposals for unified listing regime for equity shares
On 20 December 2023, the FCA launched Consultation Paper 23/31 setting out the FCA's detailed proposals to radically reform and streamline the existing listing regime to strengthen the attractiveness of UK capital markets and support the economy's growth and global competitiveness.
Changes to the identification doctrine for corporate criminal liability come into force
On 26 December 2023, changes under the Economic Crime and Corporate Transparency Act 2023 which partially codify the existing common law identification doctrine came into force. The relevant provisions provide for the attribution of criminal liability to companies and partnerships where a senior manager acting within their actual or apparent authority commits a specified economic crime offence.
Looking ahead to January 2024
1 January – Glass Lewis 2024 UK Proxy Voting and ESG Policy Guidelines will apply for meetings from this date.
1 January – ISSB Sustainability Disclosure Standards IFRS S1 and S2 are effective for annual reporting periods beginning on or after this date.
1 January – New sustainability reporting requirements created by the Corporate Sustainability Reporting Directive will start to apply from this date.
1 January – Retained EU Law (Revocation and Reform) Act 2023 will make significant changes to the body of retained EU law in UK domestic law from this date.
15 January – Economic Crime and Corporate Transparency Act 2023 (Commencement No. 1) Regulations 2023 bring a small number of provisions of ECCTA 2023 into force on this date.
31 January – amendments to the Financial Promotion Order 2005 to reform exemptions relating to high net worth individuals and sophisticated investors are expected to come into force on this date.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
