Legal development

Ashurst Governance & Compliance Update - Issue 52

Ashurst Governance & Compliance Update – Issue 52

    Equity Capital Markets

    1. FCA publishes proposed changes to its Knowledge Base

    The FCA has published Primary Market Bulletin 48 which focuses on a number of changes to the FCA's Knowledge Base flowing from the proposed listing regime reforms set out in CP 23/31 (see AGC Update, Issue 46).

    In PMB 48, the FCA:

    Procedures, Systems and Controls Confirmation Form

    • Publishes a draft of the new Procedures, Systems and Controls Confirmation Form the FCA proposes to ask applicants for listing to submit with their formal listing application. 

      In CP 23/31, the FCA proposed to require, as part of the application for listing process, that a company’s board provide confirmation that the applicant has appropriate systems and controls in place to ensure it can comply with its ongoing listing obligations and the Listing Principles once admitted. This requirement is set out in draft UKLR 20.3.1R. A draft of this form can be viewed here.

    Notification to issuers

    • Provides information on the timing of notification to issuers of their expected new listing category should the changes proposed in CP 23/31 be adopted.

      The FCA is proposing to inform issuers before the new rules come into force about the category it expects their securities to be mapped to in the event that the proposals are implemented. The FCA expects such notifications to be sent out from mid-May. Issuers who believe they have been incorrectly allocated will have four weeks to revert to the FCA.

    Technical Notes

    • Confirms final technical note changes in relation to sponsor competence rules in Listing Rule 8, coinciding with final rule changes to Listing Rule 8 confirmed in Handbook Notice 118 on 26 April.

      In terms of sponsor competence rules, the FCA is extending the time period during which a sponsor must have submitted a sponsor declaration to the FCA from three to five years given the proposed changes relating to the scope of the sponsor regime and fluctuating market conditions which, together, provide less opportunity for sponsors to submit a sponsor declaration. The FCA is also introducing an alternative method for assessing competence which allows competence to be demonstrated by reference to experience gained from providing corporate finance advisory services in the previous five years to certain issuers, without the need to have previously submitted a sponsor declaration.
    • Consults on changes to a number of technical notes to reflect the proposed changes to the listing regime - including additional aspects of the sponsor regime - for example, Classification tests and Aggregating transactions.
    • Consults on the introduction of a new technical note relating to the role of a sponsor when an issuer, in certain circumstances, is able to transfer its listing using a modified process. This process, described in CP 23/31 and in the FCA's recently published updated draft instrument, is a modified form of the current Listing Rule 5.4A ‘Transfer between listing categories’ process.

    Phased approach 

    Given the scale of the changes proposed in CP 23/31, the FCA is adopting a phased approach to consulting on corresponding changes to the guidance in its Knowledge Base. As a result of this phased approach, some consultations on amendments to existing technical and procedural notes will take place after the implementation of the UKLR. In this first consultation, the FCA is focusing on existing technical notes that are considered to be key to supporting the understanding of the UKLR or that are most frequently used by market participants.


    In terms of timing, the deadline for responding to the FCA's proposed changes to its Knowledge Base is 26 May. The FCA notes that the materials remain subject to the wider outcome of its consultation process on the UKLR and the FCA board’s final decision on whether to proceed with the changes. The FCA expects to seek board approval of the final rules in June or July. By way of reminder, in CP 23/31, the FCA proposed a very short implementation period of two weeks.

    2. Capital-raising arrangements qualifying for exemption from 1.5% stamp duty and SDRT charge - additional HMRC guidance

    The Stamp Taxes on Shares manual has had further guidance added to clarify what constitutes a capital-raising arrangement for the purpose of the Finance Act 2024 exemption from the 1.5% charge to stamp duty or SDRT that otherwise applies on transfers to depositary receipt issuers and operators of clearance services. The guidance, added to paragraph STSM053100 of the Stamp Taxes on Shares manual, indicates that, for these purposes, capital-raising arrangements can include where:

    • no consideration is provided (for example, if the issue is a bonus issue).
    • the consideration provided is non-cash consideration (for example, if the consideration is in the form of assets).
    • consideration is provided, but it is directly received by another party (for example, if the consideration is given to a subsidiary of the issuer).

    For background on this, please see AGC Update, Issue 45.

    Climate Transition Plans

    3.  TPT sector guidance on climate Transition Plans 

    The Transition Plan Taskforce (TPT) has published two types of sector guidance to complement the TPT Disclosure Framework, namely the 'TPT Sector Summary' and the 'TPT Sector Deep Dives'. 

    The TPT Sector Summary provides an overview of transition plan guidance for 30 financial and real estate sectors while the TPT Sector Deep Dives provide sector-specific guidance to interpret the Disclosure Framework for seven sectors.

    The guidance documents were the subject of two consultations in 2023 (see Transition Plan Taskforce issues Disclosure Framework and consults on sector guidance and AGC Update,  Issue 44) and complete the suite of Transition Plan (TP) resources that the TPT committed to publish to support companies and financial institutions create consistent and comparable TPs and access transition finance. The TPT's work will conclude with the publication of a 'Forward Pathway' in UK summer/ autumn 2024.

    The TPT Sector Summary gives high-level guidance to TP preparers and provides a sector summary for each of the 30 sectors, including recognised decarbonisation levers, metrics & targets, and key sources of guidance for a TP in the relevant sector. 

    The TPT Sector Deep Dive Guidance is designed to help preparers in seven key sectors, namely Asset Managers, Asset Owners, Banks, Electric Utilities & Power Generators, Food & Beverage, Metals & Mining and Oil & Gas. The TPT selected the sectors based on their GHG emissions, their need for (or provision of) transition finance in the UK context, and the quality of existing guidance available in the market.

    Other materials published by the TPT alongside the sector guidance include guidance on the how to undertake a transition planning cycle, independent advisory pieces from TPT Working Groups on Adaptation, Nature, Just Transition and SMEs, and a paper on the opportunities and challenges of TPs in emerging markets and developing economies.

    The TPT Disclosure Framework is expected to form the basis of the UK government's commitment to make the production and disclosure of TP's mandatory for large public and private companies. A consultation on those requirements is anticipated later this year. The FCA has also said it would consult on TP disclosures by listed companies in line with the TPT Framework, alongside its consultation on implementing UK-endorsed ISSB Standards. This consultation is also anticipated in 2024 with a view to these changes taking effect for financial years beginning on or after 1 January 2025 (see AGC Update, Issue 41).

    Sustainability Reporting 

    4.  IFRS Foundation and EFRAG publish Interoperability Guidance to help companies comply with both standards

    The IFRS Foundation and EFRAG have published Interoperability Guidance, which explains the alignment between the EU Sustainability Reporting Standards (ESRS) and the ISSB sustainability disclosure standards (SDS) on issues such as materiality and presentation as well as defined terms. The guidance aims to reduce the reporting burden on companies by explaining how they can avoid duplication when complying with both sets of standards. The press release states that the next step for EFRAG and the IFRS is digital interoperability guidance. 

    Section 3 of the guidance explains what a company starting with the ESRS needs to know when applying the ISSB standards and Section 4 explains what a company starting with the ISSB standards needs to know to also comply with the ESRS. Section 4.2 highlights the disclosures in ESRS E1 that do not have an equivalent requirements in IFRS S1 or S2.

    For more information on the ESRS and ISSB SDS, see First European Sustainability Reporting Standards (ESRS) apply from 1 and Disclosures required under the IFRS's Sustainability Disclosure Standards (ISSB S1 and S2).

    5.  MEPs approve delayed European Sustainability Reporting Standards (ESRS) for some companies 

    The European Parliament has agreed to postpone by two years the adoption of sector-specific sustainability reporting standards for EU companies under the Corporate Sustainability Reporting Directive and general sustainability reporting standards for non-EU companies.

    EU companies will still have to report, as planned, in line with general sustainability reporting standards adopted by the Commission in July 2023. However, later adoption of sector-specific standards for EU companies affects the extent of reporting, as the sector-specific requirements concerning companies’ particular impact on people and the planet in their area of activity will not be required before 2026. 

    As the general reporting obligations for non-EU companies with turnover above 150 million Euros and their branches in the EU with turnover above 40 million Euros will only start to apply in 2028, the adoption of sector-specific reporting obligations in 2026 should still afford them sufficient time to prepare.

    6.  EU adopts Corporate Sustainability Due Diligence Directive (CS3D)

    The Corporate Sustainability Due Diligence Directive (CS3D), requiring in-scope companies to adopt a risk-based due diligence policy to identify and assess actual or potential adverse human rights and environmental impacts, has been approved by the EU Parliament with significant changes to the text provisionally agreed in December 2023.

    Fewer and larger companies are now in-scope and those companies will have longer to comply with the requirements. Nevertheless, the Directive will still have a global impact on the basis that even companies which are out of scope may still be impacted where they are direct business partners of in-scope companies which may request due diligence information from them.

    For more detail on the CS3D regime, including the thresholds at which companies will be considered to be in-scope, see our summary here - EU adopts Corporate Sustainability Due Diligence Directive (CS3D).

    Economic Crime and Corporate Transparency

    7.  Companies House publishes guidance on removing an overseas entity from the register 

    Companies House has published guidance on applications to remove an overseas entity from the register of overseas entities (RoE). 

    If an overseas entity is not, or is no longer, a registered owner (proprietor) of relevant property or land in the UK, it can apply to be removed from the ROE under s.9 Economic Crime (Transparency and Enforcement) Act 2022

    The guidance covers when removal applications can be made, the fact that Land Registry searches should be carried out before any such application and covers the updated information about the entity and its beneficial owners that must be provided to Companies House as part of the application.  

    Information about an overseas entity and its beneficial owners will continue to be publicly available after it has been removed from the RoE. 

    8. House of Commons Library publishes research briefing on reforms to Companies House

    The House of Commons Library has published a briefing  which considers recent and prospective reforms to Companies House and the company registration regime in the UK, with a particular focus on the provisions of the Economic Crime and Corporate Transparency Act 2023 many provisions of which came into force on 4 March 2024. The briefing also looks at some of the perceived issues and limitations of the reform including the ease of corporate incorporation, cost of reform and outstanding challenges.

    Authors: Will Chalk, Partner; Rob Hanley, Partner; Marianna Kennedy, Senior Associate, Vanessa Marrison, Expertise Counsel; Becky Clissman, Counsel. 

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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