Ashurst Governance & Compliance Update – Issue 70
27 August 2025
Economic Crime and Corporate Transparency
1. Mandatory identity verification commencement confirmed
Companies House has confirmed that mandatory identity verification (IDV) for directors, LLP members and persons with significant control of companies (PSCs) will be effective from 18 November 2025 and has updated its ECCTA 2023 transition plan accordingly. Companies House has also revised its general IDV guidance and specific IDV guidance explaining when mandatory IDV will apply according to an individual's role as a director, LLP member or PSC.
In AGC Update, Issue 64 – Item 1 we recommended that ahead of IDV becoming mandatory, directors and PSCs should voluntarily verify their identity as soon as possible after 8 April 2025. Our article also addressed various questions including:
How can a director voluntarily verify their identity?
How can a director verify their identity directly with Companies House?
How can a director verify their identity indirectly with Companies House by using an ACSP?
Who else can voluntarily verify their identity with Companies House from 8 April 2025?
When will it become compulsory for directors to verify their identity?
What if a director fails to verify their identity after it becomes compulsory to do so?
What if a PSC fails to verify their identity after it becomes compulsory to do so?
Should directors use the existing window to voluntarily verify their identity?
Do individuals that file information at Companies House need to verify their identity?
When do individuals filing information at Companies House need to verify their identity?
What will mandatory IDV mean for new directors, LLP members and PSCs?
Identity verification will become a mandatory part of new company or LLP registrations, as well as part of the process when individuals are appointed as new directors, LLP members and/or become PSCs. Once an individual has successfully verified their identity, they receive a personal code from Companies House.
From 18 November 2025:
New directors must provide their personal code as part of the process of being appointed to an existing company or when a new company is registered. Failure to do so will prevent the individual from acting as a director of the company.
New LLP members must provide their personal code as part of the process of being admitted to an existing LLP or when a new LLP is registered. Failure to do so will prevent the individual from acting as a member of the LLP.
New PSCs must provide their personal code as part of the process of being registered as a PSC.
What will mandatory IDV mean for existing directors, LLP members and PSCs?
Existing directors, LLP members and PSCs must verify their identity during a 12-month transition period commencing on 18 November 2025:
Existing directors must provide their personal code as part of their company's next confirmation statement filing. Individuals with more than one directorship must do this for each company of which they are a director. If a company's confirmation statement filing is late, the relevant director cannot act until it is delivered.
Existing LLP members must provide their personal code as part of their company's next confirmation statement filing. Individuals that are members of more than one LLP must do this for each LLP of which they are a member. If an LLP's confirmation statement filing is late, the relevant member cannot act until it is delivered
Existing PSCs, who are also directors of the same company, must provide their personal code as a director as part of the company's confirmation statement filing, and must provide their personal code as a PSC within 14 days of the company's confirmation statement date (via a service which will be made available when the requirement comes into force). An existing PSC of an LLP who is also a member of that LLP is expected to be subject to similar obligations.
Existing PSCs, who are not also directors of the same company, must provide their personal code within the first 14 days of the first day of their birth month. For example, if their date of birth is 22 January, their 14 day period will begin on 1 January. An existing PSC of an LLP who is not also a member of the LLP is expected to be subject to a similar obligation.
Companies House has indicated that from 18 November 2025, directors and PSCs will be able to check the register to see the identity verification due dates for all their roles.
When will IDV measures for other individuals and entities become mandatory?
Identity verification requirements for individuals filing at Companies House, limited partnerships, corporate directors of companies, corporate members of LLPs and officers of corporate PSCs are likely to be introduced in 2026.
2. Changes to local and central company registers
From 18 November 2025, the existing company law requirements for companies to maintain their own registers of directors, directors' residential addresses, secretaries and PSCs will be removed. Instead, companies will be required to file information held in these registers at Companies House.
In addition, the existing option for companies to elect to keep information that must be recorded in its register of members on the central register at Companies House will be removed. This will mean that all companies will be required to maintain their own register of members.
The draft Economic Crime and Corporate Transparency Act 2023 (Consequential, Incidental and Miscellaneous Provisions) Regulations which make various further consequential legislative changes arising from the abolition of the requirement for companies to keep these statutory registers were published in July 2025 together with an Explanatory Memorandum.
3. Updated joint SFO-CPS Corporate Prosecution Guidance published
The UK's Crown Prosecution Service and Serious Fraud Office have published updated guidance on their common approach to the prosecution of corporate offending.
The updated guidance highlights the new legal routes to corporate criminal liability in the UK, following the introduction of the failure to prevent fraud offence and the new test for attributing liability for economic crime offences committed by senior managers under the Economic Crime and Corporate Transparency Act.
By way of reminder, the failure to prevent fraud offence comes into force on 1 September 2025 (see AGC Update, Issue 58 – Item 1) whereas the new senior manager test for corporate liability came into force in December 2023. These developments are designed to lower the threshold that prosecutors are required to meet in order to hold companies to account for criminal conduct within their businesses. The guidance therefore serves as a reminder to companies that the statutory toolkit for prosecuting corporate criminal conduct has expanded.
Companies should consider their increased risk of corporate criminal liability as a result of these developments and ensure that they have proportionate, risk-based prevention procedures in place in line with the Government guidance on each of the failure to prevent offences.
4. Home Office publishes Modern Slavery Act reporting template for companies operating in the UK, Australia and Canada
The UK Home Office has published an optional template to serve as a guide and to streamline compliance with overlapping supply chain transparency requirements in the United Kingdom, Australia and Canada.
By way of reminder, in the UK, under section 54 of the Modern Slavery Act 2015, organisations that carry on business in the UK, supply goods or services and have an annual turnover of £36m or more must publish a slavery and human trafficking statement. More recently, the government updated its statutory guidance on how businesses should comply with this requirement (see AGC Update, Issue 64 – Item 6). There is no prescribed content for such a statement in the UK. Equivalent legislation exits in Australia and Canada, albeit in those jurisdictions, there are mandatory content requirements for the statements of in-scope entities which are reflected in the template.
Payment Practices
5. DBT published Small and Medium Sized Business Plan and consultation on late payments
The Department for Business and Trade has published its Small and Medium Sized Business Plan, which sets out various proposals to support such businesses, including by tackling the late payment of business to business invoices.
To this end, the DBT has also published a consultation requesting views on possible legislative measures to address late invoice payments. The proposals are in addition to the extension of Payment Practices Reporting (see AGC Update, Issue 47 – Item 3 and AGC Update, Issue 57 – Item 4) together with associated updated guidance (see AGC Update, Issue 63 – Item 3), the launch of the Fair Payment Code (see AGC Update, Issue 60 – Item 2) and requirements for large companies to report on their payment practices in annual reports (see AGC Update, Issue 69 – Item 1).
This latest consultation proposes various measures, including:
- Increasing board level scrutiny of the payment practices of large companies. The consultation suggests that:
- audit committees be required to comment on, and make recommendations regarding, payment practices to boards before company data is provided to government and included in an annual report. This would include scrutiny of information provided as part of a company's bi-annual payment practices reporting filings and information on late payments; and
- the Small Business Commissioner write to audit committees and boards when: (i) undertaking payment performance reporting assurance; and (ii) when investigating any other matter relating to a company's payment practices.
- Maximum payment terms and dispute deadlines. The consultation proposes to amend The Late Payment of Commercial Debts (Interest) Act 1998 to remove the exemption that allows businesses to agree to payment terms longer than 60 days if considered not ‘grossly unfair’. It would also introduce a 30-day invoice verification period such that businesses who wish to raise a dispute will need to do so within 30 days of receiving an invoice, otherwise they will be liable to pay the invoice in full within the agreed payment terms, alongside any statutory interest or debt recovery costs if the invoice is paid late. A further proposal would amend the 1998 Act to make the statutory interest rate on late payments mandatory.
- Additional reporting requirements. Amending the current payment practices reporting regime so that qualifying companies are obliged to report on total statutory interest owed and paid in the relevant reporting period.
- Financial penalties. Introduce new legislation, which gives the Small Business Commissioner powers to issue financial penalties to businesses who persistently pay their suppliers late.
The government is also considering amending the current reporting obligations to require large companies to report payment information annually as opposed to twice a year as is currently required.
Privilege and the Shareholder Rule
6. Abolition of the Shareholder Rule confirmed
As reported in AGC Update, Issue 60 – Item 15, Mr Justice Picken held in the High Court that the Shareholder Rule does not, in fact exist. By way of reminder, the Shareholder Rule prevented companies from asserting legal advice privilege against their own shareholders during litigation (unless litigation privilege applied).
The Privy Council has now confirmed the abolition of the Shareholder Rule and ordered that its decision be followed by the courts of England and Wales. This means that companies may assert privilege against shareholders enabling them to seek and receive legal advice without needing to be concerned that such advice may need to be disclosed to shareholders in litigation.
Stewardship Code
7. Latest signatories to UK Stewardship Code announced
The Financial Reporting Council has published the list of successful signatories to the UK Stewardship Code 2020 following the latest round of applications. The Code now has 299 signatories representing £56 trillion assets under management, including 199 asset managers, 21 service providers and 79 asset owners, two of whom are new additions.
These signatories join under the current 2020 Code framework. As the FRC implements the revised UK Stewardship Code 2026, existing signatories will have the opportunity to report to the new framework during a transition year in 2026. For more information on the forthcoming transitional reporting year and the 2026 iteration of the Stewardship Code, see AGC Update, Issue 67 – Item 1.
Equity Capital Markets
8. FCA publishes review of share buybacks in UK listed equities
The FCA has published the findings of its review of share buybacks conducted by investment banks on behalf of FTSE 350 companies.
Aim of the FCA review
There has been significant growth in share buybacks in the UK recently. In the three years post-COVID, share buybacks accounted for 42% of the capital returned to shareholders by FTSE 350 issuers - more than double the 20% in the three years pre-COVID. As banks play a key role in the process, the FCA's aim was to assess the outcomes banks deliver when structuring, marketing and executing share buybacks.
How the FCA carried out its review
The FCA chose a sample of seven investment banks offering share buyback services, asking them to provide detailed information on transactions they had executed for listed companies. The FCA analysed data on share buybacks executed by these banks for FTSE 350 issuers (who were not investment companies) over an 18-month period, representing 165 share buybacks collectively worth £40 billion. The FCA also engaged more widely with listed companies, investor representatives and trade associations.
Key findings
Overall, the FCA was satisfied with the outcomes delivered by banks in the sample when carrying out buybacks. The FCA observed a range of fees for both agency buybacks (where the bank buys shares on a best-efforts basis and receives a commission-based fee) and structured buybacks (where the bank may provide a guarantee and receives a variable fee), although the average fee paid by issuers was not significantly different across both buyback types. Specifically on structured buybacks, the FCA did not find unmanaged conflicts in the way the products were executed.
Banks in the sample followed broadly similar approaches in terms of marketing and educational materials on buyback structures. Most of the approaches were considered to be reasonable, but the FCA also found areas where some banks could improve materials, including to explain how structured buybacks work in greater detail and the potential outcomes of structured buybacks.
During the FCA's engagement, some banks, issuers and investor representatives identified features from the UK Listing Rules and the UK Market Abuse Regulation which could weaken the efficiency of an issuer’s buyback programme. The FCA will consider this feedback in any future review of the relevant rules, with the aim of reducing regulatory burdens and removing requirements that may disproportionately affect issuers undertaking share buybacks.
Sustainability
9. ISSB issues Exposure Drafts on Proposed Amendment to SASB Standards
The International Sustainability Standards Board has published Exposure Drafts proposing amendments to the SASB Standards and consequential amendments to the Industry-based Guidance on Implementing IFRS S2, in July 2025.
The Exposure Drafts propose comprehensive amendments to the SASB Standards for nine priority industries including coal, construction materials, iron & steel, metals & mining, oil & gas, and processed foods. They also propose targeted changes to another 41 SASB Standards on common topics such as greenhouse gas emissions, energy and water management, labour practices, and workforce health and safety to ensure those standards remain aligned with the nine being amended. Changes are proposed to the Industry-based Guidance as it is based on the SASB Standards so the changes are needed to align the guidance with the revisions to the SASB Standards.
By way of reminder, the SASB Standards are a source of guidance for entities applying the ISSB's sustainability reporting standards (IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 - Climate-related Disclosures). IFRS S1 requires entities to consider the metrics and associated disclosure topics in the SASB Standards when identifying sustainability-related risks and opportunities and associated disclosure requirements. The revised SASB Standards will, therefore, be relevant to UK companies required to make sustainability disclosures based on the UK endorsed version of IFRS S1 and S2. The UK government is currently consulting on the adoption of S1 and S2 (see UK Government consults on adopting ISSB sustainability reporting standards and mandating Transition Plans to develop a sustainability reporting framework). The revised SASB Standards will also be relevant to companies that apply the standards on a voluntary basis in their sustainability reporting.
The consultation on the Exposure Drafts closes on 30 November 2025. The ISSB's project to enhance the SASB Standards is being completed in phases. The ISSB also intends to publish further Exposure Drafts with proposed amendments to three more prioritised industries before the end of 2025 (Agricultural Products, Meat, Poultry & Dairy and Electric Utilities & Power Generators).
10. EFRAG publishes Exposure Drafts of simplified ESRS for consultation
EFRAG, formerly known as the European Financial Reporting Advisory Group - the body that advises the EU Commission on developing sustainability reporting standards - has published twelve Exposure Drafts of the revised European Sustainability Reporting Standards (ESRS) together with supporting guidance and other documents.
The revised ESRS are part of the EU's first Omnibus Package which, amongst other things, aim to reduce the reporting burden on entities in scope of the Corporate Sustainability Reporting Directive (CSRD) (see EU Commission publishes first Omnibus Package to simplify sustainability regulations). The EU Omnibus proposed that the first versions of the ESRS, which applied from 1 January 2024, should be simplified as they were widely regarded as overly detailed and burdensome for reporting entities.
The Exposure Drafts propose amendments to the ESRS to:
Reduce by 57% the number of mandatory datapoints that entities in-scope of the CSRD report (if material to their business) and remove all voluntary disclosures.
Streamline the double materiality assessment (DMA) required to assess what datapoints should be reported. The changes allow for a 'top-down' strategic approach focusing on the sustainability topics that are material to the business and its stakeholders and that moves reporting entities away from a process-focused approach where the list of matters in ESRS 1 was used as a checklist to document the non-materiality of issues.
Reduce the overlaps across the various ESRS and improve interoperability with other international reporting standards, in particular the ISSB's sustainability reporting standards (IFRS S1 and S2).
Clarify the language and structure of the ESRS to improve readability and make the standards more concise. Options suggested include an executive summary at the beginning of the sustainability statement and the use of appendices to disclose granular information such as detailed metrics.
Introduce new relief mechanisms, such as exemptions where reporting would cause undue cost or effort or regarding disclosing quantitative information on financial effects.
The Commission has asked EFRAG to provide it with technical advice on revisions to the ESRS by 30 November 2025. This will allow the Commision to adopt a delegated act containing the revised ESRS within 6 months after entry into force of the Content Directive currently being negotiated by the EU legislators and containing substantive revisions to the CSRD and the Corporate Sustainability Due Diligence Directive (see EU Parliament adopts Stop-the-clock Omnibus Proposal and process to simplify ESRS starts).
The consultation on the Exposure Drafts closes on 29 September 2025.
If you would like to receive future Ashurst Governance & Compliance updates, please click here to sign up.
