Ashurst Governance & Compliance Update – Issue 72

Economic Crime and Corporate Transparency

1. Identity verification for directors, LLP members and PSCs imminent

We have previously reported that, with effect from 18 November 2025, company directors, LLP members and persons with significant control (PSC) of companies or LLPs must comply with the new identity verification (IDV) provisions introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

In AGC Update, Issue 63 - Item 10 we set out a series of Q&A's on the new IDV requirements and suggested that directors of companies should verify their identity on a voluntary basis as soon as possible after 8 April 2025.

In AGC Update, Issue 70 – Item 1 we reported on the implications of identity verification for new and existing directors, LLP members and PSCs.

New regulations: On 23 October 2025, the government issued regulations that come into force on 18 November 2025 and facilitate the new IDV regime. The regulations include:-

• The ECCTA (Commencement No. 6 and Transitional Provisions) Regulations 2025 which commence the ECCTA provisions relating to IDV for directors, LLP members and PSCs, as well as including provisions for certain transitional cases.
• The Companies and Limited Liability Partnerships (Annotations, Application and Modification of Company Law and Consequential Amendments) Regulations 2025 which require the registrar of companies to annotate the register to indicate that an individual director, LLP member or PSC has successfully verified their identity, and bring unregistered companies within the scope of the IDV regime.

Further action: Any businesses that have not yet prepared for the upcoming IDV changes should address the issue as a matter of urgency. By way of reminder, after 18 November 2025, a person will not be able to act as a director or LLP member unless they have verified their identity by the time of the submission of the confirmation statement of each company of which they are a director. An individual who fails to verify their identity and continues to act as a director or LLP member, and a company or LLP that fails to ensure that an individual has been verified, will commit a criminal offence. Failure to verify will also attract civil penalties issued directly by Companies House. However, the validity of the acts of an unverified director or LLP member will be unaffected.

Narrative and Financial Reporting

2. HM Treasury updates on progress of its regulation action plan

HM Treasury has published a progress update to its regulation action plan. By way of reminder, various measures have already been brought forward including raising qualification thresholds for corporate reporting and removing what the government considered to be redundant or duplicative disclosures from directors' reports (see AGC Update, Issue 60 - Item 7) and streamlining directors' remuneration reporting (see AGC Update, Issue 63 – Item 4).

The update includes an announcement that the government will bring forward further changes to the corporate reporting landscape including:

• Exempting most medium-sized private companies from the requirement to produce a strategic report in their annual report.
• Exempting wholly owned subsidiaries from producing a strategic report where they are covered by the reporting of a UK parent.
• Removing the requirement to produce a directors' report, with some underlying provisions to be removed entirely, and others relocated elsewhere in the annual report.

The government also states its intention to expand the scope of its non-financial reporting review pre-consultation to include financial, remuneration and corporate governance reporting, as well as consideration of how reporting can be modernised for the digital age. A consultation on these issues will be undertaken in 2026.

The update also notes that:

• The Financial Reporting Council will, by early November 2025, publish updated UK Corporate Governance Code guidance clarifying that the payment of non-executive directors in shares is appropriate. This is in order to enhance the ability of UK listed companies to attract talent.
• The government is working with the Investment Association so as to discontinue the IA's public register of shareholder dissent to board approved resolutions, believing that the register has served its purpose and is duplicative of the UK Corporate Governance Code.

Alongside the publication of the update, the Department of Business and Trade and HM Treasury have published a call for evidence asking businesses to provide their views on regulations they think are not fit for purpose or which inhibit growth, innovation and investment. The call for evidence, which closes on 16 December 2025, asks for evidence of specific rules that impose direct or indirect costs on businesses or which delay or prevent future business opportunities being taken up.

The ministerial statement on the reform of corporate reporting can be found here.

Relatedly, the FRC has announced that it will be holding an online roundtable session on Tuesday 18 November 2026, from 11:30 to 13:00, in order to seek views on what stakeholders find useful about its current review processes and publications, and what they may want to see more or less of in future reviews. The FRC is predominantly looking for feedback from UK companies who follow the UK Corporate Governance Code. Those interested in taking part should email: stakeholderengagement@frc.org.uk.

3. FRC publishes corporate reporting insights: reporting by investment companies and on share-based payment arrangements

The FRC has published two thematic reviews designed to enhance the quality of, and provide insights into, UK company reporting in respect of investment companies and share-based payment arrangements.

Both the reviews focused on highlighting the importance of clarity and consistency in financial reporting, especially where judgement and complex valuation models are involved. From equity-settled awards to fair value measurements of unquoted investments, the reviews seek to shed light on common pitfalls and showcase good practice.

The share-based payment thematic review examines how companies have applied IFRS 2 ‘share-based payment’, a standard that requires judgement and modelling to value share-based transactions, such as those used in employee compensation packages. This review highlights varying quality in share-based payment disclosures. While many companies provided clear and concise policies and disclosures, some showed inconsistencies – such as unexplained cash outflows despite describing awards as equity-settled.

The investment companies thematic review provides insights into the reporting by investment trusts, venture capital trusts and other closed-ended investment entities. While the FRC considers that these entities’ financial statements are generally straightforward, it has identified recurring issues, particularly disclosures around Level 3 fair value measurements. This thematic review sets out key recommendations and areas for improvement, including improved disclosures around the quantification of significant unobservable inputs and assumptions, and related sensitivities, for Level 3 valuations.

For our overview of the FRC's 2025 Annual Review of Corporate Reporting, see AGC Update, Issue 71 – Item 8.

4. FRC issues October consultations

The FRC has published four consultations as part of its scheduled October release, seeking stakeholder input on updates to its Audit Enforcement Procedure, revisions to audit and audit reporting standards, and a proposal to maintain FRS 101 'Reduced Disclosure Framework' with no changes following the standard’s annual review.

Equity Capital Markets

5. Regulations to implement new prospectus regime published

The Financial Services and Markets Act 2023 (Commencement No. 11 and Saving Provisions) Regulations 2025 have been published. The regulations set commencement dates for the revocation of assimilated law (formerly 'retained EU law'), including the repeal of the current UK Prospectus Regulation regime, which will be revoked on 19 January 2026.

The existing regime will be replaced by the new public offers and admissions to trading regime, which will come fully into force on the same date under the Public Offers and Admissions to Trading Regulations 2024 (POAT Regulations). The FCA's rules relating to admissions to trading set out in the Prospectus Rules: Admission to Trading on a Regulated Market (PRM) sourcebook will also come into effect on the same date.

The commencement regulations include saving provisions, preserving the application of the existing prospectus regime in relation to:

• offers of transferable securities to the public made before 19 January 2026;

• requests for admission to trading on a regulated market made before 19 January 2026; and

• prospectuses approved by the FCA before 19 January 2026.

The Public Offers and Admissions to Trading (Amendment and Consequential and Transitional Provisions) Regulations 2025 have also been published. Amongst other things, the regulations contain transitional provisions to allow FCA-authorised firms to undertake the new regulated activity of operating a public offer platform pending the grant of FCA permission to do so, and make consequential amendments to other financial services legislation, ensuring consistency with the POAT Regulations.

For our overview of the regime and latest developments, see AGC Update, Issue 69 – Item 3.

6. Prospectus review processes and proposed changes to FCA Knowledge Base published

The FCA has published Primary Market Bulletin 58 which focuses on the implementation of the new public offers and admissions to trading (POAT) regime, which will come into effect on 19 January 2026 (see item 5 above).

In this PMB, the FCA:

• provides information on processes and timings for submitting documents in the period before the new POAT regime is implemented and reminds market participants of other impending changes arising from the new regime;

• consults on proposed changes to its Knowledge Base in anticipation of the POAT regime, as previously signalled; and

• gives feedback on its consultation in PMB 57 and finalises two Technical Notes in relation to the sponsor regime and prospectus requirements for issuers with a complex financial history.

Implementation of POAT regime

The PMB provides updates on FCA processes ahead of the implementation of the new POAT regime including the following:

• Prospectus submissions
  
  The FCA will be able to approve documents under the new Prospectus Rules: Admission to Trading on a Regulated Market / PRM sourcebook from 19 January 2026 when the PRMs come into force.
  
  From 1 December 2025, issuers will be able to submit a draft prospectus, registration document, universal registration document and/or a securities note and summary prepared under the new framework for review, with a view to seeking approval on or after 19 January 2026. This can be done as usual via the Electronic Submission System. Prospectuses can either be approved (i) before 19 January 2026 if prepared under the existing regime or (ii) on or after 19 January 2026 if prepared under the new regime. If approval of documentation is sought prior to 19 January 2026, the last day of approval under the existing regime is 16 January 2026.
  
  On or around 24 November 2025, the FCA aims to publish the new forms and checklists to accompany submissions of draft documents prepared under the new regime for issuers seeking approval on or after 19 January 2026. Issuers will also need to submit an additional short form for any review under the new framework from 1 December 2025 until 16 January 2026, highlighting that the draft documentation is being submitted in readiness for the implementation of the new regime and confirming the applicable new PRM prospectus cross-reference checklists.

• Timing of prospectus reviews
  
  FCA turnaround times will be suspended between 22 December 2025 and 2 January 2026 (inclusive). As the FCA anticipates a busy period in the lead up to and following the implementation of the new regime, it is unlikely to be able to expedite its turnaround times. Advisers are encouraged to contact the FCA where an issuer is seeking approval of a prospectus before 19 January 2026.

• Sponsor declarations
  
  The FCA intends to publish revised sponsor declaration forms before December 2025.

• MTF admission prospectus
  
  The FCA reminds market participants that the POAT regime introduces the new regulatory concept of an MTF admission prospectus, which will be required for admissions to trading on UK primary MTFs - such as AIM - in certain circumstances. The specific content requirements and the process for reviewing and approving these documents will be set by the relevant MTF operator, i.e. the London Stock Exchange in the case of AIM.

• Changes to the UK Listing Rules for further issuances
  
  The FCA also reminds market participants that from 19 January 2026 the UK Listing Rules (UKLRs) will no longer require an issuer with an existing listed class of securities to apply for admission to listing for a further issue of those securities; the FCA will treat subsequent issuances of the same class as ‘automatically listed’ when issued. However, issuers will still need to seek admission to trading on the relevant market and should continue to liaise with exchanges accordingly.
  
  The last date for listing hearings of further issues of securities where the class of securities is already listed on the Official List under the existing UKLRs will be 15 January 2026, with admission on 16 January 2026.

• Proposed changes to the Knowledge Base
  
  In light of the scale of the changes consequential on the new POAT regime, the FCA is adopting a staged approach to consulting on corresponding revisions to its Knowledge Base guidance. This initial consultation includes four new guidance notes, proposed changes to 42 existing guidance notes and the deletion of seven guidance notes.
  
  The new guidance notes relate to:

• content of the prospectus exemption document for takeovers, mergers and divisions;

• preparation of protected forward-looking statements;

• fungible securities; and

• content of a prospectus where there is an exempt public offer under the POAT Regulations as the offer is conditional on the admission of the transferable securities to trading on a regulated market.

Working capital

The FCA also indicated in PS 25/9 that it would look to consult on additional guidance for climate-related disclosures and working capital statements (among other topics) (an overview is in this Ashurst update here). In line with this, the FCA is consulting on revised Primary Market/TN/619 - Guidelines on disclosure requirements under the PRM sourcebook and Guidance on specialist issuers, which includes an updated section on the basis of preparation of working capital statements. In this section, the FCA has introduced guidelines that permit issuers to:

• Provide additional disclosures, in limited circumstances, alongside a clean working capital statement explaining the basis on which the statement has been prepared; and

• Include ‘uncommitted’ facilities in their working capital calculations in certain circumstances.

Sustainability

In respect of updated guidance on climate and sustainability-related disclosures to reflect the new POAT regime, the FCA is consulting on revised Primary Market/TN/801 - Disclosures in relation to sustainability matters, including climate change, which includes, amongst other things, new guidance covering the application of the PRM climate disclosure rule for certain issuers of equity securities and depositary receipts over shares and the application of the protected forward-looking statements regime to sustainability-related information.

Next steps

The FCA requests comments on its proposals by:

• 5 December 2025 for all the new Technical Notes as well as certain other revised guidance including (amongst others) amendments to Technical Note 619 and Technical Note 801 outlined above; and

• 21 November 2025 for all other Technical Notes.

The FCA aims to finalise the Technical Notes on which it is currently consulting shortly and before the new rules take effect in January 2026.

Finalised changes to Knowledge Base

Further to its consultation in PMB 57 (see AGC update, Issue 69 – Item 6), the FCA has published (i) an updated Primary Market/TN/710.2: Sponsor Services: Principles for Sponsors and (ii) a new Primary Market/TN/638.1: Guidance on application of complex financial history and significant financial commitment rules. The FCA is however consulting on further changes to both Technical Notes in PMB 58 for the POAT regime.

7. FCA publishes Primary Market Bulletin 59 with a focus on delayed disclosure under UK MAR

Delaying disclosure under UK MAR

As part of Primary Market Bulletin 59, the FCA has published a review of delayed disclosure of inside information (DDII) notifications received under Article 17(4) of the UK Market Abuse Regulation (UK MAR), which allows issuers to delay public disclosure of inside information under certain conditions. This follows the FCA's previous review of DDII notifications in November 2020, which it has used as a comparator.

Article 17 of UK MAR

By way of reminder, Article 17(1) of UK MAR requires, among other things, an issuer to inform the public as soon as possible of inside information which directly concerns that issuer. However, Article 17(4) allows an issuer to delay disclosure to the public of inside information if all the following conditions are met:

• Immediate disclosure is likely to prejudice the legitimate interests of the issuer.
• Delay of disclosure is not likely to mislead the public.
• The issuer is able to ensure the confidentiality of that information.

Issuers must immediately inform the FCA that disclosure of the inside information was delayed after disclosure to the public through a DDII notification and, if the FCA so requests, provide a written explanation of how the conditions permitting delay were met.

The FCA also reminds market participants of Listing Principle 1, which requires listed companies to take reasonable steps to establish and maintain adequate procedures, systems and controls to enable them to comply with their obligations and which extends to disclosure obligations under Article 17(4). The AIM Rules for Companies contains similar expectations.

The FCA review

For the purpose of its review, the FCA considered DDII notifications submitted to it by issuers from 1 April 2022 to 31 March 2024. The notifications related to issuers on the Main Market, AIM, the Aquis Main and Growth Markets, the Professional Securities Market and the International Securities Market, as well as requests for admission to trading.

The FCA categorised the DDII notifications into nine categories based on the information they contained. The categories followed those used in the FCA's November 2020 review, with the addition of a new category for announcements of PDMR's transactions. The FCA then calculated the average time between the decision to delay disclosure and the disclosure of the information to the public.

Key findings

• There was a 39% decrease in DDII notifications per day compared to the previous review.
• Approximately 18% of equity issuers on the trading venues reviewed submitted DDII notifications, down from 25% previously.
• The average delay in disclosure increased by seven days to 35.2 days, though delays for unscheduled financial information decreased by six days.
• The majority of notifications related to 'M&A', 'business updates' and 'placings and corporate finance'.
• Debt-only issuers made significantly fewer notifications than equity issuers.
• The proportion of equity issuers submitting DDII notifications on AIM (17%), the Aquis markets (3%) and the Professional Securities Market and the International Securities Market (3%) was lower than on the Main Market (21%).
• 43 issuers submitted at least one DDII notification seven or more days after the inside information was disclosed to the public.

Overall volume of notifications

As noted above, 835 DDII notifications were submitted during the review period, marking a 39% decrease in the average daily number of notifications compared to the previous review period. The FCA's previous review included the period immediately after the onshoring of UK MAR and the FCA suggests that it may have taken issuers time to update their compliance processes as a result. An increase in notifications was therefore anticipated by the FCA rather than the notable decrease.

The FCA notes that a drop in DDII notifications does not necessarily signal a deterioration in compliance with Article 17(4) and that it is possible that less inside information was identified by issuers, or that issuers had chosen to delay disclosure of inside information less often. Alternatively, there is a risk that some issuers, having delayed disclosure in accordance with Article 17(4), failed to submit the required DDII notifications to the FCA following public disclosure. The FCA highlights that this would constitute a breach of Article 17(4) and that it has followed-up with issuers and will continue to do so.

Volume of notifications by category

Findings relating to the volume of notifications by category aligned with FCA expectations. The highest volume of notifications related to 'M&A' (196), ‘business updates’ (161) and ‘placings and other corporate finance’ (158).

Average delay periods

The overall average period between the date of the decision to delay disclosure and the date when the inside information was disclosed to the public was 35.2 days. This reflected an unexpected increase of approximately seven days. Whilst there are likely to have been a range of issuer-specific reasons for this increase, the FCA notes that extended delay periods heighten the risk that the conditions for delay under Article 17(4) may no longer be satisfied, particularly the requirement to maintain confidentiality.

Average delay periods by category of notification

An area of focus for the FCA from its previous review was the delay periods for notifications relating to unscheduled and periodic financial information. Here, the FCA found a decrease of approximately six days in the average delay for the ‘unscheduled financial Information’ category, from around 21 days to 15 days. There was also a decrease of approximately three days for the ‘periodic financial information’ category, to an average of 15 days.

Delays in submitting notifications

43 issuers submitted at least one DDII notification to the FCA seven or more days after the inside information was disclosed to the public. Article 17(4) requires that issuers inform the FCA that disclosure of the information was delayed immediately after the information is disclosed to the public. The FCA reminds issuers to submit a DDII notification promptly to ensure compliance with Article 17(4).

Outliers and FCA engagement

Certain issuers were notable outliers in terms of the length of delay periods, delays in notifying the FCA and the number of DDII notifications made. The FCA engaged with these issuers to assess underlying causes, and whilst no serious compliance breaches were identified, some issuers demonstrated uncertainty in classifying and processing information, resulting in unnecessary classifications and notifications.

The FCA advises issuers to review their policies and procedures and arrange training for relevant staff. It highlights that it will continue to monitor significant outliers and follow-up with issuers where necessary.

Enhancing the National Storage Mechanism

The FCA reminds issuers that changes to introduce new metadata requirements in respect of the NSM (as set out in PS24/19) take effect on 3 November 2025. For more detail, see AGC Update, Issue 60 – Item 6.

Dematerialisation of Shareholdings

8. Dematerialisation Market Action Taskforce constituted 

HM Treasury has established the Dematerialisation Market Action Taskforce (DEMAT) to advance reforms to the UK’s shareholding framework. This follows the publication of the Digitisation Taskforce's final report in July 2025 which recommended a staged approach to removing paper share certificates and ultimately moving to a fully intermediated system of shareholding in the UK (see AGC Update, Issue 69 – Item 6). The government accepted the report's recommendations and set out in its response how it intends to take these forward.

By way of reminder, the report's three-step process for the digitisation process involves the following:

• Step 1 – Existing paper-based or ‘certificated’ share registers will be replaced by ‘digitised’ share registers.
• Step 2 – The intermediated system, in which most shares are already held, will be enhanced to facilitate the ability of beneficial owners of shares to exercise their rights effectively through intermediaries.
• Step 3 – A process will then be implemented to move all remaining shares on the temporary digitised registers into the intermediated system.

HMT has also published DEMAT’s terms of reference, setting out its objectives and governance structure. In overview, DEMAT's principal objectives are:

• To report back by summer 2026 with a recommended go-live date for Step 1, which should be before the end of 2027, and an implementation plan for the actions industry participants need to take to deliver this.
• To begin working with market participants to identify and implement the actions they need to take as part of Step 2, with the aim of the market being ready for Step 3 to begin by the end of this Parliament.
• To assess progress in implementing Step 2 and to recommend a detailed plan for all shares to transition into the intermediated system in Step 3, including a decision on the optimal method and timing for transitioning all remaining shares into the intermediated system.

Cyber Security

9. Ministerial Letter on Cyber Security sent to leading UK companies

In light of the cyber attacks on numerous companies, including M&S and JLR, the government has written to the Chairs and CEOs of the UK's largest companies with urgent advice to help ensure they are best protected against cyber threats.

The letter sets out three actions businesses can take to improve their cyber resilience:

• Make cyber risk a board-level priority using the Department of Science, Innovation and Technology's Cyber Governance Code of Practice. For an overview of the Code of Practice, see AGC Update Issue 65 – Item 1.
• Sign up to the National Cyber Security Centre’s Early Warning service.
• Integrate the government's Cyber Essentials in their supply chains.

Regulation in practice

10. FCA issues final notice for insider dealing

The FCA has published a final notice imposing a £100,281 financial penalty (reduced by 30% for early settlement) on a former capital markets advisor of an AIM company, and prohibiting him from working in UK financial services, for engaging in insider dealing and on the basis that he was no longer a fit and proper person to perform such a function.

Background: While employed as an advisor of ITM Power Plc, Neil Dwane was party to details of an announcement to be made to the market by the company following which the company's share price fell by 37%. In light of that information, on the day before the announcement was made, Dwane sold his own and a close family member’s entire shareholding in the company (125,000 shares worth £124,287). Once the update was issued by the company and following the fall in share price, Dwane purchased 180,000 shares worth £140,700, gaining £26,575 from the price difference.

Decision: The FCA considered that, as an experienced financial professional and a former approved person, Dwane would have known his conduct amounted to insider dealing. His conduct was therefore deliberate and dishonest. Further, Dwane knew that the company's internal policies required him to obtain the company’s permission before dealing in shares and yet he failed to do so. The FCA also considered it relevant that, as a senior member of the investor relations capital markets team, whose role was specifically to become engaged when potentially price sensitive information was under consideration for inclusion in RNS announcements, Dwane had abused a position of trust.

Sustainability

11. European Parliament fails to agree position on sustainability reporting Omnibus' Content Directive

The European Parliament has failed to agree its negotiating position on the sustainability reporting Omnibus' Content Directive, which proposes amendments to the Corporate Sustainability Due Diligence Directive (CS3D) and the Corporate Sustainability Reporting Directive (CSRD). MEPs disagreed over several key issues including the scope, civil liability provisions, and transition plans requirements of the CS3D, as well as the scope of the CSRD (for background, see Where has the EU's Omnibus got to now?).

Although the European Parliament's Legal Affairs Committee adopted a position on 13 October that would further reduce the number of companies in-scope while retaining transition plan requirements, on 22 October, MEPs narrowly rejected the mandate to enter into the next step in the EU legislative process – i.e. trilogue negotiations - by just 10 votes.

As a result, the debate within the European Parliament continues, and further amendments to the Directive remain possible ahead of the next plenary vote, which is anticipated to take place on 13 November.

The EU is aiming to conclude negotiations by the beginning of December, leaving the European Parliament with a very tight timeframe to adopt a formal negotiating position. The delay increases uncertainty for businesses potentially affected as the final scope and requirements remain subject to change.

Once the European Parliament’s position is adopted, trilogue negotiations between the Council, European Parliament and the Commission are expected to proceed swiftly, given the current alignment between the majority of MEPs and the Council, particularly regarding higher thresholds for in-scope companies and less onerous sustainability due diligence and reporting obligations. However, it is important to note the ongoing pressure from certain political groups within the EU and from third countries, such as the United States, which view the EU’s due diligence and sustainability reporting rules as potential barriers to trade. Businesses should continue to monitor developments closely as the legislative process unfolds.

12. Sector Transition Plans guidance supports sector benchmarking, coordination and accountability

The UK Net Zero Council and the Transition Finance Council have published guidance on Sector Transition Plans (STPs), which sets out a framework for sectors to collaboratively develop decarbonisation pathways aligned with national net zero targets. The guidance is part of the Net Zero Council's 3-year programme to develop STPs to help businesses, investors and policymakers coordinate the UK’s transition to a clean energy economy.

STPs will explain what the clean energy transition means for every major sector, and help sector leaders to capitalise on the economic opportunities presented by the transition. They will underpin clean energy investment, innovation, and policy development, and will become an important tool for benchmarking, coordination, and accountability across sectors.

STPs will be the bridge between national transition plans (for example, the UK's carbon budget delivery plan(s) created under the Climate Change Act 2008) and individual businesses' transition plans. STPs will help the development of company transition plans by providing a framework to work within. Companies should engage early with any STP process in their sector to ensure their interests are represented and to leverage the benefits of benchmarking and collaboration.

For more information on the guidance, see Sector Transition Plans guidance supports sector benchmarking, coordination and accountability.

Authors: Will Chalk, Partner; Shan Shori, Expertise Counsel; Becky Clissmann, Sustainability Counsel; Marianna Kennedy, Senior Associate

If you would like to receive future Ashurst Governance & Compliance updates, please click here to sign up.