Ashurst Governance & Compliance Update – Issue 82

Equity Capital Markets/ Market Abuse

1. Latest Primary Market Bulletin focuses on Market Abuse

The Financial Conduct Authority has published Primary Market Bulletin, Issue 62 in which it sets out, among other things, key aspects of its enforcement action against Carillion plc and its former directors.

Carillion enforcement cases: misleading statements

By way of reminder, in January and February of this year, the FCA imposed financial penalties on three former executive directors of Carillion for acting recklessly and being knowingly concerned in breaches by Carillion of the Market Abuse Regulation (MAR) and the former Listing Rules in relation to the publication of misleading announcements in 2016 and 2017. For more detail on the FCA's fine of Carillion's CEO, see AGC Update, Issue 79 – Item 7.

In PMB 62, the FCA analyses a number of key features of its decision - in particular, its finding that Carillion and its former directors ought to have known that the company's statements were false or misleading under Article 12(1)(c) of MAR.

The FCA highlights that:

(i) the test to establish whether Carillion and its former directors ought to have known that the information in the announcements was false or misleading is an objective one. If a reasonable person in their position ought to have known the information in the announcements gave, or was likely to give, false or misleading signals as to Carillion’s share price, Carillion would commit market manipulation as defined in Article 12(1)(c) of MAR; and

(ii) the knowledge of a company’s directors, as well as other employees or agents, may be attributable to the company for these purposes.

The FCA attributed the knowledge of the former directors to Carillion for its finding that Carillion had committed market manipulation for all the relevant announcements.

The FCA also highlights the high standard of disclosure expected of listed companies, the importance of maintaining adequate procedures, systems and controls and its own willingness to hold executives to account for breaches by issuers, which is underscored by the 2024 UK Corporate Governance Code’s introduction of board accountability for effective internal controls – i.e. through the operation of Code Provision 29.

Relatedly, the Financial Reporting Council has also imposed sanctions on the two former Group Finance Directors of Carillion, whom they consider to have acted recklessly and to have failed to act with integrity in connection with the preparation of accounting information for Carillion's financial statements, prior to the company's collapse in 2018. Further sanctions were also imposed on three former senior accountants at the company. For a reminder of the market abuse-related FCA sanctions imposed on the directors, see AGC Update, Issue 77 – Item 8.

Sponsor reviews and manipulative investment schemes

The PMB provides detailed feedback from the FCA's reviews of sponsors that have worked on modified transfers into the equity shares (commercial companies) category - a streamlined process introduced under the UK Listing Rules which includes a targeted eligibility assessment.

The FCA also highlights concerns about manipulative investment approaches targeting micro-cap or small-cap issuers to affect those issuers’ share prices, including fake investor takeover approaches and equity fundraisings linked to 'pump and dump' schemes.

2. Primary Market Bulletin 63 consults on working capital statements (among other updates)

The FCA has published Primary Market Bulletin, Issue 63 in which it:

• finalises Technical Note 717.3 - Sponsors: Record Keeping Requirements;
• consults on working capital statement guidelines in Technical Note 619.2 - Guidelines on disclosure requirements under the Prospectus Rules: Admission to Trading on a Regulated Market and Guidance on specialist issuers;
• flags recent amendments to the UK Listing Rules sourcebook (UKLRs) and the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook (PRMs) and sets out its approach to consulting on further amendments; and
• provides an update on climate-related disclosures for specialist issuers.

Sponsors: Record Keeping Requirements

In PMB 61, the FCA consulted on updates to Technical Note 717.2 - Sponsors: Record Keeping Requirements (for more detail, see AGC Update, Issue 77 – Item 5). The FCA has now finalised this Technical Note without further amendment.

Working capital

By way of reminder, in PMB 58, the FCA proposed new guidelines on working capital statements for inclusion in Technical Note 619.2 - Guidelines on disclosure requirements under the Prospectus Rules: Admission to Trading on a Regulated Market and Guidance on specialist issuers. However, the proposals were not taken forward in light of concerns around the proposed approach leading to inconsistencies between working capital and going concern disclosures (for more detail, see AGC Update, Issue 77 – Item 5). The FCA has continued to engage with market participants on this topic and is now consulting on a revised set of working capital statement guidelines. These include:

• a new guideline on 'basis of preparation' disclosures (Guideline 33.1). This provides that, where an issuer includes a clean working capital statement, in certain circumstances disclosure explaining the basis of preparation of the statement should be included; and
• a new guideline on the circumstances in which issuers may take into account financing under uncommitted facilities in their working capital calculations (Guideline 33.2). The proposed new guideline is intended to introduce greater flexibility by allowing an issuer to rely on uncommitted facilities for the purposes of giving a clean working capital statement in certain circumstances.

Comments on the FCA's proposals should be submitted by 15 June 2026.

Amendments to UKLRs and PRMs

The FCA reminds market participants that, since September 2025, it has consulted on and implemented a series of minor amendments to the UKLRs and the PRMs. A number of these address unintended consequences that emerged following the introduction of the Primary Markets Effectiveness reforms, changes to listing processes and the new Public Offers and Admissions to Trading Regulations (POATR) regime. The remaining amendments clarify existing requirements in the UKLRs and the PRMs, so as to keep them proportionate and aligned with the FCA's policy objectives. They include, amongst other things, an extension of the share buyback reporting obligation under UKLR 9.6.6R (for more detail, see AGC Update, Issue 79 - Item 3) and the streamlining of the listing application process for adding new securities to the Official List.

The FCA has indicated that further minor amendments may follow as the revised regimes bed in. To provide a structured approach, the FCA intends to consult in Q4 2026 on any additional issues that have emerged in practice. Market participants and advisers are encouraged to share with the FCA any potential ‘snagging’ issues relating to the UKLRs or the PRMs by the end of August.

The FCA also intends to consult on corresponding amendments to the guidance in affected Technical Notes and Procedural Notes published in its Knowledge Base, with a view to finalising those updates through future Primary Market Bulletins. In the interim, the FCA expects firms and other market participants to interpret purposively any references in existing Technical Notes and Procedural Notes to the previous rules in light of the new provisions, once in force.

Update on disclosures applying to specialist issuers

In Policy Statement 25/9 - New rules for the public offers and admissions to trading regime, the FCA indicated that it intended to take certain steps in relation to climate-related disclosures for specialist issuers. Over the past six months, the FCA has analysed key disclosure documents to assess the extent to which climate-related information has been included and has engaged with international standard-setting bodies on how their existing materials address climate-related impacts and whether further guidance is anticipated.

As part of this process, the FCA has identified that the Joint Ore Reserves Committee is currently updating the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) - one of the recognised codes referenced in Technical Note 619.2 - Guidelines on disclosure requirements under the Prospectus Rules: Admission to Trading on a Regulated Market and Guidance on speciality issuers. As a result, the FCA has decided to pause policy work in this area until the updated JORC Code is finalised, in order to avoid potential fragmentation and regulatory arbitrage.

The FCA has also noted the need for further time to assess the impact of recent broader reforms to climate and sustainability-related disclosure, including the new POATR regime and the updated guidance in Technical Note 801.4 - Disclosures in relation to sustainability matters, including climate change. The FCA has received broadly positive feedback on its recent changes under the POATR regime under which issuers are expected to assess climate-related risks, opportunities and wider sustainability considerations in informing their disclosures.

Directors' duties

3. Private Members' Bill to extend duties fails

Given the recent Parliamentary recess, the Companies Directors (Duties) Bill, which was published in July 2025 as a Private Members' Bill and which we covered in AGC Update, Issue 68 – Item 1, will not make it onto the statute book.

By way of reminder, the Bill proposes the amendment of section 172 of the Companies Act 2006 (duty to promote the success of the company) to require directors to balance their duty to promote the success of the company with duties in respect of the environment and the company's employees. In other words, the Bill proposed to put those considerations and interests alongside those of members.

4. Breach of duty: undermining a board-backed transaction¹

The High Court has held that a company director breached his statutory duties under sections 171, 172 and 175 of the Companies Act 2006 by covertly seeking to frustrate a critical board-backed transaction and instead acting in his own interests.

Background

Company directors must comply with the general duties imposed on them by the 2006 Act including:

• The duty to act in accordance with the company's constitution (which includes the articles of association and company resolutions) and only exercise powers for the purposes for which they are conferred (section 171, 2006 Act).
• The duty to act in good faith to promote the company's success for the benefit of its members as a whole (section 172, 2006 Act).
• The duty to avoid situations where the director's personal interests conflict, or potentially conflict, with the company's interests (section 175, 2006 Act).

The National Security and Investment Act 2021 (2021 Act) permits the government to scrutinise and intervene in corporate acquisitions, investments or takeovers that could threaten UK national security. The 2021 Act mandates the notification of corporate transactions in 17 sensitive sectors and allows voluntary reporting for others. The Investment Security Unit (ISU), a part of the Cabinet Office, is responsible for operating the 2021 Act.

Facts

U was the director and interim CEO of two companies, GA and GG.

GA and GG entered into a transaction that required a Chinese state entity to increase its indirect control over GA through a debt-for-equity swap. The transaction triggered a requirement for government approval under the mandatory notification regime in the 2021 Act due to GA and GG's military and dual-use activities.

GA's board considered that the transaction was essential to secure the refinancing of bank facilities and relieve intercompany debt, without which GA and GG would have faced potential insolvency.

U supported the transaction in public but, in private, he acted in his own interests to undermine and frustrate it. This included acting with a view to securing continued employment under new ownership rather than prioritising the transaction.

GA and GG brought an action against U for breach of his statutory directors' duties.

Decision

The court held that U had breached his statutory duties under sections 171, 172 and 175. U had breached his contractual duties to perform his role faithfully, use his best endeavours to protect GA and GG's business, and keep the board fully informed. He had failed to so by:

• Covertly lobbying Members of Parliament to oppose the transaction and expressing a preference for government refusal of the transaction under the 2021 Act.
• Sending an unsolicited remedies letter to the ISU proposing divestment and exaggerating compliance concerns in other communications with the ISU.
• Approaching potential acquirers and encouraging lobbying for divestment without board authorisation.
• Undermining assurances given to GA's bank about shareholder funding commitments by falsely linking uncertainty to the 2021 Act process.

The court found that U had acted to further his own interests of securing continued employment under new ownership, rather than furthering the interests of GA and GG. U knew that his actions directly contradicted the board's agreed strategy and would risk insolvency if successful, yet he pursued them without disclosure.

The court accepted that U had genuine concerns about the national security implications of the transaction but considered that this did not justify his conduct. It found that U had exercised his powers for improper purposes and placed himself in a position of conflicting personal interests.

The questions of causation and quantum were deferred to a subsequent hearing.

Comment

The court's decision was unsurprising as the director clearly used his position to undermine and frustrate the transaction rather than help to implement it, as well as failing to act in good faith to promote the interests of the company and putting himself in a situation where his personal interests conflicted with the company's interests. The decision emphasises the importance of directors not pursuing their own private individual agenda but acting in accordance with decisions and strategy determined collectively by the board of directors.

Case. Gardner Aerospace Holdings Ltd v Upton [2026] EWHC 555 (Ch)

Employment Rights

5. Equality Action Plans and pay gap reporting

In AGC Update, Issue 80 – Item 11 we reported on the publication by the government of guidance for employers when producing Equality Action Plans which will become mandatory for those with 250 or more employees from Spring 2027. Our Employment team have now published a series of Q&As explaining how to comply with the new requirements in line with that guidance and covering the proposed disability and ethnicity pay gap reporting regime.

Sustainability

6. European Commission consults on revises ESRS and voluntary standard for smaller companies

The European Commission has published two consultations on (i) draft revised European Sustainability Reporting Standards (ESRS), and (ii) a Voluntary Sustainability Reporting Standard for smaller companies (Voluntary Standard).

The draft revised ESRS build on the December 2025 technical advice from the European Financial Reporting Advisory Group (EFRAG) to the Commission on amending the ESRS adopted in December 2023 (see AGC Update, Issue 76 – Item 5). The Commission is proposing targeted adjustments to EFRAG's advice to further ease reporting burdens. The mandatory datapoints in the ESRS have been reduced by over 60% and the total datapoints have been reduced by over 70%.

The Voluntary Standard provides a framework for sustainability reporting by companies not subject to mandatory reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) ((EU) 2022/2464) and it establishes the reference level for the "value chain cap" introduced by the Omnibus I Directive ((EU) 2026/470), which entered into force on 18 March 2026. The cap ensures that companies in scope of CSRD cannot require value chain partners with 1,000 employees or fewer i.e. - protected undertakings to provide information for CSRD reporting purposes beyond what is set out in the Voluntary Standard. The draft Voluntary Standard is based on EFRAG’s 2024 voluntary SME standard, which the Commission endorsed in 2025.

The ESRS and the Voluntary Standard represent a significant recalibration of corporate sustainability reporting obligations across the EU, with direct consequences for reporting undertakings, their value chain partners, and users of sustainability data.

The Commission intends to adopt both delegated regulations as soon as possible after the consultations close in June 2026. Reporting entities should evaluate how the simplified ESRS alter their reporting obligations and review data requests to their value chain partners to ensure compliance with the forthcoming value chain cap. For more information on the consultations, see European Commission consults on revised ESRS and sustainability reporting standard for voluntary use.

7. ISSB confirms it will publish IFRS Practice Statement on nature-related disclosures

The International Sustainability Standards Board (ISSB) has confirmed that it will publish an IFRS Practice Statement covering nature-related disclosures rather than produce a standalone nature standard or amend its existing sustainability disclosure standards.

The ISSB's first two standards were published in June 2023 with a view to setting a global baseline for sustainability disclosures. They have been endorsed, or are in the process of being endorsed, by over 30 jurisdictions globally (see ISSB publishes first standards on sustainability and climate disclosures). The existing standards (IFRS S1 on general requirements for disclosure of sustainability-related financial information and IFRS S2 on climate-related disclosures) require disclosure of material sustainability-related risks and opportunities, including nature-related risks and opportunities (NRO) that could reasonably be expected to affect a company’s prospects. ISSB intends the new Nature Practice Statement would complement the existing standards by explaining how to make the NRO disclosures they require.

The ISSB's decision follows a long-term project to consider disclosures of material information on NROs including how to build on the Taskforce on Nature-related Financial Disclosures Framework (TNFD) (see TNFD makes major contribution to sustainability reporting landscape).

The ISSB aims to publish an exposure draft of the Nature Practice Statement for public comment in October 2026. The feedback sought will include whether an IFRS practice statement is the right form of standard-setting for nature-related disclosures as well as the content of the Practice Statement.

The ISSB's announcement states that the practice statement would have the full effect of an ISSB standard for companies applying it, although it also states that issuing a practice statement explaining, but not changing, the existing requirements would minimise disruption at a time when many companies and jurisdictions are in the process of adopting and implementing S1 and S2. The ISSB also notes that this approach provides it with a "pathway" to publishing a standard on nature in the future. Some sustainability groups have expressed disappointment and said that the decision not to publish a standalone nature standard is out of sync with the science on the action needed to protect natural capital.

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