Essential Corporate News – Week ending March 4, 2022

BEIS: Corporate Transparency and Register Reform – White Paper

On February 28, 2022 the Department for Business, Energy and Industrial Strategy (BEIS) published a White Paper setting out the government’s position (ahead of introducing legislation into Parliament) in relation to reforms to Companies House which are aimed at contributing to government priorities in national security and anti-corruption, fraud and boosting enterprise. The reforms cover the transformation of Companies House, new powers for the Registrar of Companies (Registrar), identity verification for directors and others, improved privacy protections, greater powers to share data and reforms to improve the quality of financial information on the register.

The White Paper follows a number of consultations, including three launched in December 2020 examining detailed proposals on the powers of the Registrar, implementation of the ban on corporate directors and improvements to the financial information on the register. The annexes to the White Paper include the government’s responses to those consultations.

The proposed reforms include the following:

The role and powers of the Registrar

Among others, the following new powers will be given to the Registrar:

• A new role in promoting and maintaining the integrity of the register kept at Companies House which will capture economic crime and other activities that may undermine the integrity of the register. This function will be supported by new powers, including a new power to query and check information submitted, with a power to reject and query new filings, as well as to query information already on the register. That power could be used, in certain circumstances, to query a proposed or registered company name. If an entity fails to respond to a query, or fails to provide sufficient evidence in its response even after being asked for more, the Registrar will be able to take a number of actions, including if appropriate imposing a sanction upon the entity.
• Changes to the proper delivery requirements, including providing that a filing may be rejected. This may either be under the new querying power or a new, specific power to reject documents that, in the Registrar’s opinion, may cause harm to the register, even where it meets all other proper delivery requirements.
• A discretionary power to remove material which impacts upon the integrity of the register.
• A discretionary power to change the address of a company's registered office where the Registrar is satisfied that the company is not authorised to use the address.

Identity verification and other measures relating to directors, beneficial owners and agents

Measures to be introduced include the following:

• Identity verification of directors, and their equivalents for other registrable entities, and Persons with Significant Control (PSC) will apply to any corporate body subject to the disclosure requirements of the Companies Act 2006. All members and PSCs of limited liability partnerships will be required to verify their identity and general partners of limited partnerships will be required to verify their identity. The primary method for identity verification will link a person with an authorised identity document.
• All new and existing company directors, (and equivalents for other registrable entities), PSCs and anyone else submitting filings will need a verified account at Companies House.
• A director will be able to verify either before or during their registration process at Companies House. The director will open an account with Companies House and verify their identity. Companies House will cross check the director with a database of verified accounts. If a matching verified identity is found, Companies House will register the director and notify the director and the company of the successful registration. If an identity is not found, Companies House will reject the notification. A director who has not registered at Companies House by the end of the set period will be committing an offence and may also be liable for a civil penalty. A company that is directed by an unverified director will also commit an offence but it will be a valid defence if a technical failure at Companies House is responsible for a director being unable to verify their identity. PSCs will need to verify their identity in a similar way.
• Restrictions and identity verification for corporate directors and other corporate officers of registrable entities will also apply. The ‘principle based’ exception being introduced is based on two conditions that must be satisfied (i) that all directors of the company seeking such appointment are themselves natural persons; and (ii) those natural person directors are, prior to the corporate director appointment, subject to an appropriate identity verification process. Any company failing to satisfy these grounds of exception will not be permitted to act as corporate director.
• For corporate members of LLPs or corporate general partners of LPs, the corporate person will have to provide the details of their director(s) or a managing officer, whose identity must be verified. Registrations of corporate persons that are not accompanied by a verified person in a management position will be rejected.
• Third parties will be able to conduct identity verification checks provided they confirm to Companies House that they are supervised and they must register with Companies House before they can be permitted to form companies or registerable partnerships, or to file on their behalf.

The usefulness of information held on the shareholders and PSCs of UK companies is also to be improved through:

• Introducing a requirement for companies to record full names for shareholders in their registers.
• Introducing a requirement for private companies, and traded companies where shareholders hold at least 5% of the issued shares of any class of the company, to provide a one-off full shareholder list. Any changes will be updated annually when a company files a confirmation statement, as is currently the case.
• Collecting and displaying more information from companies claiming an exemption from the requirement to provide details of its PSC, including the reason for the exemption; if listed on a regulated market, the name of the market the company is listed on; and information that will direct searchers to where PSC information is published.
• Collecting and displaying the relevant legal entity (RLE) conditions satisfied to be recorded as a PSC; and, if listed on a regulated market, the name of the market the RLE is listed on, which will give assurance that the RLE meets the condition as claimed.

Enhanced data sharing

A package of measures will be introduced which will enable Companies House to share intelligence with law enforcement, regulatory bodies and the private sector. Such sharing will be conducted only where it is proportionate and appropriate to do so, and under certain conditions.

Preventing abuse of personal information on the register

The White Paper notes that the government’s aim is to strike the right balance between transparency over who is running companies, whilst ensuring that transparency does not become a tool for abuse and that information is only displayed publicly if it is necessary and proportionate to do so.

The government believes there is a case for extending existing rights for directors and PSCs to have some of their personal information held on the register suppressed from public view, in order to protect individuals from fraud and other harms. In particular cases, a process to protect names, or, in the most serious cases, to protect all the ‘required particulars’ from being displayed on the public register will be introduced, as well as a process for signatures to be suppressed, and where it is not already possible to do so, to have the day of dates of birth and residential addresses suppressed from the public register. Directors will no longer be required to specify a business occupation and applications to suppress “sensitive” addresses from the public register will be possible. New routes to access certain supressed personal information will also be introduced.

Improving the financial information on the register

To ensure that the UK’s financial reporting system promotes and supports modern business practices which help UK companies compete in the digital world company, accounts will have to be filed with Companies House in a digital format using the industry standard Inline Extensible Business Reporting Language (iXBRL). The information will also have to be fully tagged. It is noted that digital accounts information will also support the Registrar’s new role, as it will enable Companies House to quickly check and validate the information it receives.

The White Paper notes that the government has considered whether the time allowed for filing of accounts should be reduced but, recognising the challenges that companies are still facing as a result of the pandemic, no changes are to be made at this time. However, changes to the law to facilitate future changes to improve the value of the register and bring the UK in line with international standards will be made.

The government has reviewed the filing options available to small and micro companies and their filing options will be reduced to just two: micro-entities and small companies. As a result, all small companies will have to file a profit and loss account and all the constituent parts of their accounts, so Companies House will receive a balance sheet and profit and loss account for all small companies including micro-entities. Small companies will also file a director’s report unless they meet the micro-entity thresholds, when they will still have the option to not prepare or file a director’s report. These reforms will enable Companies House to check eligibility and to categorise companies by size.

The changes being made to the filing options for small companies will mean that all small companies will in future be required to file sufficient information for eligibility to be checked. Dormant companies will be required to file an eligibility statement which will provide the Registrar with additional evidence to take stronger enforcement action for false filings in future

The government will also explore options to enable companies to file their financial information once a year with the government, instead of filing different elements of information with each department that requires it, at various times. There will then be less risk of missing a filing deadline, and it will reduce duplication and unnecessary complexity.

Government: Economic Crime (Transparency and Enforcement) Bill published

The government published a draft Economic Crime (Transparency and Enforcement) Bill (Bill) on February 28, 2022. Part 1 of the Bill makes provision for the registration of overseas entities who already own, or want to own, land in the UK. It effectively replicates, with a few minor changes, the draft Registration of Overseas Entities Bill which was originally published in July 2018. Part 2 of the Bill deals with Unexplained Wealth Orders. The government has said that it will fast-track the Bill.

Part 1 of the Bill – Register of overseas entities

The purpose of Part 1 is to "prevent and combat the use of land in the UK for money laundering purposes by increasing the transparency of beneficial ownership information relating to overseas entities that own land in the UK". It seeks to achieve this by establishing a new register of the beneficial owners and controllers of such entities, to be held by Companies House and to be called the “register of overseas entities”.

In broad terms Part 1 provides that:

• Any overseas entity that owns, or wants to own, a “qualifying estate” in UK land - residential or commercial - will be required to identify its registrable beneficial owners, register their details in the register of overseas entities and update that information annually. A qualifying estate means a freehold interest or a leasehold interest for a term of more than seven years.
• "Overseas entities" include companies, partnerships, corporations sole, governments and public authorities – in fact any entity that has a legal personality under the law by which it is governed. On registration, they will be allocated an overseas entity ID.
• The registration requirement will be retrospective and overseas legal entities that acquired a qualifying estate in UK land on or after January 1, 1999 will have 18 months to register or to sell that estate.
• The register of overseas entities will record beneficial ownership above a certain threshold. For example, in the case of a company limited by shares, a person holding (directly or indirectly) more than 25% of the shares or voting rights in the company would be a registrable beneficial owner, as would a person holding the right (directly or indirectly) to appoint or remove a majority of the directors of the company or a person with significant influence or control over the company.
• Where another legal entity is the registrable beneficial owner, unless that other legal entity fulfils certain criteria (for example, it is a company with voting shares traded on UK or EU regulated markets), disclosure of ownership further up the chain will be required until the individual (or individuals) who exercises control over the legal entity is identified.
• There will be measures to ensure that an individual's beneficial ownership is not disguised by diluting their shareholding (or equivalent) amongst others.
• Where an overseas entity has no registrable beneficial owners or they cannot be identified, a statement to that effect must be registered, together with information about each managing officer of the entity.
• While the register of overseas entities will be publicly available, some information will be protected, for example date of birth and residential address information.

A failure to register and to update the register of overseas entities annually will mean that an overseas entity:

• cannot register at the Land Registry as the legal owner of land; and
• where already registered as legal owner, cannot sell, charge or lease the land for a term of more than seven years as any buyer, chargee or tenant will not be able to register the disposition at the Land Registry.

Registered overseas entities can apply to be removed from the register of overseas entities but must deliver specified information to Companies House, including a statement that they are not registered as the proprietor of a relevant interest in land. This will then be checked by Companies House and the application for removal will be refused if they are still so registered.

Compliance will be enforced through restrictions on the title registers of land owned by overseas entities. There will also be criminal sanctions for non-compliance and delivering misleading, false or deceptive information.

Part 2 of the Bill –  Strengthening of Unexplained Wealth Orders regime

An unexplained wealth order (UWO) is an investigatory order placed on a respondent whose assets appear disproportionate to their income to explain the origins of their wealth. A UWO requires a person who is a Politically Exposed Person (PEP) or reasonably suspected of involvement in, or of being connected to a person involved in, serious crime to explain the origin of assets (minimum combined value of £50,000) that appear to be disproportionate to their known lawfully obtained income.

A joint Home Office and HM Treasury National Risk Assessment of money laundering and terrorist financing in 2020 noted that property in the UK is attractive to both foreign and domestic criminals seeking to conceal large amounts of illicit funds, disguise their ownership, and realise the proceeds of their criminal activities.

As a result, reforms are being introduced to enable UWOs to be sought against property held in trust and other complex ownership structures such as opaque foundations. The reforms are also aimed at removing key barriers to the use of UWOs by increasing time available to law enforcement to review material provided in response to a UWO and reforming cost rules to protect law enforcement incurring substantial legal costs following an adverse ruling.

(Government, Economic Crime (Transparency and Enforcement) Bill, 28.02.2022)

FCA: Events in Ukraine – Impact on financial markets

On March 3, 2022 the Financial Conduct Authority (FCA) published a statement concerning the impact of events in Ukraine on companies with securities admitted to UK markets. The statement reminds such issuers of their disclosure obligations under the UK Market Abuse Regulation (MAR).

The statement points out that companies in scope of MAR must fulfil their obligations to disclose inside information as soon as possible unless they have a valid reason under MAR to delay disclosure. This includes continuing to assess carefully what information constitutes inside information, recognising that both the invasion and responses to it by governments globally may alter the nature of information that is material to a business’ assets, operations and prospects. It advises companies assessing the effect of financial sanctions in all relevant jurisdictions to take legal advice where necessary.

Companies are reminded that they should ensure the market is fully informed of any information or changes that are required to be disclosed under MAR, and that the disclosure obligations continue to apply even when trading of securities has been suspended.

The FCA states that it will continue monitoring the market carefully to ensure these obligations are met in full.

HM Treasury: Outcome of UK Prospectus Regime Review

On March 1, 2022 HM Treasury published the outcome of its previous consultation (Consultation) in relation to the UK prospectus regime (this also follows on from the publication in December 2021 of a summary of responses to the Consultation).

As proposed in the Consultation, the current UK regime will be replaced in order to simplify regulation in this area and make it more agile and effective, as well as facilitating wider participation in the ownership of public companies and improving the quality of information investors receive. Key elements of the new regime are summarised below.

The government intends to legislate to introduce the new regime when parliamentary time allows. It also notes that, as it intends to delegate a greater degree of responsibility to the Financial Conduct Authority (FCA) to set out the detail of the new regime through rules, the suite of reforms will take full effect after the FCA has consulted on, and is ready to implement, new rules under its expanded responsibilities.

Admission to trading on UK regulated markets

The government intends to give the FCA enhanced rule-making responsibilities regarding admission of securities to trading on UK regulated markets. This will allow the FCA to specify in its rulebook if and when a prospectus is required (including for further issues by existing listed issuers). FCA rule-making responsibilities will also cover other matters that currently sit in the UK Prospectus Regulation including determining what a prospectus should contain, whether (and, if so, in which circumstances) a prospectus must be reviewed and approved by the FCA prior to publication, and the manner and timing of publication. The government notes that the FCA’s enhanced responsibilities will give it enough flexibility to determine whether to require a UK prospectus for a secondary listing or whether to rely on an overseas prospectus.

Public offerings of securities in the UK

Under the new regime there will be a general prohibition on public offerings of transferable securities subject to exemptions. The exemptions will be derived from the existing UK Prospectus Regulation (including the qualified investors and 150 persons exemptions) but will be expanded to also cover offers of securities:

• Which are (or will be) admitted to UK regulated markets or on certain multilateral trading facilities (MTFs).
• To those who already hold equity securities in the offering company (subject to certain requirements, including that the offer is made pro-rata to existing holdings).

See also below in relation to offers by private companies and public offerings from overseas.

Multilateral trading facilities

As well as the exemption referred to above in relation to public offerings of securities that are (or will be) admitted to trading on certain MTFs, the government also intends to develop a mechanism by which admission documents published in accordance with the rules of the relevant MTFs are treated as a type of prospectus. It notes that this will not change the current system in which the operators of MTFs establish admission criteria and rules for the facilities they run, subject to FCA rules and oversight.

Private companies

The government notes that it wishes to increase the capital raising options available to enable private (i.e. unlisted) companies to grow their businesses more quickly. As such, it intends to remove the current requirement for an FCA-approved prospectus for offers over €8 million and instead allow offers to be made to the public provided this is done through a platform operated by a firm specifically authorised for the purpose. In connection with this, the government intends to create a new regulated activity covering the operation of an electronic platform for the public offering of securities, such as an equity crowdfunding platform. It will be for the FCA to determine the detailed requirements that such platforms will be subject to, including the levels of due diligence and disclosure issuers will need to comply with. The regime will be available to overseas private companies provided that they comply with UK regulation.

The government notes that it is still considering the threshold below which offers of securities from private companies are exempt from the prohibition on public offers.

Public offerings from overseas

The government intends to develop a new regime of regulatory deference for offers into the UK of securities listed on certain designated overseas stock-markets. This will permit offerings to be extended into the UK on the basis of offering documents prepared in accordance with the rules of the relevant overseas jurisdiction and market. It will not feature FCA review and approval of the offering documentation and will instead place reliance on an assessment of the overall effectiveness of the regulation of the overseas market in question. There will be powers for the FCA to intervene to protect UK investors in exceptional circumstances.

The “necessary information” test

The government intends to retain a single statutory “necessary information” test as a basic standard of preparation for a prospectus subject to certain amendments including:

• Clarifying that necessary information may vary according to whether an offer relates to a first-time admission or a secondary issue.
• Modifying the test that applies to debt securities, with a focus on the issuer or guarantor’s creditworthiness rather than prospects.

Facilitating forward-looking information

The existing statutory remedy for false, misleading or omitted information will be retained but the government intends to raise the threshold for liability that applies to certain categories of forward-looking information in a prospectus to a “recklessness” standard. The government notes that it intends to ensure that these disclosures are clearly labelled as forward-looking information to which that threshold applies and that the FCA will be given responsibility for specifying the categories of information to which the new liability threshold will (or will not) apply.

(HM Treasury, Prospectus Regime Review – Review Outcome, 01.03.2022) 

HM Treasury: Wholesale Markets Review – Consultation Response

On March 1, 2022 HM Treasury published a document outlining the government’s views following a consultation launched in July 2021 looking at ways to improve the UK’s regulation of secondary markets, taking advantage of the UK’s new freedoms in financial services following its withdrawal from the EU. The document recaps the proposals in the consultation, summarises the feedback received and, in light of the evidence gathered, outlines the government’s views.

One aspect of the consultation concerned SME markets. The consultation noted that many small and micro-sized companies often use crowdfunding platforms and private markets to access finance instead of using SME Growth Markets and the consultation asked if there would be value in developing a new category of trading venue with a more proportionate framework for SMEs with a sub-£50m market capitalisation.

The response document notes that overall, respondents agreed that the current regulatory regime can represent a barrier to SME financing on public markets, particularly for companies with a lower market capitalisation. While most respondents asked the government to consider a more proportionate disclosure regime without lowering regulatory standards, there was no support for a new type of venue solely for SMEs due to concerns that it would overlap with the existing SME Growth Market category. Instead, a number of respondents put forward a proposal for a new venue that would operate trading windows instead of offering trading on a continuous basis.

The government states in response that it is committed to increasing firms’ ability to access primary and secondary markets, while preserving appropriate levels of regulation and investor protection. In addition to the work HM Treasury and the Financial Conduct Authority (FCA) is undertaking under the UK Listings Review, the government will continue to explore the proposal for a new type of venue for SMEs and will consider the case for expanding it to other types of businesses.

(HM Treasury: Wholesale Markets Review – Consultation Response, 01.03.2022)

FCA: Primary Market Bulletin No. 38 – New Technical Note on TCFD aligned climate-related disclosure requirements for listed companies

On February 25, 2022 the Financial Conduct Authority (FCA) published Primary Bulletin No.38 which confirms that the FCA’s Knowledge Base (its base of technical guidance) has been updated by the addition of a new Technical Note on Task Force on Climate-related Financial Disclosures (TCFD) aligned climate-related financial disclosures for listed companies, TN/802.1.

Listing Rules 9.8.6R(8) and 14.3.27R now require premium listed commercial companies and certain standard listed companies to include a statement in their annual financial report setting out, among other things, whether they have made climate-related financial disclosures consistent with the TCFD’s recommendations and recommended disclosures in their annual financial report. In November 2021, the FCA published Primary Market Bulletin No. 36 which set out the FCA’s disclosure expectations and supervisory strategy in this area and included a consultation on the new Technical Note.

Among other things, the new Technical Note states that in determining whether climate-related financial disclosures are consistent with TCFD recommendations and recommended disclosures, listed companies should consider the Fundamental Principles of Effective Disclosure contained in Section F of the TCFD Annex. Where a listed company has not included climate-related financial disclosures consistent with all of the TCFD recommendations and recommended disclosures in either its annual financial report or in another document as required by the Listing Rules, explanations of the reasons for this should be full, clear and meaningful and be written in plain language that is easy to understand and leaves no room for ambiguity. Where details of any steps a listed company is taking or plans to take in order to be able to make those disclosures in the future, and the timeframe within which it expects to be able to make those disclosures, the Technical Note states that it should provide sufficient level of detail so that investors and stakeholders can fully understand the nature of the proposed action.

The Technical Note also reminds listed companies that they may be required to make disclosures on climate-related and other environmental, social and governance (ESG) matters in certain circumstances under other provisions of the Listing Rules, or under particular provisions of the Disclosure Guidance and Transparency Rules, Market Abuse Regulation and Prospectus Regulation (this may be as part of periodic financial reports, a prospectus, or other publications or ad hoc announcements, as applicable). More information on these provisions is set out in Technical Note TN 801.1.

(FCA: Primary Market Bulletin No. 38 – New Technical Note on TCFD aligned climate-related disclosure requirements for listed companies, 25.02.2022)

Investment Association: Shareholder priorities and IVIS approach for 2022

On March 1, 2022 the Investment Association (IA) set out the issues that companies with year ends starting on or after December 31, 2021 will be monitored in respect of in their financial reporting. These are responding to and accounting for climate change, audit quality, diversity and stakeholder engagement.

Particular points to note are as follows:

• Responding to climate change - The IA encourages companies to publish transition plans ahead of the government making them mandatory. It states that investors also expect to see progress on the setting of robust targets to achieve net zero, with a clear preference for these targets to be aligned with robust methodologies such as the Science Based Target initiative. In 2022 IVIS will Amber top all companies that do not make disclosures against all four pillars of TCFD.
• Accounting for climate change - Directors should affirm that the financial impact of climate-related matters have been incorporated into the company’s accounts and provide a statement in the annual report that they have considered the relevance of the risks of climate change and transition risks associated with achieving the goals of the Paris Agreement when preparing and signing off the company’s accounts. The company’s auditors will be expected to consider the risks of climate change when conducting their assessment of the accounts and IVIS will monitor whether auditors have highlighted climate change-related risks in their Key Audit Matters.
• Audit quality - IVIS will continue to monitor whether the Audit Committee has demonstrated how it has assessed the quality of the audit and how it has challenged management’s judgements.
• Diversity - The IA supports the proposed changes to the Listing Rules set out in the Financial Conduct Authority’s (FCA) CP21/24 and the recent FTSE Women Leaders Review recommendations. Companies should articulate the approach that they are taking to meet the new targets. Ahead of the FCA’s targets and disclosures formally being incorporated into the Listing Rules all companies are encouraged to disclose against the new reporting template and to set out how they expect to meet the new Listing Rule and FTSE Women Leaders Review targets over time. IVIS will take the following approach in relation to ethnic and gender diversity: Ethnic Diversity: IVIS will Red top FTSE 100 companies that have not met the Parker Review target of one director from a minority ethnic group and Amber top FTSE 250 companies that do not disclose either the ethnic diversity of their board or a credible action plan to achieve the Parker Review targets by 2024. Gender Diversity: IVIS will Red top FTSE 350 companies where women represent 33.0% or less of the Board or 28.0% or less of the Executive Committee and their direct reports, and Red top FTSE Small Cap companies where women represent 25.0% or less of the Board or 25.0% or less of the Executive Committee.
• Stakeholder engagement - Investors continue to expect companies and their boards to identify and disclose their material stakeholders, decide on the most appropriate mechanism to engage with those stakeholders, clearly articulate how their views have both informed and impacted their decision making and report back to shareholders and stakeholders on the engagement, the views heard and how they have impacted on board decision making. These disclosures should also include the impact of increases to the cost of living and inflationary pressures in the economy on consumers and suppliers.

Welcoming the leadership shown by Remuneration Committees and executives in responding to the pandemic, both in ensuring that remuneration outcomes were linked not just to the outcomes of the performance metrics but taking into account the wider experience of the company’s major stakeholders, and in disclosing how they have taken into account the wider stakeholder experience, the IA note that the pandemic has significantly impacted companies and their stakeholders. Investors will expect companies to make quality disclosures outlining the approach taken to engaging, communicating, and supporting the company’s stakeholders during the disruption caused by the pandemic, including how the Board reflected the views of their stakeholders in key decision making and consideration of the wider stakeholder experience when determining executive remuneration outcomes by Remuneration Committees will continue to be a critical investor expectation.

Government: Dormant Assets Act 2022 published

The Dormant Assets Bill received Royal Assent on February 24, 2022 and has now been published as the Dormant Assets Act 2022 (2022 Act). It extends the Dormant Assets Scheme (Scheme), established by the Dormant Bank and Building Society Accounts Act 2008 (2008 Act) for dealing with certain dormant assets.

A dormant asset is defined as a financial product (such as a bank account) that has not been used for many years and which the provider has not been able to reunite with its owner despite efforts aligned with industry best practice. The 2008 Act established the Scheme to distribute dormant assets to good causes. It applies to cash in UK bank and building society accounts that has been dormant for 15 years and the core principles of the Scheme are that attempts should first be made to reunite assets with their rightful owners before transferring them, owners should always be able to reclaim their funds and participation is voluntary.

The 2022 Act significantly expands the scope of the Scheme to cover a range of financial products, being long-term insurance products, certain pension assets, collective investment scheme assets, client money, and proceeds or distributions from shares in traded public companies. It also introduces a specific legal requirement for firms participating in the Scheme to make attempts to reunite assets with their owners, before passing them into the Scheme.

So far as proceeds or distributions from shares in traded public companies are concerned:

• if a traded public company transfers dormant eligible proceeds or distributions relating to a share registered in the name of an individual to an authorised reclaim fund, the shareholder will cease to have a right against the company to payment of the proceeds or distribution, and if the person is not the registered shareholder they will have no such right to payment against the shareholder, but will have a right to payment against the reclaim fund;
• a “traded public company” is defined as a public company whose shares are traded on a UK regulated market or UK multilateral trading facility;
• “eligible proceeds or distribution” mean amounts owing to a shareholder as a result of a share being converted into a right to payment of the price of the share when it was converted, an amount owing as a cash distribution attributable to the share, or an amount owing due to a corporate action relating to the share for which the company is notified of the consideration, less interest due, fees and charges payable in each case;
• eligible share conversion proceeds or eligible distributions are “dormant” if at the particular time the traded public company considers the relevant individual to have been “gone-away” throughout the preceding 12 years as there has been no communication from the individual or any person acting on their behalf in that period;
• a transfer of an amount by a traded public company to an authorised reclaim fund does not itself constitute a breach of trust or fiduciary duty affecting the amount owing or give rise to any liability other than the liability of the reclaim fund if the individual claims against the reclaim fund for a right to payment of the proceeds or distribution the individual would have had if the transfer had not happened.

The sections in the 2022 Act relating to the above will come into force on a day appointed by the Secretary of State.

(Dormant Assets Act 2022, 24.02.2022)