FCA: CP 25/2 – Consultation on further changes to the public offers and admission to trading regime and the UK Listing Rules

On 31 January 2025 the Financial Conduct Authority (FCA) published Consultation Paper 25/2 (CP 25/2) on further changes to the public offers and admissions to trading regime and the UK Listing Rules. This follows on from, and supplements, its earlier consultation in July 2024. Some of the key areas covered are summarised out below.

The consultation closes on 14 March and the FCA indicates it is aiming to finalise rules and publish a policy statement in Summer 2025.

Aligned disclosure requirements for non-equity securities

The FCA is proposing to align prospectus disclosure requirements for low and high denomination non-equity securities being admitted to a regulated market by removing the dual disclosure standard for ‘wholesale’ (higher denomination) and ‘retail’ (lower denomination) non-equity securities. Instead, it intends to introduce a single standard based on the current rules and annexes for wholesale non-equity securities. There would continue to be additional, tailored disclosure requirements for securities with more complex features such as asset backed securities and securities with a derivative element.

New guidance on when corporate bonds issued by listed companies can be appropriate for the ‘mass market’

In the context of encouraging offerings of bonds to retail by high-quality issuers, the FCA has developed a concept of non-complex listed corporate bonds. Broadly speaking, these are senior, unsecured, plain vanilla, listed bonds issued by companies admitted to the equity shares (commercial companies) category or one of their wholly owned subsidiaries.

The FCA proposes to provide additional guidance on how its product governance rules should be applied to such bonds, including by amending PROD to provide that they would ordinarily be regarded as ‘simple’ and therefore likely to be appropriate for distribution to customers in the mass retail market.

Listing applications process for further issues

Changes are proposed to the applications process for admissions of further securities of a class already listed. In summary, the requirement for a listing application process would be removed in this context, although issuers would still have to apply to the relevant exchange for admission of the securities to trading. Issuers would be required to comply with new notification requirements where securities are admitted to trading and to admit any further issues within 60 days of allotment.

Listing particulars

The FCA is proposing to remove the concept of listing particulars in light of the public offers and admissions to trading regime reforms and in order to simplify its listing framework.

Transitional provisions

The FCA also outlines its proposals for transitional provisions in relation to prospectuses/supplementary prospectuses approved prior to the commencement of the new regime.

(FCA, CP25/2 - Consultation on further changes to the public offers and admissions to trading regime and the UK Listing Rules, 31.01.2025)

FCA: CP 25/3 – Consultation on further proposals for firms operating public offer platforms

On 31 January 2025, the Financial Conduct Authority (FCA) published Consultation Paper 25/3 (CP 25/3) on further changes to support the implementation and operation of the new public offer platform (POP) regime being introduced in connection with the reform of the UK public offers and admissions to trading regime. This follows on from, and supplements, its earlier consultation on this topic in July 2024.

CP 25/3 includes certain redress-related proposals, proposed fees and reporting requirements for firms operating a POP, as well as amendments to the Perimeter Guidance manual (PERG). The FCA is also using the consultation to set out its proposed approach to authorising and supervising firms carrying on the new regulated activity of operating a POP.

The FCA has also taken the opportunity to consult on additional guidance on the recently implemented regime for firms approving the financial promotions of unauthorised persons.

The consultation closes on 14 March and the FCA indicates it is aiming to finalise rules and publish a policy statement in Summer 2025.

(FCA, CP25/3 - Consultation on further proposals for firms operating public offer platforms, 31.01.2025)

Parliament: Reporting on Payment Practices and Performance (Amendment) Regulations (Regulations) 2025

On 29 January 2025 the Reporting on Payment Practices and Performance (Amendment) Regulations 2025 (Regulations) and associated explanatory memorandum were published.

The Regulations are in the same form as the draft published on 7 October 2024 and introduce requirements for qualifying companies and LLPs to publish certain information on practices, policies and performance with respect to retention clauses in any qualifying construction contracts with suppliers.

They were made on 23 January 2025 and come into force on 1 March 2025, with the amendments applying to qualifying companies and LLPs in relation to financial years beginning on or after 1 April 2025.

(Parliament, Reporting on Payment Practices and Performance (Amendment) Regulations 2025, 29.01.2025)

(Parliament, Explanatory memorandum - Reporting on Payment Practices and Performance (Amendment) Regulations 2025, 29.01.2025)

FRC: Launch of market study examining SME audit and reporting challenges

On 3 February 2025 the Financial Reporting Council (FRC) launched a market study examining how effectively the audit market serves small and medium-sized enterprises (SMEs) and exploring opportunities to reduce their reporting burden where possible. This study represents the first phase of the FRC’s broader campaign to support SMEs to access audit services and secure the capital they need for growth.

Key areas to be explored by the market study include:

• How the audit market is working for SMEs, including any burdens arising from reporting and audit requirements.
• Market forces driving the consumption of audit services by SMEs.
• Challenges which auditors experience when auditing SMEs.
• Forthcoming developments which the FRC should be considering as part of the study, including the change in company size thresholds from 6 April 2025 and the expected consultation later in 2025 on changes to reporting and audit requirements (following the outcome of the review on non-financial reporting).

The FRC invites interested parties to submit comments and evidence by 25 April 2025. The market study is expected to conclude before the end of the year.

(FRC, Launch of market study into SME audit and reporting challenges (press release), 03.02.2025)

(FRC, Small and medium-sized enterprises (SME) market study, 03.02.2025)

Companies House: New Registrar’s rules on ID verification and ACSPs

On 5 February 2025, Companies House updated its Registrar’s rules guidance with publication of The Registrar’s (Identity Verification by the Registrar) Rules 2025, The Registrar’s (Identity Verification by Authorised Corporate Service Providers) Rules 2025, and The Registrar’s (Requirements Applicable to Applications to Become an Authorised Corporate Service Provider) Rules 2025.

These rules sit alongside the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025 and they set out the information and types of evidence individuals will have to provide when applying to verify their identity either directly via Companies House or indirectly through an authorised corporate service provider (ACSP).

The Registrar’s rules that have been published are as follows:

• The Registrar’s (Identity Verification by the Registrar) Rules 2025 – these apply to applications for identity verification delivered directly to Companies House on or after 25 February 2025. Among other things the Rules set out the method of identity verification, the required information and the channels for making such an application, as well as the Registrar's ability to impose requirements in relation to reverification The required information includes a home address and a suitable email address that has not previously been used for this purpose by any other applicant. The required evidence will depend on whether an applicant is using the GOV.UK One Login ID Check app, the GOV.UK One Login web service or the GOV.UK One Login face to face service. The process for each of these channels is set out in the Rules.

• The Registrar’s (Identity Verification by Authorised Corporate Service Providers) Rules 2025 apply to requests for identity verification delivered to ACSPs on or after 25 February 2025. Applicants making such a request will also need to provide a home address and a suitable email address that has not previously been used for this purpose by any other applicant. The required evidence to be provided to the ACSP will depend on whether the applicant is eligible for any of the evidence listed in Option 1 as set out in these Rules and the ACSP has the capability to validate cryptographic features. If the ACSP does not have the capability to validate cryptographic features the applicant will have to provide two items from Option 2, as set out in these Rules.

• The Registrar’s (Requirements Applicable to Applications to Become an Authorised Corporate Service Provider) Rules 2025 apply to every application to become an ACSP delivered to the Registrar on or after 25 February 2025. The Rules specify the form of applications and set out how applications will be authenticated.

These Rules were all made on 24 January 2025 and come into force on 25 February 2025.

(The Registrar’s (Identity Verification by the Registrar) Rules 2025)

(The Registrar’s (Identity Verification by Authorised Corporate Service Providers) Rules 2025)

(The Registrar’s (Requirements Applicable to Applications to Become an Authorised Corporate Service Provider) Rules 2025)

FRC: Assurance of Sustainability Reporting Market Study: Final Report

On 5 February 2025 the Financial Reporting Council (FRC) published its final report on its sustainability assurance market study, including remedies to support the functioning of the market (Report). The Report sets out four key findings as well as its remedies.

The market study was launched in March 2024 with three broad themes: (i) choice of sustainability assurance providers and competition; (ii) market capacity, opportunities and barriers to entry/expansion; and (iii) the regulatory framework, including how changing international requirements could affect the UK market.

The FRC engaged extensively with a broad range of stakeholders in preparing the report, including FTSE 350 companies, private companies, audit and non-audit providers of sustainability assurance, investors, professional and trade bodies, academics and other institutions with an interest in sustainability. The FRC published its emerging findings in October 2024 and this Report builds on those findings.

Key findings by the market study include:

• Finding I – there is a wide variety of choice of sustainability assurance providers in the UK but there are concerns over the consistency in the quality of the assurance provided.

• Finding II – there is a growing preference amongst large companies to use the Big Four audit firms (Deloitte, EY, KPMG and PwC) to carry out sustainability assurance in the UK market, which could have implications for future choice of assurance provider.

• Finding III – there are concerns about the maturity of the UK assurance market and that a lack of clarity on the UK’s regulatory position could hinder investment, planning and capacity development. According to many stakeholders, there is a need for education and communication to bridge gaps in knowledge and understanding in the market.

• Finding IV – there could be a risk that without an established regulatory framework, which includes appropriate monitoring and oversight, the UK sustainability assurance market may not produce consistent, high-quality sustainability information for decision-making.

In light of these findings, the FRC considers that the following remedies could help to ensure a well-functioning sustainability assurance market in the UK:

• Remedy I – the UK market would benefit from the timely development of a policy framework for sustainability assurance that creates certainty for providers over the medium term, supporting necessary investment and providing clarity on any alignment with international frameworks, where appropriate.

• Remedy II – the market would benefit from the creation of a holistic regulatory regime that brings together all relevant elements for sustainability assurance, including standard setting, oversight, enforcement and monitoring of the market in one place to maximise certainty for companies, assurance providers and investors.

• Remedy III – the market would benefit from better information on the quality of sustainability assurance to support how it functions. The creation of a holistic regulatory regime should address the information gap.

(FRC sets out recommendations for the sustainability assurance market (press release), 05.02.2025)

(FRC, Assurance of Sustainability Reporting Market Study: Final Report, 05.02.2025)

Takeover Panel: Updated Takeover Code and Notes to Advisers

Following the coming into effect on 3 February 2025 of rule changes that will result in a refocusing and significant narrowing of the types of companies subject to the UK Takeover Code (Code), on that date the Takeover Panel published an updated version of the Code and certain other updates.

As well as an updated webpage, Companies to which the Code applies (and see further our briefing Refocusing the application of the UK Takeover Code), there have been updates to the Notes to Advisers webpage.

There is a new Note to Advisers in relation to cancellation of admission to trading which sets out the recommended procedure to be followed for a cancellation of admission to trading where a company referred to in section 3(a)(i) of the Introduction to the Code decides that it wishes to cancel the admission of its securities to trading on a UK regulated market, a UK MTF, or a stock exchange in the Channel Islands or the Isle of Man. To assist advisers, the Takeover Panel has also prepared pro forma drafting for inclusion in the announcement, circular or explanatory memorandum in relation to the proposed cancellation of the admission to trading. This is set out in an Annex to the Note.

The Note to Advisers in relation to re-registering a public company as a private company has also been updated. It applies only to an unquoted public company which is a “transition company” falling within section 3(a)(iii) of the Introduction to the Code and as defined in the Transitional Appendix. It does not apply to an unquoted public company which falls within section 3(a)(ii) of the Introduction, i.e. a public company whose securities ceased to be UK quoted on or after 3 February 2025.

To assist advisers, the Takeover Panel has prepared two forms of pro forma drafting for inclusion in the re-registration circular or explanatory memorandum to be sent to shareholders before the relevant resolution is considered. The pro forma wording to be used will depend on whether or not the Code will continue to apply to an unquoted public company, which is a transition company, and which is being registered as a private company on or before 2 February 2027.

HM Treasury: Accelerated Settlement Technical Group report

On 6 February 2025, HM Treasury published the report of the Technical Group appointed to develop a detailed implementation plan for the UK transition to a settlement cycle of T+1 and to recommend a date before the end of 2027 for this to take place.

This follows the setting up of the Accelerated Settlement Taskforce in December 2022 to explore the potential for faster settlement of securities trades in the UK. The Accelerated Settlement Taskforce published its report on 28 March 2024, and that recommended that the UK should move to a T+1 settlement cycle no later than the end of 2027. Draft recommendations and a consultation report were then published in September 2024 (see further here).

The Technical Group’s report recommends 12 ‘critical’ and 27 ‘highly recommended’ actions to facilitate a successful transition to T+1. It also recommends that the UK move to T+1 on 11 October 2027 and that this date should be set by the Government by amending the relevant part of the UK Central Securities Depositories Regulation.

The Government has welcomed this report and states that it will set out its response shortly.

(HM Treasury, Accelerated Settlement Technical Group report, 06.02.2025)

DSIT: Cyber Governance Code of Practice - Government response to the call for views

The Department for Science, Innovation and Technology (DSIT) has published its response to its January 2024 call for views on a draft Cyber Governance Code of Practice (Code).

The call for views was an invitation for any industry stakeholders or other interested party to provide feedback on three key areas: the design of the Code; how the Government can drive uptake of its use and compliance with the Code; and the merits and demand for an assurance process against the Code.

The response document provides an overview of the responses to the call for views and key themes that emerged, as well as stating the Government’s response to the feedback. This is structured around five key themes from the responses, as follows:

• There was overall support for the aims and design of the Code, with a range of suggestions for further additions.

• Most respondents were in favour of an assurance scheme, however support depended on the design of the scheme.

• A large number of respondents commented on the wide target audience of the Code and the implications of this on promoting uptake.

• Many respondents requested further clarity over links with other standards, guidance and resources.

• There was interest in the Government working with a wide range of stakeholders to promote uptake of the Code.

The response document also outlines next steps. Among other things (and in conjunction with the National Cyber Security Centre, NCSC), DSIT will make minor edits to the Code before publishing it in early 2025. DSIT and NCSC will also develop materials to support implementation of the Code and will work closely with industry stakeholders to promote its uptake.

(DSIT: Cyber Governance Code of Practice - Government response to the call for views, 03.02.2025)