DBT: Corporate re-domiciliation – Report of the UK Independent Expert Panel

On 14 October 2024, the Department for Business and Trade (DBT) published the Report of an independent expert Panel on how best to establish a UK corporate re-domiciliation regime. 

Jon Perry from the NRF corporate team was a member of that Panel which considered this question, including which entities would be eligible to re-domicile, the information and procedural requirements that would apply, and how an entity that has re-domiciled into the UK would be treated for company law and other purposes.

You can find out more about the Panel’s discussion here: Recommendations for a new UK corporate re-domiciliation regime | Global law firm | Norton Rose Fulbright

DBT: The UK’s Modern Industrial Strategy – Written Statement

On 14 October 2024, a Written Statement from the Secretary of State for Business and Trade was published which refers to a number of proposed company law reforms.

This was published at the same time as the Department for Business and Trade (DBT) published a Green Paper, Invest 2035: The UK’s Modern Industrial Strategy, setting out the Government’s vision for a modern industrial strategy, with a 10-year plan to deliver that vision.

In terms of reforms to company law, the following are mentioned in the Written Statement:

• UK re-domiciliation regime -The Written Statement refers to the Report published by the independent expert Panel on corporate re-domiciliation and confirms that the Government intends to consult in due course on a proposed regime design. Further information in relation to that Report is here.
• Narrative reporting requirements – Legislation is to be laid by the end of 2024 removing redundant reporting requirements and raising the monetary size thresholds for micro-entities, small and medium-sized companies, as well as making certain technical fixes to the UK’s audit framework. These changes are designed to be the first step toward modernising the UK’s reporting framework, so it is simpler and better for business, supporting the Government’s aim to have the highest sustained growth in the G7. DBT will also launch a consultation in 2025 aimed at simplifying and modernising the UK’s non-financial reporting framework.
• Other modernisation proposals - Efforts to modernise will also include examining the potential for updating shareholder communication in line with technology and clarifying the law in relation to virtual annual general meetings (AGMs).
• Raising share capital - The Government is also committed to speeding up the process for raising share capital and to implementing the outstanding recommendations from the Secondary Capital Raising Review, published in 2022. The changes will speed up and simplify the process for companies raising new share capital, for example by reducing from 10 to 7 working days the minimum time in which a company must offer new shares to existing shareholders before offering them to the wider market.

(Parliament, Written Statement – The UK’s Modern Industrial Strategy, 14.10.2024)

DBT: Simpler corporate reporting consultation – Summary of responses

On 14 October 2024, the Department for Business and Trade (DBT) published a summary of responses to its May 2024 corporate reporting consultation.

That consultation sought views on proposals affecting medium-sized companies and these included whether to raise the employee threshold that help determine company size from 250 to 500 employees for medium-sized companies and whether to exempt medium-sized private companies from having to prepare a Strategic Report as part of the annual reports and accounts.

While most respondents agreed with these proposals, many felt they should be introduced, or considered, as a part of a wider package of change rather than in isolation. There was also a low level of responses to the consultation. As a result, the proposals are not being taken forward at this time but will be considered as part of the Government’s broader non-financial reporting review.

(DBT, Simpler corporate reporting consultation – Summary of responses, 14.10.2024)

DBT: Value of non-financial reporting to investors – Research and analysis

On 14 October 2024, the Department for Business and Trade (DBT) published research and analysis in relation to the value of non-financial reporting information (NFR) to investors.

The study conducted used a mixed methods approach to:

• examine the uses of NFR by different types of investors through a series of interviews and survey with investors; and
• estimate the quantitative value of NFI by determining the relative value of different elements of NFR.

The study found that investors believe that the UK non-financial reporting regulations lead to more and better quality non-financial information being available. This information plays an important role in understanding risks and opportunities when investing in companies. If investors had less or worse quality non-financial information it would negatively impact their ability to assess investments. Investors would also benefit from improved assurance and comparability in NFR. The study found there is greater demand for these kinds of improvements in reporting than for a greater volume of ESG information being made available.

Companies House: Economic Crime and Corporate Transparency Act – Outline transition plan for Companies House

On 16 October 2024, Companies House published an outline transition plan which includes a timetable for implementation of outstanding measures being introduced via the Economic Crime and Corporate Transparency Act 2023 (ECCTA). Among other things, ECCTA is making amendments to the Companies Act 2006 (CA 2006).

The transition plan notes that around 50 statutory instruments will be commenced over 18 months with implementation activity and transitional periods continuing until completion in 2027. Timelines are dependent on suitable Parliamentary time and will be kept under review.

As well as summarising changes that came into effect on 4 March 2024 and 1 May 2024, the transition plan sets out several key future steps:

By autumn 2024

• Companies House will be able to issue financial penalties for relevant offences under ECCTA and the CA 2006.

By winter 2024 into 2025

• Expedited striking off of companies formed on a false basis will be possible.
• The register will be annotated in various circumstances, such as when a company has a disqualified director.

By spring 2025

• Authorised Corporate Service Providers (ACSPs) will be able to carry out verification services.
• Individuals will be able to voluntarily verify their identity.
• Applications for residential address suppression from public disclosure will be assessed.

By summer 2025

• Access to certain trust information on the Register of Overseas Entities will be allowed on request.

By autumn 2025

• Identity verification will become compulsory for new incorporations and new appointments for directors and persons with significant control (PSCs).
• A 12-month transition phase will begin for existing directors and PSCs to verify their identity.

By spring 2026

• Identity verification will be required for presenters filing any document at Companies House.
• Third-party agents filing on behalf of companies must be registered as ACSPs.
• Documents delivered by disqualified directors will be rejected unless delivered by an ACSP for specified filings.

By the end of 2026

• Limited partnerships will need to submit more information for greater transparency.
• Completion of the transition period for identity verification of all individuals on the register.
• Enhanced cross-checking of information and data between Companies House and other public and private sector bodies.

Following accounts reform:

• Companies House will mandate software-only filing for all accounts.
• The option for small companies and micro-businesses to file abridged accounts will be removed.
• All companies will be required to file profit and loss accounts and small companies to file their directors’ report.
• The number of times a company can shorten its accounting reference period will be limited.

Following the implementation of restrictions on corporate directors

• Corporate directors must have an all-natural person board, and all directors must verify their identity.
• Only UK corporate entities with legal personality will be capable of acting as corporate directors.

(Companies House, Policy Paper, Economic Crime and Corporate Transparency Act 2024, Outline transition plan for Companies House, 16.10.2024)

House of Lords: Report of Select Committee on review of Modern Slavery Act 2015

House of Lords: Report of Select Committee on review of Modern Slavery Act 2015

On 16 October 2024, the UK House of Lords Select Committee (Select Committee) published its report on the review of the UK Modern Slavery Act 2015 (MSA). It found that the UK has “fallen behind” on international due diligence developments and recommends that the UK adopts modern slavery due diligence legislation, as well as forced labour import bans, in part recognising that many UK companies are already subject to such requirements in other jurisdictions.