Corporate law update: 16 - 22 May

This week: 

• When interpreting a disclosure in a disclosure letter and deciding whether it was fair, the court could not take into account pre-contractual discussions between the parties

• When deciding whether a corporate seller gave warranties fraudulently, it was not possible to “pool” the differing knowledge of different seller executives

• Companies House sets out its priorities for 2026/2027

• A timetable is laid out for various capital markets reforms, including sustainability reporting, share digitisation and securities settlement

• Other items of interest

Court issues guidance on standard of disclosure for M&A transactions

The High Court has delivered helpful guidance on the standard of disclosure required to qualify warranties in a share sale agreement.

In doing so, the judge also commented on the extent to which parties may rely on extraneous statements made during due diligence in an attempt to supplement or qualify contractual disclosures.

Veranova Bidco LP v Johnson Matthey plc and ors [2026] EWHC 1021 (Comm) concerned the sale of shares in a health business.

Following completion, the buyer argued a failure to disclose negotiations with a key customer amounted to a breach of warranty. The court agreed.

The key question was whether the sellers had effectively disclosed those negotiations to the buyer via the disclosure letter. If they had, the buyer would have no claim for breach of warranty.

The sellers had provided details of the negotiations to the buyer through due diligence. However, importantly, although the disclosure letter referred to the contract in question and the potential for negotiations, it omitted key information regarding the negotiations.

The court found that, as a result, there had not been effective disclosure against the warranty. In reaching this decision, the court held that it was not possible to interpret the disclosure by reference to the discussions that had taken place between the buyer and the sellers.

The disclosure had to be read within the “four corners” of the sale documentation. That documentation contained an entire agreement clause and a no reliance statement, which specifically disapplied any pre-contractual discussions between the buyer and sellers.

The decision shows the need for careful drafting when making disclosures.

Read our separate article on the court’s decision that statements made during due diligence could not be taken into account into deciding whether disclosure was fair

Access the court’s decision in Veranova Bidco LP v Johnson Matthey plc and ors [2026] EWHC 1021 (Comm) on whether disclosures on a share sale were fair

Court confirms test for deciding whether corporate sellers gave fraudulent warranties

The High Court has analysed the state of mind that is required of the individual officers of a company when deciding whether the company had acted fraudulently in giving a warranty in a share sale agreement that turned out to be untrue.

The decision arises from the case of Veranova Bidco LP v Johnson Matthey plc and ors [2026] EWHC 1021 (Comm), summarised in the preceding item in this update. See that item for more information on the background to the case.

In the share sale agreement, the sellers had limited their liability for breach of warranty to zero, except where the breach arose from the fraud or wilful misconduct of the sellers.

The buyer argued that the states of mind of four of the principal seller’s senior executives were sufficient to establish that the breach of warranty was fraudulent.

The court found that, to attribute dishonesty (and, therefore, fraud) to that seller, the buyer had to show that at least one of those senior executives knew both of the facts that gave rise to the breach of warranty and of the terms of the warranty and that it was untrue.

In the event, the judge found that two of the executives knew of the facts but had not been aware of the terms of the warranty, whilst the other two knew of the terms of the warranty but had not been aware of the facts that rendered it untrue.

It was not possible to “pool” these executives’ collective knowledge to attribute fraud to the seller. There needed to be one single individual who had the complete extent of knowledge.

The decision shows the need for sellers to test warranties to ensure they believe in their truth or have made adequate disclosure within the requirements of the contract documents.

Read our separate article on the court’s decision that the knowledge of different individuals could not be aggregated to attribute fraud to a corporate seller

Companies House sets out priorities for 2026/2027

Companies House has published its business plan for 2026/2027. The plan sets out the priorities for Companies House for the forthcoming year, which include the following.

• Data at Companies House. Companies House intends to ensure the data it keeps is authoritative and transparent, including by validating data and cleaning up the registers it keeps, employing intelligence and analytical capability to prevent problematic company formations and filings, and scaling up data-sharing with government and law enforcement partners.

• Tackling economic crime. Companies House intends to take targeted enforcement action against people who misuse the registers it keeps and to take “proportionate action” against individuals who fail to verify their identity.

• Company law reforms. Companies House will continue to implement new requirements whilst trying to minimise administrative burden. This includes supporting individuals with verifying their identity, taking steps towards mandatory identity verification for individuals who file on behalf of companies, and progressing reforms relating to limited partnerships.

• Service delivery. Companies House will invest in digital enhancements, including to simplify customer experience and improve efficiency, and it will set out a roadmap for moving away from paper filings.

Read Companies House’s business plan for 2026/2027

Capital markets reform timetable laid out

The Financial Services Regulatory Initiatives Forum has published the Regulatory Initiatives Grid, which sets out timeframes for projects within the financial services and capital markets ecosphere.

The Forum is an initiative co-chaired by the Financial Conduct Authority (FCA) and the Bank of England, whose purpose is designed to foster co-ordination between nine different UK regulatory and government organisations.

The Grid confirms the following projects and timelines.

• Sustainability reporting. The Government published the UK’s first Sustainability Reporting Standards (UK SRS S1 and S2) in February 2026. These are currently voluntary. The FCA consulted in January 2026 on introducing mandatory UK SRS reporting for listed companies. (Read our previous Corporate Law Update on the FCA’s proposals for mandatory reporting under UK Sustainability Reporting Standards.) The FCA intends to publish its policy statement from this consultation in Autumn 2026. Meanwhile, the Government will also consider the future role of UK SRS within the Companies Act 2006.

• Alternative investment funds. The Government consulted in March 2025 on a new simplified regulatory framework for alternative investment fund managers. HM Treasury intends to publish draft legislation, and the FCA intends to publish a consultation on draft rules, in mid-2026.

• DTR review. The FCA is starting a review of its Disclosure Guidance and Transparency Rules (DTR) to consider the value of the current rules for issuers and investors. It intends to publish a consultation in Q3 2026.

• Listed investment entities. The FCA intends to bring forward its review of some aspects of the UK Listing Rules and their application to specific types of investment entity, following feedback that certain eligibility criteria for listing (particularly regarding risk-spreading) may be unduly restrictive. It intends to consult on this in Q4 2026.

• Share digitisation. The Dematerialisation Market Action Taskforce (DEMAT) published its final report on digitising listed company shares in July 2025. In October 2025, the Government tasked DEMAT with reporting on actions to implement “Step 1” of the project, which would see existing paper-based registers replaced by digitised share registers. DEMAT will report back by Summer 2026 with a recommended “go-live” date for Step 1, which should be before the end of 2027. (Read our previous Corporate Law Update for more information on the share dematerialisation project.) 

• Securities settlement. The Government has previously announced that it intends to legislate to mandate T+1 settlement from 11 October 2027. It consulted on draft legislation in late 2025 to early 2026 in advance of T+1 settlement commencing in 2027.

Read the Regulatory Initiatives Grid for May 2026 (opens PDF)

Other items this week

• Legislation introduced to tighten payment of invoices. As promised in the King’s Speech, the Government has introduced the Commercial Payments Bill into Parliament. The Bill aims to improve protections for small suppliers by tightening payment of invoices by large customers. Measures include imposing a maximum payment period of 60 days (with exceptions where the supplier is not smaller than the purchaser), fixing interest on late payments at the statutory rate of interest (currently 8% above Bank of England base rate), requiring disputes to be raised at least one week before payment is due, and giving the Small Business Commissioner power to adjudicate disputes. The Bill is subject to debate in Parliament. We will report in more detail on the changes when the Bill becomes law.

  Read the Commercial Payments Bill (opens PDF)

• FRC publishes annual report on structured digital reporting. The Financial Reporting Council (FRC) has published its annual report on structured digital reporting in annual financial reports for 2025/2026. The report is based on a detailed review of 30 UK listed companies’ 2024/25 digital annual reports, market-wide analysis of digital reporting using analysis tools, and ongoing engagement with relevant stakeholders. The report identifies areas where basic checks would address quality issues, alongside more judgmental areas.

  Read the FRC’s structural digital reporting report for 2025/2026

  Read the FRC’s structural digital reporting factsheet for 2025/2026 (opens PDF)

• Government withdraws ROE regulations. On 8 May 2026, we reported that the Government had introduced draft regulations to broaden access to trust information held on the UK’s Register of Overseas Entities. These draft regulations have now been withdrawn. We understand this was due to the need for refinements in some of the drafting, but that replacement draft regulations will be laid in due course.

  Read our previous Corporate Law Update on draft regulations extending access to trust information on the Register of Overseas Entities