Corporate Law Update: 29 November - 5 December 2025
04 December 2025This week:
- The court grants an injunction to force a company to circulate a written resolution requisitioned by its shareholders
- The Takeover Panel announces changes to the Takeover Code to address dual class share structures
- The FRC publishes its first review of reporting against the Wates Principles for Large Private Companies
- Other items this week
Shareholders were entitled to apply to court to circulate written resolution
The High Court has held that shareholders in a company were entitled to apply to the court for an order requiring the company to circulate a written resolution to its shareholders and permitting them to circulate the resolution themselves if the company were to refuse.
The decision clarifies an area of law that has been subject to uncertainty for some time.
Webster and another v ESMS Global Ltd and others [2025] EWHC 3107 (Ch) concerned a company formed to acquire a medical toxicology information services business.
Two of the company’s shareholders sent the company a formal request under section 292 of the Companies Act 2006 to circulate a written resolution to its shareholders to appoint a new director.
Two of the company’s four directors refused to agree to circulate the resolution, arguing that it was vexatious. With the board deadlocked, the resolution could not be circulated.
The two shareholders applied to the court for an injunction to require the company to circulate the proposed written resolution, or, if the company were unable to do so because its board could not agree, to allow the shareholders to circulate the resolution themselves.
The two dissenting directors opposed the injunction. They argued that the Companies Act 2006 already provides a remedy where a company fails to circulate a written resolution, namely by imposing criminal liability on the directors. Based on previous case law, they said, this precluded the court from granting a different remedy.
The court, however, disagreed and granted the injunction.
The judge concluded that section 292 explicitly creates private rights for members of a company which can be enforced against the company. The fact that criminal penalties also existed to secure compliance did not prevent private rights from arising.
The court was entitled to explore ways to ensure that the private rights created by section 292 can be respected. In the circumstances, an injunction of the kind sought was a suitable way of achieving that.
The decision runs contrary to the thinking to date of several commentators, which had been that, where a company refuses a shareholder’s request to circulate a written resolution, the shareholder will need to requisition a formal general meeting under section 303 of the Companies Act 2006.
That said, the court’s decision does not hand shareholders a self-help remedy. Where a board refuses to circulate a written resolution, aggrieved shareholders cannot simply circulate it themselves. Instead, they will need to apply for an injunction, a process that is likely to be time-consuming and costly.
Takeover Panel confirms changes to Takeover Code to address dual class share structures
The Takeover Panel has published Response Statement RS 2025/1, in which it has confirmed that it will be making changes to the Takeover Code to deal with target companies that have “dual class share structures”.
The Panel is also making changes relating to initial public offers (IPOs) and share buy-backs.
The changes will come into effect on 4 February 2026.
The response follows the Panel’s consultation on the proposed changes in July 2025.
What are dual class share structures?
A dual class share structure (DCSS) normally involves a company issuing at least one class of special shares alongside its ordinary shares. These special shares – often referred to as “class B” shares, although they can carry any label – are usually held by management and typically carry weighted voting rights in certain circumstances.
DCSS structures are typically used to provide founders of, or initial investors in, a business with ongoing enhanced influence as their economic participation dilutes over time, and to protect against a change of control. Class B shares typically convert to ordinary shares or become extinguished on certain trigger events.
Under the UK Listing Rules, a company with a DCSS can obtain a listing for its ordinary shares (and, therefore, access to the UK’s senior primary capital markets), subject to certain conditions. These include restrictions on transfers of the class B shares and on matters to which enhanced voting rights apply, and a requirement that class B shares not held by directors or employees expire after 10 years (a sunset provision).
In addition, the London Stock Exchange announced in November 2025 that, as part of reforms to its AIM market, it has begun accepting applications from DCSS companies that meet UK Listing Rules requirements to admit their shares to trading on AIM as an alternative. You can read more about recent changes to AIM in our previous Corporate Law Update.
The Panel is making the following changes and clarifications to the Code in relation to DCSSs.
Mandatory offers. If class B shares are extinguished or convert into ordinary shares on any of certain defined “trigger events” and, as a result, a shareholder’s percentage of voting rights in the company crosses the mandatory offer threshold, the starting point is that the shareholder will be required to make an offer for the company under Rule 9 of the Code.
However, the Panel will normally grant a dispensation from Rule 9 unless the trigger event is the expiry of a sunset provision or the shareholder in question had reason to believe, when it acquired the class B shares, that the trigger event would occur.
The Panel will also be able to grant a dispensation from Rule 9 if, at the time the company achieves its IPO, it makes “appropriate disclosure” in its IPO document of the maximum percentage of voting rights the shareholder could have following a trigger event. This kind of dispensation would apply on all trigger events, including expiry of a sunset provision.Acceptance condition. Under the Code, a contractual offer (i.e. an offer that is not structured as a scheme of arrangement) must be subject to a condition that the bidder has acquired or will, pursuant to the offer, acquire more than 50% of the voting rights in the target.
For a DCSS target company, this condition applies at two points: before any class B shares convert or are extinguished (Test 1); and (if Test 1 is satisfied) again after any class B shares convert or are extinguished (Test 2).Comparable offers. If proposing to make an offer for a DCSS target, a bidder will be required to consult the Panel in advance.
This is to ensure the Panel is comfortable that an offer does not provide favourable treatment for the class B shareholders compared with ordinary shareholders. This might be the case if, for example, the offer price per class B share is higher than the offer price per ordinary shares, but the class B shares will convert into ordinary shares on completion of the takeover.
In relation to IPOs and share buy-backs, the Panel is making the following changes to the Code.
IPOs. If a company becomes subject to the Code on an IPO, it will be required to disclose certain information about the Code, including details of any person (or group of persons) who would be interested in more than 30% of its voting rights, and any dispensation from Rule 9 granted to those persons by the Panel.
Share buy-backs. The Panel is proposing changes to clarify the circumstances in which it will grant dispensation from the requirement under Rule 9 to make a mandatory offer where a person’s percentage holding of voting rights increases as a result of a share buy-back or redemption.
FRC reports on application of the Wates Principles for Large Private Companies
The Financial Reporting Council (FRC) has published its first report on how large private companies have been applying the Wates Principles.
Since 1 January 2019, the largest UK private companies have been required to report on their corporate governance arrangements. The requirement applies to companies that have 2,000 or more employees, or which have both turnover above £200m and a balance sheet total above £2bn.
A company subject to the requirements must state (among other things) which corporate governance code the company adopted (if it adopted a code at all) and how it applied that code.
To support companies with this reporting requirement, a coalition group chaired by Sir James Wates CBE published a set of corporate governance principles known as the Wates Corporate Governance Principles for Large Private Companies (or, more colloquially, the Wates Principles).
The Wates Principles operate on an “apply and explain” basis. Rather than simply confirming compliance or explaining deviation (as is the approach for the FRC’s UK Corporate Governance Code), companies are encouraged to explain, in a more narrative fashion, how they have applied each provision of the Wates Principles.
The report does not state how many companies’ annual reports the FRC reviewed, nor over what period. However, it does highlight some interesting observations.
Purpose and leadership (Principle 1). The FRC notes lower quality reporting that is generic and lacks specific examples. It recommends companies state their purpose and strategy and how they communicate this to stakeholders, discuss outcomes of board actions, report on how culture and staff wellbeing can be improved, and explain how company values underpin operations.
Board composition (Principle 2). The FRC feels reporting is “boilerplate”, noting the composition of the board but not explaining the role of different individuals. It encourages companies to report on the intersection of governance between a holding company and its subsidiaries; diversity of skills, expertise and professional background on the board (as well as any gaps and actions to address them); the role of any non-executive directors; and board evaluation.
Directors’ responsibilities (Principle 3). Reporting in this area was better, particularly in relation to committees of the board. The FRC encourages companies to explain who in the company is ultimately responsible for its long-term success; internal lines of accountability; and key aspects of board committees, including purpose, terms of reference, skills, remit and culture.
Risk and opportunities (Principle 4). Companies provided more insightful disclosure and greater clarity in this area. The FRC notes that many companies reported on the board’s role in assessing long-term value creation, but fewer reported on the processes for identifying opportunities. It encourages companies to report on the process for managing risk.
Remuneration (Principle 5). The FRC feels reporting in this area is weaker than in others, utilising only broad statements of intent to attract and retain talent. It says better reporting provided insight into the rationale for remuneration decision (including on how pay levels are set), which does not necessarily mean disclosing specific figures.
Stakeholder relations and engagement (Principle 6). Reporting in this area was of a high standard, with good reports disclosing how companies engage with key stakeholders and explicit cross-referencing to the company’s section 172 statement.
Fragmentation. Feedback suggests that various parts of the annual report are often prepared by different teams within an organisation. The FRC says this can hinder coherence and consistency. It encourages companies to consider the annual report as a cohesive and integrated document, to utilise cross-referencing and to reduce duplication within the report.
Access the FRC’s review of reporting against the Wates Principles (opens PDF)
Access the Wates Corporate Governance Principles for Large Private Companies (opens PDF)
Access the FRC’s explainer on the Wates Principles and “apply and explain”
Other items this week
FCA publishes updated prospectus forms and checklists. The Financial Conduct Authority (FCA) has published updated forms and checklists for issuers and applicants looking to publish a prospectus under its new Prospectus Rules Admission to Trading on a Regulated Market (PRM) sourcebook. An issuer or applicant may now use the updated forms in anticipation of the FCA approving a prospectus on or after 19 January 2026, when the UK’s new public offers of securities regime comes into effect. The FCA has also updated its UK Listing Rules checklists.
Read our previous Corporate Law Update for more on the FCA’s transitional provisions for prospectus submissions in the run-up to the UK’s new public offers of securities regime
Access the FCA’s updated prospectus forms and checklists under the new PRM sourcebook
Access the FCA’s updated prospectus cross-reference lists under the new PRM sourcebook
Access the FCA’s updated UK Listing Rules checklistsNew legislation clarifies that digital assets are property. The Property (Digital Assets etc.) Act 2025 has received Royal Assent. The Act clarifies that digital assets, such as cryptoassets and tokens, qualify as property under the law of England and Wales, notwithstanding that they do not fall into traditional categories of property. The Act takes effect from 2 December 2025.
Access the Property (Digital Assets etc.) Act 2025
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