Corporate Law Update: 22 - 28 October 2022

28 October 2022

In this week’s update: The Law Society and CLLS comment on the new Economic Crime Bill, the FRC’s annual review of corporate reporting and the FRC’s 2023 taxonomy suite.

Law Society and CLLS comment on new Economic Crime Bill

A joint working party of the Law Society and the City of London Law Society has published a response to the Government on corporate, partnership and Register of Overseas Entities elements of the Economic Crime and Corporate Transparency Bill, which is currently making its way through Parliament.

The response endorses the Government’s aims with the Bill, including to combat economic crime, enhance the integrity of the register at Companies House and improve the power of the Registrar of Companies to correct the register and query information.

However, the response also highlights numerous areas in which the Bill lacks certainty or in which the proposed powers appear to go beyond what is necessary to achieve the Bill’s aims.

The response also notes that:

  • proposed amendments to the Limited Partnerships Act 1907 could pose problems for funds that currently sit outside the Alternative Investment Fund Managers (AIFM) regime; and
  • proposed amendments to the Register of Overseas Entities regime in the Economic Crime (Transparency and Enforcement) Act 2022 could create serious and critical obstacles to property transactions involving an overseas entity.

FRC publishes annual review of corporate reporting

The Financial Reporting Council (FRC) has published its annual review of corporate reporting. The review covers 252 companies’ accounts.

The FRC notes that the overall quality of corporate reporting within the FTSE 350 was maintained, but it found errors in cash flow statements and scope for improvement in reporting on financial instruments and deferred tax assets.

The report also covers climate-related reporting, following new Listing Rules requiring disclosure against the Taskforce on Climate-related Financial Disclosures Recommendations, noting that listed companies had generally “risen to the challenge” and mostly provided disclosures as expected.

The FRC will focus on the travel, hospitality and leisure, retail, construction materials and gas, water and multi-utility sectors when conducting its next review in 2022/2023.

FRC publishes 2023 taxonomy suite

The Financial Reporting Council (FRC) has published its 2023 taxonomy suite.

The 2023 suite incorporates changes to all FRC taxonomies, including UK IFRS, FRS 101, FRS 102 and the UK Single Electronic Format (UKSEF). The suite also contains taxonomy documentation, supporting documents, key information sheets and release notes.

Following feedback on UKSEF 2022, the FRC has announced that the 2023 version of UKSEF makes use of XBRL's "multiple target document" feature. This will enable relevant issuers to file one report to multiple regulators. The FRC notes that the new feature satisfies the technical requirements for both the European Single Electronic Format (ESEF) and FRS 102/UK IFRS tagging.