Corporate Law Update: 11 - 17 November 2023
- The UK government is consulting on paring back the UK’s national security investment screening regime
- The QCA publishes an updated version of its Corporate Governance Code
- The Transition Plan Taskforce is consulting on sector-specific transition plan guidance
The Government is seeking views on the UK’s national security investment (NSI) screening regime, including how it can be made more business-friendly whilst maintaining and honing essential protections for the UK’s national security.
The NSI regime, which is set out in the National Security and Investment Act 2021, has been in place since 4 January 2022. It allows the UK government to intervene in and, if necessary, block certain acquisitions and investments where “trigger events” are met, including substantial acquisitions of voting rights or control and acquisitions of material influence.
In 17 specified sectors, parties to a proposed transaction are required to notify the Government before completing. Failure to do so is a criminal offence and could see the transaction unwound.
The Government is particularly interested in the impact of the regime on businesses and investors and whether the scope of the system is proportionate and effective.
In its summary, the Government has indicated that it intends to review the 17 mandatory notification sectors and ensure there is no need to notify transactions that pose no national security risk. (In the last year for which the Government published statistics, there was 866 notification acquisitions, of which only 65 were “called in” and only 14 were subject to final orders.)
Following an interview this week with Deputy Prime Minister Oliver Dowden MP, who is responsible for decisions under the regime, the Financial Times reports that the proposed changes will include removing purely internal restructurings from the scope of the regime and narrowing the scope of transactions involving artificial intelligence (AI) that are subject to mandatory notification.
The Government has asked for responses by 15 January 2024.
The Quoted Companies Alliance (QCA) has updated its Corporate Governance Code.
The Code is designed to act as a framework for good corporate governance for small and mid-sized UK quoted companies. It serves as the corporate governance framework of choice for most AIM companies but is also suitable for smaller listed companies and AQSE Growth Companies.
Changes to the Code include an increased emphasis on engagement with the workforce, independence of non-executive directors, contingency-planning for key staff and ESG matters.
The Code is available from the QCA at no cost for QCA members and for a fee for non-members.
The Transition Plan Taskforce (TPT) is seeking views on “sector deep dives” designed to complement its disclosure framework for UK private sector entities transitioning to a low-carbon economy.
The TPT published its final disclosure framework in October 2023, which makes recommendations for companies and financial institutions to develop “gold-standard” net-zero transition plans. It explicitly builds on the ISSB’s IFRS S2 standard, which sets out climate disclosures for companies.
Specifically, the TPT has asked for feedback on draft guidance for the following sectors:
- asset managers
- asset owners
- electric utilities and power generators
- food and beverages
- metals and mining
- oil and gas
The consultation closes on 29 December 2023.