Corporate Law Update: 5 - 11 August 2023
- The Government updates its technical guidance on the UK’s Register of Overseas Entities
- The FCA is to consult on disclosures under international sustainability standards and on new transition plan disclosures
- The FCA will now suspend a non-UK issuer’s listing if it fails to publish an adequate audit report with its financial statements
- The FRC is consulting on changes to its Ethical Standard for auditors
The Government has updated its technical guidance on registration and verification under the UK’s Register of Overseas Entities (ROE).
Under the ROE regime, an overseas entity that holds certain types of real estate in the UK must register on the ROE and provide details of its beneficial owners (and, in some case, its managing officers and any trusts in its corporate structure).
The guidance has no legal force but sets out the Government’s approach to the regime.
The updated guidance contains new sections on (among other things) how to identify limited partners in a non-UK limited partnership (which mirror the equivalent position under the UK’s PSC regime), how to apply to rectify information on the register, and Companies House’s approach to levying fines.
The guidance has also been updated to reflect recent changes to the protection regime, which allows a person to apply to suppress their details from public view if they are at serious risk of being subjected to violence or intimidation. Under recent changes, an applicant no longer needs to show that the risk arises through an association with the overseas entity. Read our previous Corporate Law Update for more information on changes to the ROE protection regime.
The Financial Conduct Authority (FCA) has published Primary Market Bulletin 45, confirming that it intends to consult on incorporating the new IFRS Sustainability Disclosure Standards (SDS) published by the International Sustainability Standards Board (ISSB) into listed company disclosures.
The ISSB published its first two Sustainability Disclosure Standards in June 2023. The Financial Reporting Council (FRC) subsequently launched a call for evidence in July 2023 seeking views on whether those Standards should be adopted in the UK. That call for evidence is open for responses until 1 October 2023. The final decision on adoption will be taken by the UK Government.
Assuming that the SDS are adopted in the UK, the FCA intends to update its existing climate-related disclosure rules, which require listed companies to disclose against the Recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), to reference the SDS.
The FCA envisages launching that consultation in the first half of 2024, with a view to bringing the new requirements in for financial years beginning on or after 1 January 2025.
The FCA also intends to consult on guidance for listed companies on disclosing their transition plans. This follows a formal consultation by the UK’s Transition Plan Taskforce on a new framework for disclosing plans to transition to a low-carbon economy. That consultation closed in February 2023.
The Financial Conduct Authority (FCA) has published Primary Market Bulletin 45, confirming its position with regard to audit reports of non-UK issuers.
Under the FCA’s Disclosure Guidance and Transparency Rules (specifically, DTR 4.1.7R(4)), a non-UK company whose securities are traded on a UK regulated market (such as the London Stock Exchange’s Main Market) must include an audit report in its financial statements.
That audit report must be given by an auditor who is on the Financial Reporting Council’s register of third country auditors.
The FCA has now confirmed that, if a non-UK issuer publishes financial statements that do not contain an audit report by a registered third country auditor, it will suspend the issuer’s listing until it publishes a compliant audit report.
The Financial Reporting Council (FRC) is formally consulting on proposed changes to its Ethical Standard.
The Ethical Standard applies to audits of financial statements undertaken under the International Standards on Auditing (UK), as well as to other “public interest assurance engagements”. It sets out a framework of ethical principles and supporting provisions for auditors and assurance practitioners to underscore and create trust and confidence in their integrity and objectivity.
The Ethical Standard was last updated in December 2019. The proposed changes follow the FRC’s position paper on the topic in June 2022.
The FRC has asked for comments by 31 October 2023.