Corporate Law Update: 27 January - 2 February 2024
- New legislation sets out reformed regime for public offers of securities in the UK
- The Financial Reporting Council publishes new guidance to accompany the UK Corporate Governance Code
New legislation has been made reforming UK’s regime for regulating public offers of securities.
The Government previously laid draft regulations in Parliament in November 2023. The final regulations are, in all relevant respects, identical to those draft regulations.
The new regime will replace the UK’s existing securities prospectus regime when the UK Prospectus Regulation (derived from the EU Prospectus Regulation) is repealed.
Under the new regime, it will be unlawful to offer securities issued by a company to the public unless an exemption applies. This differs from the current regime, under which there is no general prohibition on offering offer securities to the public, but (subject to certain exemptions) there is a requirement to publish a prospectus.
In substance, however, the regime will remain very similar. The key objective of the new regime is to devolve more authority and responsibility to the Financial Conduct Authority (FCA) for regulating the circumstances in which a prospectus will be required and what the prospectus must look like.
The powers given to the FCA came into force on 30 January 2024, allowing the FCA to begin making new rules in advance of the new regime coming into effect.
The new regime itself will come into force on a day yet to be decided by HM Treasury.
The Financial Reporting Council (FRC) has published guidance to accompany the new 2024 edition of the UK Corporate Governance Code.
Last week, we reported that the FRC had launched a new edition of the Code, which will apply to financial years beginning on or after 1 January 2025 (except for changes to Code Provision 29, which will apply to financial years beginning on or after 1 January 2026). Read our previous Corporate Law Update for more information on the UK Corporate Governance Code 2024.
The new UK Corporate Governance Code Guidance is designed to sit alongside the 2024 Code and provide advice, further detail and examples, but it is not intended to be prescriptive.
The new guidance incorporates and supersedes the FRC’s existing guidance that accompanies the Code, including its Guidance on Board Effectiveness, its Guidance on Audit Committees and its Guidance on Risk Management, Internal Control and Related Financial and Business Reporting.
The guidance follows the same structure as the UK Corporate Governance Code, but with an additional section providing good practice guidance for the successful management of board committees.