Corporate Law Update: 6 - 12 January 2024

This week:

ClientEarth’s application to challenge the approval of a prospectus is dismissed

The High Court has dismissed a judicial review application by ClientEarth to challenge a decision of the Financial Conduct Authority (FCA) to approve a prospectus published by an oil and gas exploration company.

ClientEarth had alleged that a prospectus published by Ithaca Energy plc on its initial public offering (IPO) in November 2022 failed to comply with two aspects of the UK Prospectus Regulation.

Specifically, it claimed that the prospectus had failed to disclose Ithaca’s assessment of the materiality and specificity of risks to its business, and that it failed to include necessary information that was material to a person investing in Ithaca’s securities.

As a result, it sought a declaration that the FCA had wrongly approved the prospectus for publication.

The court dismissed the application, noting that the FCA had responsibility and authority to reach an evaluative judgment as to whether the prospectus complied with law. The FCA had interpreted the law correctly and reached a rational decision, and the court could not therefore impugn it.

Read more about the court’s decision on ClientEarth’s application for judicial review of the approval of Ithaca’s prospectus in our separate in-depth piece

Draft legislation published to extend invoice payment practice reporting regime

The Government has laid draft regulations in Parliament which, if approved, will extend the UK’s payment practices reporting regime.

Under the current regime, large UK companies and limited liability partnerships (LLPs) must publish a half-yearly report setting out their practice for paying supplier invoices, as well as statistics for their actual performance in paying invoices over the preceding year.

The regime is currently due to expire on 6 April 2024.

The Government previously consulted on extending the regime and extending reporting obligations. In November 2023, it confirmed that it intended to extend the regime for seven years and to widen reporting to include the total sum due but not paid within each reporting period and the proportion of late payments that relate to disputed invoices.

The draft regulations, if implemented, will extend the current regime so that it expires on 6 April 2031. They will also require in-scope entities to report, for each reporting period:

  • the sum total of payments made within specified 30-day periods;
  • the sum total of payments not made within the required payment period; and
  • the percentage of payments that were not made during the required payment period as a result of a dispute.

If adopted, the regulations will come into effect on 5 April 2024.

Access the draft Reporting on Payment Practices and Performance (Amendment) Regulations 2024