Consultations launched by the Financial Conduct Authority (FCA), on significant reform proposals to the UK listing regime, and the Competition and Markets Authority (CMA), on the development and use of artificial intelligence (AI) foundation models, will be of interest to in-house lawyers. The High Court’s decision to refuse ClientEarth permission for its derivative claim against Shell on its directors’ approach to energy transition and climate risk is noteworthy too.
Corporate
The FCA has published a consultation paper seeking views on significant reform proposals to the UK listing regime. The main proposal comprises replacing the existing standard and premium segments with a single UK listing category for equity shares in commercial companies. This would involve (among other things):
- Removing eligibility rules requiring a three-year financial and revenue earning track record as a condition for listing, and no longer requiring a clean working capital statement.
- Modified eligibility and ongoing rules requiring that a company has an independent business and operational control over its main activities.
- Modified rules requiring listed companies to conclude a shareholder agreement with a controlling shareholder to ensure flexibility by moving to a comply or explain and disclosure-based approach.
The consultation closes on 28 June.
The FCA has also published a series of engagement papers relating to the new regime for public offers and admissions to trading on UK public markets. These include:
- Admission to trading on a regulated market (Engagement Paper 1).
- Further issuances of equity on regulated markets (Engagement Paper 2).
- Protected forward-looking statements (Engagement Paper 3).
The deadline for responding to the questions raised by the engagement papers is 29 September.
The Code Committee of the Takeover Panel has published a consultation paper seeking views on amendments relating to Rule 21 of the Takeover Code (restrictions on frustrating action) and other matters. Responses are requested by 21 July.
Climate change
The High Court has concluded that environmental NGO, ClientEarth, failed to make out a prima facie case to enable the grant of permission under section 261(1) of the Companies Act 2006 (CA 2006) for it to continue a derivative claim against Shell plc’s directors for alleged breaches of their duties in connection with the company’s climate change risk management strategy. The duties alleged to have been breached included the duty to promote the success of the company under section 172 of the CA 2006 and the duty to exercise reasonable care, skill and diligence under section 174. ClientEarth subsequently announced that it has applied to the High Court for an oral hearing of its application to continue its derivative claim against Shell plc.
The UK government has convened a new Net Zero Council with business and finance leaders to drive forward industry’s transition to net zero. The key objectives of the Council include ensuring sectors and companies have a pathway to net zero (with construction, manufacturing, retail, and water and waste identified as priority sectors, alongside the university and R&D sectors).
Artificial intelligence
An initial review of competition and consumer protection considerations in the development and use of artificial intelligence (AI) foundation models has been launched by the CMA. AI foundation models, which include large language models and generative AI, that have emerged over the past five years, have the potential to transform much of what people and businesses do. The CMA is, therefore, seeking to understand how foundation models are developing and produce an assessment of the conditions and principles that will best guide the development of foundation models and their use in the future. The CMA invites comments by 2 June.
Digital Markets, Competition and Consumers Bill
On 25 April, the long-anticipated Digital Markets, Competition and Consumers Bill was introduced into Parliament, had its first reading and was published. The Bill introduces major changes to consumer protection law, including empowering the CMA to enforce consumer protection law directly without having to take each case to court. In addition, it allows the CMA and the courts to impose fines on businesses that breach consumer protection law of up to 10% of their global turnover. The Bill makes significant changes to digital markets and competition law as well.
Economic Crime and Corporate Transparency Bill
The Economic Crime and Corporate Transparency Bill has completed its committee stage in the House of Lords. The Bill will now move to the report stage for further scrutiny. A date for this has not yet been scheduled.
Employment
The government has launched a consultation on reforming the calculation of annual leave and holiday pay and the record-keeping requirements under the Working Time Regulations 1998 (SI 1998/1833), and the consultation requirements under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (SI 2006/246). These measures were first proposed in the policy paper Smarter regulation to grow the economy. The consultation will remain open until 7 July.
Dates for your diary
1 June
Unified Patent Court Agreement comes into force and new Unitary Patent system commences.
UK Vertical agreement block exemption Order transition period ends.
5 June
Part 3 of Register of Overseas Entities (Disclosure and Dispositions) Regulations 2023 comes into force.
9 June
The Low Pay Commission consultation about the National Minimum Wage and National Living Wage rates for 2024 closes.
13 June
Deadline for responding to UK Parliament’s call for written evidence on Data Protection and Digital Information (No 2) Bill.
21 June
Deadline for responses to consultation on government’s AI white paper.
22 June
Consultation on over-collection of tax in cases of non-compliance with off-payroll working rules closes.
Implementation deadline for the Directive as regards disclosure of income tax information by certain undertakings and branches.
26-27 June
HMRC v Professional Game Match Officials Ltd, a case concerning employment status and types of working, is due to be heard by the Supreme Court.
30 June
Expiry of Regulations extending duration of R&D and specialisation block exemption regulations published in Official Journal.
