• The Financial Conduct Authority is consulting on proposals for the new PISCES private securities trading perimeter
• PERG publishes its 17^th annual report on compliance with the Walker Guidelines
• The High Court holds that the “Shareholder Rule” does not apply, meaning a company can assert privilege against its shareholders
• The UK Sustainability Disclosure Technical Advisory Committee endorses incorporating the IFRS S1 and S2 sustainability disclosure standards into UK law
• The Financial Conduct Authority publishes Primary Market Bulletin 53, in which it is consulting on changes to its Knowledge Base
• Institutional Shareholder Services publishes its 2025 benchmark policy updates for the UK and Ireland
• The Government responds to the House of Lords’ recent review of the Modern Slavery Act 2015, including modern slavery reporting

There will be no Corporate Law Update next week or the week after. We wish all our readers a relaxing festive season.

FCA consults on specifics of new PISCES trading platform

The Financial Conduct Authority (FCA) has published Consultation Paper CP24/29, in which it is seeking views on certain specifics of the rules it proposes to lay down for the new PISCES trading platform.

PISCES (short for “Private Intermittent Securities and Capital Exchange System”) is a new framework to allow sophisticated investors to buy and trade securities in public and private companies in a controlled environment away from the primary capital markets, subject to a more proportionate disclosure and market manipulation regime.

Rather than a trading venue, PISCES is a regulatory perimeter within which operators will be able to establish their own platform. Securities on a platform within the PISCES framework would trade intermittently during so-called “trading windows” set by the platform operator.

PISCES will initially operate in a financial services “sandbox” so that it can be properly assessed in controlled conditions.

You can read more about PISCES in our previous in-depth piece.

The FCA is seeking views on the following proposals for the new PISCES perimeter.

• General approach. The FCA intends to set minimum requirements for all PISCES platforms. Beyond this, platform operators would be able to set their own rules within specific parameters prescribed by the regulator. The FCA believes this will cater for a variety of PISCES operator business models and service features.
• Buying and selling. Anyone would be able to sell securities on PISCES (although a company could prevent its own employees from selling securities if they are subject to a contractual lock-up). Only institutional and sophisticated investors, as well as PISCES company employees who sign a “restricted investor statement”, would be able to buy securities.
• Core disclosures. All PISCES companies would need to disclose a set of “core information”. This would include financial information and forecasts, as well as information on share schemes, directors’ transactions, litigation, risks, material contracts, sustainability and major shareholders.
• Additional disclosures. Beyond the core information, individual PISCES platform operators would be able to require companies to disclose further information tailored to the nature of the companies and investors their platform will serve. The operator would need to ensure the additional information it requires is appropriate for the effective functioning of its platform.
• Publishing disclosures. PISCES companies would need to make disclosures to all eligible investors through the platform operator’s disclose arrangements. However, unlike under the UK Market Abuse Regulation, there would be no requirement to make them publicly available. There would be a limited ability for PISCES companies to withhold or delay disclosure. The FCA envisages companies making their disclosures through methods similar to secure data rooms.
• Trading events. Depending on their platform operator’s rules, and within certain guardrails, PISCES companies would be able to decide when, how often and for how long their securities can be traded, and who can trade in them.
• Price parameters. Depending on the platform rules, companies would be able to apply minimum or maximum pricing to trading events (price parameters). Companies would be required to publish information on price parameters, including the methodology used to determine those parameters, in advance of the trading event.
• Permissioned trading events. Depending on the platform rules, companies would be able to restrict who can buy their shares in trading events if to do so would promote or protect their legitimate commercial interests. The FCA suggests this could be used to exclude (among others) competitors, or persons located in non-UK jurisdictions, from acquiring the company’s securities.
• Market abuse and manipulation. As previously confirmed, the UK Market Abuse Regulation will not apply to securities traded on a PISCES platform. In principle, this will enable companies on a PISCES platform to control who can see their confidential information and to set price parameters. However, the criminal regime in sections 89 and 90 of the Financial Services Act 2012 (making misleading statements or impressions in relation to securities) would apply.
• Operator oversight. PISCES platform operators would not vet disclosures or the methodology used to set price parameters. However, they would need to monitor compliance with their platform rules and take disciplinary action where appropriate. This might include suspending trading or cancelling a trading event, as well as issuing warnings and fines.
• Communications by intermediaries. Generally, communications relating to securities on PISCES will fall outside the UK’s financial promotions regime. However, the FCA will effectively import elements of that regime into PISCES to ensure retail investors are protected. These include risk warnings and checks to ensure that investors are eligible to participate in PISCES, as well as a 24-hour “cooling-off” period before processing a PISCES trade.

The FCA has asked for feedback by 17 February 2025.

Access the landing page for the FCA consultation on the sandbox arrangements for PISCES

Read FCA Consultation Paper CP24/29 on the sandbox arrangements for PISCES (opens PDF)

PERG publishes 17th annual report on Walker Guidelines compliance

The Private Equity Reporting Group (PERG) has published its 17th annual report on compliance with the Guidelines for Disclosure and Transparency in Private Equity (the Walker Guidelines).

The Guidelines are designed to assist private equity firms and their portfolio companies with improving transparency in financial and narrative reporting. They require portfolio companies to make certain disclosures in their annual report, publish their report and a mid-year update in a timely manner, and share certain data to gauge the contribution of UK private equity to the economy.

They also require private equity firms to make certain website disclosures.

The report assesses compliance with the Walker Guidelines during 2024. This year’s report covered 90 portfolio companies and 75 firms that backed them.

This year, from a sample of 23 portfolio companies, 100% complied with the PERG annual report disclosure requirements, and 78% included an explicit statement of compliance in their report.

PERG states that only 43% prepared disclosures to a “good” standard (down from 60% in 2023), although a large number of reports fell only one area of disclosure short of “good”. No portfolio companies prepared disclosures that PERG deemed “excellent”.

In terms of content, PERG feels that disclosures on social, community and human rights issues, as well as on gender diversity, were “basic”. It also notes a “deterioration” in compliance with financial key performance indicators.

Alongside its report, PERG has also published a good practice guide for portfolio company reporting, as well as the latest report on portfolio company performance compiled by EY.

Finally, PERG has published an updated Part V of the Walker Guidelines, which sets out guidance on the enhanced disclosure obligations placed on portfolio companies and private equity firms.

Read the Private Equity Reporting Group’s 17^th annual report on Walker Guidelines compliance (opens PDF)

Read PERG’s 2024 good practice guide for portfolio company reporting (opens PDF)

Read EY’s 2024 report on the performance of portfolio companies (opens PDF)

Read the updated Part V of the Walker Guidelines (opens PDF)

Privilege in corporate disputes: there is no "Shareholder Rule"

The High Court has held that the so-called “Shareholder Rule” is unjustifiable and should no longer be applied, significantly curtailing the circumstances in which a company can be compelled to disclose privileged information to shareholders.

The decision in Aabar Holdings S.à r.l. v Glencore plc and ors [2024] EWHC 3046 (Comm) overturns over a century of decisions by the English courts that a company cannot assert privilege against its own shareholders, other than in respect of communications concerning hostile litigation between the company and the shareholder.

You can read more on the court’s decision that a company can assert privilege against its shareholders in our colleagues’ in-depth piece.

Access the court’s decision that a company can asset privilege against its shareholders

First UK sustainability reporting standards to be endorsed

The next steps have been taken towards endorsed international sustainability reporting standards in the UK.

In June 2023, the International Sustainability Standards Board (ISSB) has published its first two IFRS Sustainability Disclosure Standards.

IFRS S1 sets out general requirements for the disclosure of sustainability-related financial information. These integrate into a company’s general financial reporting, so that disclosures on sustainability-related risks and opportunities are presented alongside other information.

IFRS S2 sets out more specific climate-related disclosures. These draw heavily on the recommendations and recommended disclosures in the final report of the Task Force on Climate-related Financial Disclosures (the TCFD).

In May 2024, the Government established the UK Sustainability Disclosure Technical Advisory Committee (TAC) to advise on whether to endorse IFRS S1 and S2 to create new UK Sustainability Reporting Standards (UK SRSs).

The TAC has now published its technical assessment, confirming that both IFRS standards meet the necessary endorsement criteria and would be conducive to the long-term public good. TAC has recommended some minor amendments to both standards as part of this process.

The next step will be to include the modified standards within UK legislation.

Read the Technical Advisory Committee’s recommendations to endorse IFRS S1 and IFRS S2 in the UK (opens PDF)

FCA consults on technical notes

The Financial Conduct Authority (FCA) has published Primary Market Bulletin 53, in which it is consulting again on two of its Knowledge Base Technical Notes: TN 307 (aggregating transactions) and TN 710 (sponsor services: principles for sponsors).

The re-consultations seek views on further proposed changes to the technical notes following the introduction of the new UK Listing Rules in April 2024. In particular, the further changes to TN 710 include the introduction of practical examples to illustrate the application of sponsor principles under the new listing regime.

The FCA is also proposing to finalise changes to three other technical notes on which it previously consulted: TN 717 (sponsors: record-keeping requirements), TN 723 (FCA review of sponsor services) and TN 722 (responsibilities of a sponsor: specialist due diligence).

Finally, the FCA is proposing changes to numerous technical notes and procedural notes within its Knowledge Base to reflect the new UK Listing Rules, as well as expanding TN 209 (Listing Principle 2).

Read FCA Primary Market Bulletin 53

ISS publishes 2025 benchmark policy updates

Shareholder proxy advisor Institutional Shareholder Services (ISS) has updated its benchmark policy updates for the United Kingdom and Ireland for the 2025 AGM season.

The updates, which are the forerunner to update guidelines, set out how the proxy advisor will recommend that institutional shareholders vote on various matters at company meetings.

As expected following the consultation in November on ISS’ 2025 benchmark voting policy, the changes principally reflect updates to the Investment Association’s Principles of Remuneration, updates to the Quoted Companies Alliance (QCA) Corporate Governance Code, and clarification around Financial Conduct Authority (FCA) reporting requirements in relation to board diversity.

The 2025 guidelines will apply to meetings held on or after 1 February 2025.

Access Institutional Shareholder Services’ 2025 Benchmark Policy Updates for (among other jurisdictions) the UK and Ireland (opens PDF)

Government hints at next steps for modern slavery reporting

The Government has published its formal response to House of Lords specialist committee’s report on the Modern Slavery Act 2015 (published in October 2024), in which it gives indications of its future intentions for the regime.

Section 54 of the Act requires commercial organisations that supply goods or services in the UK and that have turnover above a specific threshold to publish an annual slavery and human trafficking statement (more commonly referred to as a modern slavery statement) setting out the steps they took during the year to eliminate modern slavery from their organisation and supply chains.

However, there is no prescribed content for the statement and no deadline for publishing it. Organisations can upload their statement to a central government registry, but, again, this is not mandatory. The Committee’s report set out recommendations for strengthening the regime.

In its report, the Committee recommended making it mandatory for organisations to publish their modern slavery statement in the central government registry. The Government has not responded directly to this recommendation, instead noting improvements to the registry that it believes will increase the number of statements that are uploaded voluntarily.

The Committee also recommended mandating specific content for modern slavery statements, as well as a “statement of effectiveness”. The Government has not responded to these recommendations.

The Committee recommended introducing proportionate sanctions for failure to publish a modern slavery statement. The Government states that it is reviewing how it can strengthen penalties for non-compliance, but that this will require legislative change and will be considered against a wider review of how best to tackle forced labour and increase transparency in global supply chains.

Finally, the Committee recommended introducing legislation to require companies to carry out modern slavery due diligence on their supply chains. The Government’s response notes its various initiatives to support supply chain due diligence but does not commit to introducing mandatory diligence.

Read more about the House of Lords committee’s report on the Modern Slavery Act 2015 in our previous Corporate Law Update

Read the Government’s official response to the House of Lords committee’s report on the Modern Slavery Act 2015