• A failure by one shareholder to transfer shares to another did not amount to unfair prejudice
• The Financial Reporting Council publishes a thematic review of climate reporting by AIM and large private companies
• Companies House updates its timetable for implementing upcoming company law reforms
• Regulations are published that will bring into effect the procedure for directors and others to verify their identity at Companies House

Failure to transfer shares did not amount to unfair prejudice

The High Court has struck out a petition in unfair prejudice, finding that a failure by one shareholder to transfer shares to another did not amount to sufficient grounds for the petition.

Brierley v Howe & Anor [2024] EWHC 2789 (Ch) concerned a company formed to run a home furnishings business.

One of the company’s shareholders (B) claimed that she and another of the shareholders (H) had entered into agreements under which B would be awarded further shares in the company in return for services provided by her to the company.

To this end, B claimed that H was holding around 39% of the company’s issued shares on trust for her and was obliged to transfer them to her. When H failed to do so, B claimed (among other things) that she had suffered unfair prejudice.

Under section 994 of the Companies Act 2006, a member of a company can apply to the court for relief if they suffer unfair prejudice as a result of an act or omission of the company or the way in which the company’s affairs are being conducted. For more information on unfair prejudice petitions, read our previous in-depth piece.

B also cited other grounds, including that she had been excluded from management of the company and that allegedly wrongful transactions had been carried out. However, the court was not required to reach a decision on these allegations at this particular hearing. In addition, the court was not, at this hearing, reaching a decision on whether B did in fact hold shares on trust for H.

The court dismissed the petition. The judge found that the arrangement between the two shareholders was “not an arrangement that would or is said to involve the Company in any way”. As a result, any prejudice did not arise from an “act or omission of the company”, nor from the way the company’s affairs were being conducted.

The court came to this conclusion even if the company could be characterised as a “quasi-partnership”. In quasi-partnerships, the scope of actions that can be challenged through an unfair prejudice petition is wider. However, the petitioner still needs to identify some act or omission of the company or some link to the way the company’s affairs have been conducted, which the petitioner here had not done.

Unfair prejudice petitions are a popular means of challenging the way in which a company is being run, particularly because the court has a wide discretion when deciding how to remedy any misconduct.

However, the decision in this case shows the importance of establishing proper grounds for a petition in unfair prejudice. Section 994 is not without its limits and cannot be used as a blanket tool to challenge any behaviour that happens to impact on a shareholder.

Access the High Court’s decision that a failure to transfer shares did not amount to unfair prejudice

FRC publishes review of mandatory climate reporting

The Financial Reporting Council (FRC) has published a thematic review of mandatory climate-reporting by AIM and large private companies.

For accounting periods starting on or after 6 April 2022, certain companies with more than 500 employees are required by sections 414C, 414CA and 414CB of the Companies Act 2006 to prepare a non-financial and sustainability information statement (NFSIS).

This includes companies admitted to the AIM market, as well as companies and limited liability partnerships (LLPs) with a turnover exceeding £500m.

The NFSIS must include climate-related financial disclosures that are modelled on (albeit not identical to) the disclosures recommended by the Taskforce on Climate-related Financial Disclosures (TCFD).

The FRC notes that this was the first time most companies it sampled had been required by law to prepare climate-related financial disclosures. It has suggested certain areas and recommendations for improvement, including on resilience analysis, climate-related targets, governance arrangements, and risk assessment and management.

Companies that are listed in the UK will by now be very familiar with disclosure under the TCFD’s framework. For entities that are being required to make climate-related disclosures for the first time, the task may seem daunting. These entities can draw inspiration from listed companies’ reporting and should, of course, seek advice from their professional advisers.

Read the FRC’s thematic review of climate reporting by AIM and private companies (opens PDF)

Companies House updates company law reform implementation timetable

Companies House has updated its implementation timetable for company law reforms under the Economic Crime and Corporate Transparency Act 2023. The updates confirm existing known upcoming reforms but provide anticipated implementation dates.

• 27 January 2025. Companies House anticipates being able to receive and assess applications to suppress residential addresses from public disclosure where they’ve been used as an entity’s registered office address. This follows regulations made in December 2024, which allow applications as from this date. See our previous Corporate Law Update for more detail.
• 25 February 2025. Companies House anticipates being able to vet Authorised Corporate Service Providers (ACSPs) to authorise them to carry out ID verification.
• 25 March 2025. Companies House anticipates that individuals will be able to verify their identity on a voluntary basis.

Read Companies House’s updated company reforms implementation timetable

Company identity verification legislation published

Final regulations have been made setting out how individuals, including directors and persons with significant control (PSCs), will be able to verify their identity.

Under changes made by the Economic Crime and Corporate Transparency Act 2023, certain individuals will be required to verify their identity. This includes directors and PSCs of UK companies and general partners of UK limited partnerships.

The final regulations follow a draft published by the Government in 2024. At that time, the Government also published draft Registrar’s Rules setting out the evidence an individual will need to supply to verify their identity. You can read our previous Corporate Law Update for more information on the documentation required for identity verification (IDV).

The new regulations set out the process for IDV. The key points are as follows.

• An individual will be able to verify their identity directly with Companies House or alternatively through an authorised corporate service provider (ACSP). (An ACSP is one of several regulated service providers that has been authorised by Companies House to make filings.)
• To do so, the individual will need to provide their name and date of birth, any former names, and the information required by the Registrar’s Rules. As we explained last week, this means a valid email address, a current residential address and supporting evidence of identity.
• Companies House will be able to require an individual to reverify their identity if any of the information on which Companies House or the ACSP relied was false, misleading or deceptive in any material way. The individual will generally have 42 days to reverify their identity.
• If an ACSP conducts IDV, it must keep records for seven years. This applies even if the ACSP ultimately concludes that it cannot verify the individual’s identity.
• The regulations also set out when Companies House will be able to suspend, or even cancel, a provider’s status as an ACSP.

The regulations will come into force when the IDV and ACSP regimes come into effect. We expect separate commencement regulations in due course to bring these regimes into effect.

As noted in the previous item in this update, the Government intends to bring the scheme for IDV into effect (on a voluntary basis) from 25 March 2025.

Access the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2025