Narrative and Financial Reporting
1. Modernising corporate reporting consultation issued
The UK Government has published its long-awaited consultation on modernising the UK’s corporate reporting framework, including non-financial narrative reporting. The Modernising Corporate Reporting review aims to address the existing complex and duplicative requirements that obscure the purpose of corporate reporting so that future requirements are simpler, more proportionate and focus on providing financially material information for investors and creditors. Our detailed overview of the proposals, which include proposals relating to virtual shareholder meetings and distributions, can be found here.
Equity Capital Markets
2. Primary Market Bulletin reviews market disclosure under MAR
The Financial Conduct Authority has published Primary Market Bulletin, Issue 65 in which it addresses, among other things:
- regulatory announcements being used as marketing materials;
- the FCA's review of the delayed disclosure of inside information; and
- the new inside information declaration form for listings submissions via ESS.
Taking each of these in turn:
Language in regulatory announcements
The FCA has recently identified a growing trend of potentially misleading statements in regulatory announcements - with issuers using language which is vague, exaggerated and flamboyant. In some cases its view is that announcements resemble marketing material rather than regulated information. In particular, the FCA notes that:
- issuers have released regulatory announcements more frequently than appears justified by their content;
- announcements are marked as containing inside information when they almost certainly do not; and/or
- announcements are released against a backdrop of very significant share price spikes.
The FCA cites examples of the types of issuer statements that have raised concerns, including unnecessary minor progress updates, repeated and detailed updates on possibly favourable macroeconomic and political conditions which are already in the public domain, and the use of "sensationalist language" typically reserved for promotional activity.
Relevant rules and guidance
The FCA reminds issuers of its expectations for regulatory announcements - based on requirements in UK MAR, the Disclosure Guidance and Transparency Rules and the UK Listing Rules. It also highlights that the obligation on listed issuers to have adequate systems and controls (UKLR 2.2.1R, Listing Principle 1) which deal with the creation and dissemination of compliant regulatory announcements.
Further, UKLR 1.3.3R (and DTR 1A.3.2R) require issuers to take reasonable care to ensure their regulatory disclosures are accurate and full. UKLR 2.2.1R, Listing Principle 6, which concerns false markets, imposes a similar obligation. These rules supplement UK MAR Article 12(1)(c) which defines market manipulation as including the dissemination of false or misleading information. In this context, the FCA cross-references its earlier guidance in Primary Market Bulletin, Issue 52 - specifically that management should be careful to ensure that the language used in communications is clear and unambiguous so that it is understood by investors.
Whilst the FCA appreciates that regulatory announcements cannot always be limited purely to regulated information, it stresses that issuers must take care when drafting and releasing regulatory announcements. Where their content strays too far from regulated information, the FCA will consider whether or not the content has become misleading for the purpose of the UKLRs or, in the most serious cases, UK MAR and whether this also indicates poor systems and controls.
Inside information and marketing
The FCA issues a reminder that issuers must not combine the release of inside information under UK MAR with marketing material. Issuers should also be mindful of the FCA's financial promotion rules in this respect. Where issuers wish to release marketing material, they are able to do so through non-regulatory newswire services and/or other appropriate channels, including for example their own website and social media channels.
Delayed Disclosure of Inside Information
The FCA has continued its review of delayed disclosure of inside information (DDII) notifications under Article 17(4) of UK MAR, building on its thematic work from November 2020 and Primary Market Bulletin, Issue 59 (for more detail, see AGC Update, Issue 72 - Item 7).
By way of reminder, Article 17(4) of UK MAR allows an issuer to delay disclosure of inside information to the public only if all of the following conditions are met:
- immediate disclosure is likely to prejudice the legitimate interests of the issuer;
- delay of disclosure is not likely to mislead the public; and
- the issuer is able to ensure the confidentiality of the information.
Overall, the FCA did not identify widespread or systemic failures in the use of the delay mechanism, although it observed some inconsistent practices in the identification and handling of inside information.
Key observations
Where extended or unusual delays arose, the FCA observed that they were mainly caused by: (i) the incorrect classification of inside information; and (ii) issues arising from ongoing assessments of the inside information, or sometimes a lack of such assessment, including where market expectations became clearer or price sensitivity diminished.
In a small number of cases issuers adopted blanket approaches when assessing whether information held during periodic reporting processes constituted inside information. Issuers automatically treated advanced financial reporting information as inside information without the case-by-case assessment required by Primary Market Technical Note 506.3.
In some instances, misclassification of information was compounded by automated or semi-automated processes that triggered insider lists and DDII notifications, without meaningful opportunity for reassessment. The FCA notes that while such technical solutions are likely to play an increasingly important role in supporting issuers' processes, they should ensure that their use is accompanied by appropriate controls, governance and oversight, including opportunities to reassess underlying assumptions before regulatory actions are triggered.
The FCA also indicates that where an issuer faces an unexpected development and requires a short period to clarify the position under DTR 2.2.9G(2), a DDII notification may not be required.
EU MAR and retained ESMA guidance
The FCA references changes to EU MAR and notes that UK issuers, subject to UK MAR, should continue to comply with related technical standards and applicable guidance. Where relevant, ESMA guidelines and recommendations that existed before the end of the Brexit transition period should continue to be applied, interpreted in the context of the UK’s withdrawal from the EU and related legislative changes. For further information on recent amendments to EU MAR, see AGC Update, Issue 84 – Item 9.
New Inside Information Declaration Form for ESS Submissions
From 21 September 2026, all new equity cases (including guidance requests) submitted through the FCA's Electronic Submission System portal must include a new inside information declaration form with the first submission of documents. Submitters must state whether the submission contains inside information and, if so, provide details. The FCA has indicated that cases will not be allocated for review without this declaration.
Directors' Duties
3. Supreme Court confirms the scope of a director's duty to act in good faith
In Saxon Woods Investments Ltd v Costa [2026] UKSC 21, the Supreme Court confirmed that a director's duty to act in good faith applies to conduct and not just to subjective belief.
Background
A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole (section 172, Companies Act 2006) (section 172).
A director's statutory general duties, including section 172, are interpreted and applied by the courts in the same way as pre-existing common law rules or equitable principles (section 170(4), Companies Act 2006).
Facts
A company and its shareholders entered into a shareholders' agreement (SHA) requiring all parties to work towards a sale of the company by no later than the end of 2019. A director and shareholder of the company (Costa) ran the sale process. Believing that a higher price would be obtained for the company if the sale were deferred, Costa deceived his fellow directors by delaying and obstructing the sale process beyond 2019. However, the subsequent Covid-19 pandemic resulted in the company being worth significantly less.
Saxon Woods (SW), a minority shareholder in the company, brought an unfair prejudice petition against the company on the basis that, by failing to work towards the timely sale of the company, Costa breached his section 172 duty.
Prior judgments
The High Court held that SW had been unfairly prejudiced but that Costa had not breached the section 172 duty. Despite failing to act in accordance with the SHA and work towards a sale of the company before the end of 2019, the court agreed that Costa had sincerely and reasonably believed that his conduct would maximise value for the company and its shareholders.
The Court of Appeal reversed the High Court's decision, concluding that the good faith requirement in section 172 was breached as Costa had acted dishonestly.
Costa appealed, arguing that, on the issue of good faith, all that matters is whether a director's thought process, rather than his conduct, demonstrates a genuine belief on his part that what he planned to do was in the best interests of the company.
Supreme Court decision
The Supreme Court dismissed Costa's appeal, deciding that the requirement in section 172 to act in good faith does not only apply to a director's thought process but also to their conduct. Costa's conduct was disloyal and his genuine belief that he was acting in his company’s best interests was not sufficient to avoid breaching section 172.
In holding that the good faith requirement in section 172 extends to conduct and not just thought, the Supreme Court confirmed that such an approach was more consistent with the common law before section 172 was enacted and under which the courts applied an objective test as to whether a fiduciary's conduct fell short of the duty of loyalty.
The Supreme Court highlighted that it would strain credulity if the intention of section 172 was to require a director not to act but merely think in good faith, as the consequences of such an interpretation would be a 'recipe for chaos and paralysis in corporate governance' and 'destructive of the collegiality of the board'.
When determining if a director has acted in good faith consistent with the section 172 duty, the court will still accept a director's genuine business judgment, this being a subjective test. However, the director will be unable to use genuine business judgment as a defence to a section 172 breach if they have, objectively speaking, acted in a fundamentally disloyal manner.
Although the Supreme Court reached the same decision as the Court of Appeal, it preferred to analyse the section 172 breach through the broader lens of good faith and loyalty rather than dishonesty on its own, finding that the fiduciary duty of loyalty itself supplied the relevant analytical framework. This means that the court will consider a director's dishonesty as part of a broader fiduciary duty of loyalty in determining whether a director has acted in good faith.
Comment
The decision is a reminder that the starting point for the proper discharge of directors' duties and decision-making is the board acting collectively availed of all the facts. As part of that process, directors should disclose all relevant information to the board as a whole.
If a director disagrees with a course of action, they should raise the issue with the board, engage in discussion, and form a collective view as to the course of action that is most likely to promote the success of the company. If a director acts alone, even with the best of intentions, there is a risk that they will breach section 172 if their conduct is not consistent with fiduciary loyalty and good faith. This will certainly be the case if an individual director pursues an alternative strategy through disloyalty and deception rather than pursuing an agreed board strategy.
Economic Crime and Corporate Transparency
4. Companies House delays implementation of IDV presenter measures by a year
Companies House has updated its Transition Plan for implementing key corporate law reforms under the Economic Crime and Corporate Transparency Act 2023, indicating that the start of mandatory identity verification for those filing documents at Companies House has been postponed by one year to no earlier than November 2027. The requirement for any third-party agent filing on behalf of a company to be registered as an authorised corporate service provider (ACSP) has been similarly delayed. Companies House will give at least six months' notice before the new requirements come into effect.
The timetable has also been revised to reflect the anticipated implementation date of 1 April 2028 for reforms to the annual accounts filing regime. Limited partnership reforms are now expected to be introduced by no earlier than the end of 2026.
In addition, Companies House has published guidance on what the Registrar will consider when applying the 'fit and proper' criteria for ACSPs. The guidance also describes how an applicant can apply to register as an ACSP.
Case law
5. Rectification where no register previously existed (High Court)
In Palmer v P1 Pit Stop Limited [2026] EWHC 1924 (Ch), the High Court ordered rectification of a company's register of members under section 125 of the Companies Act 2006, holding that the statutory power of rectification extended to creating a register from scratch where the company had never maintained one. Previous cases had established that the court has the power under section 125 to order the creation of a new register where the previous register had been lost or destroyed.
Companies House
6. GOV.UK One Login to be used for 'Find and update company information' service
Companies House has announced that the GOV.UK One Login will become the main sign-in option for its Find and update company information service. While users with an existing Companies House account will still be able to sign in as before, all new users will need a GOV.UK One Login to access Companies House services. In the future, GOV.UK One Login will become compulsory for all users.
Authors: Will Chalk, Partner; Shan Shori, Expertise Counsel; Becky Clissmann, Sustainability Counsel; Marianna Kennedy, Senior Associate.
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