Corporate Update Bulletin - 3 April 2025

Welcome to the latest edition of Corporate Update, our fortnightly bulletin offering a five-minute read of the latest developments which we consider relevant to corporate counsel. Please get in touch with your usual contact if you want to explore any of the topics covered in more detail. If you would like to subscribe to this bulletin as a regular email, please click here.

In this issue:

• News
• Legislation
• Case Law
• Publications

News

Chancellor delivers Spring Statement 2025

On 26 March 2025, the Chancellor delivered her Spring Statement to Parliament. Whilst the Chancellor did not announce any further tax increases, sticking to her commitment of having only one fiscal event a year, she did announce, amongst other things: (i) an increase in defence funding by £2.2 billion for the next financial year; and (ii) a package of measures to reduce tax evasion and to invest in HM Revenue and Customs (HMRC) and AI tools in order to close the tax gap and raise a further £1 billion per year by 2029-30.

A number of consultations and technical notes were published by HMRC in tandem with the Spring Statement. HMRC has also confirmed that a ‘roadmap’ for the future transformation of the tax and customs system will be revealed by Summer 2025.

HMRC publishes technical note on tax implications for trading on PISCES

As part of the government’s Spring Statement, HMRC has published a technical note concerning the tax implications for companies and their employees who trade their shares on the Private Intermittent Securities and Capital Exchange System (PISCES), including shares acquired through tax advantaged schemes such as Enterprise Management Schemes and Company Share Option Plans.

As previously announced, PISCES transactions will be exempt from Stamp Duty and Stamp Duty Reserve Tax. A technical consultation on the draft statutory instrument in relation to this exemption has also been published by HMRC for consultation, with the consultation ending on 23 April 2025.  

Home Office revises guidance for transparency in supply chains

On 24 March 2025, the Home Office published updated Guidance for companies producing Modern Slavery Statements as required by the Modern Slavery Act 2015, which aims to reflect developments which have been made since the Act was first introduced. Its publication follows increasing criticism of the Act as failing to hold companies to account and achieve meaningful outcomes. The main message of the updated guidance is for organisations to increase transparency on steps they are taking to prevent modern slavery, and the need to go beyond reporting and take more action. The key changes include:

• A new structure for the guidance, with disclosure provisions set out in individual tables for each subsection and in a way which allows organisations to use them as data points against which to make disclosures.
• “Higher tier” disclosures reflecting increased disclosure expectations, for example, a detailed map of the organisation’s structure and relationships to understand all tiers of its supply chain. However, the expectations set out in the disclosure tables are tiered, recognising that different organisations will have varying levels of sophistication, while also stating that organisations are expected to demonstrate continued improvement.
• More attention being given to action that companies should be taking, with each section including suggestions of “key actions” to facilitate meeting the applicable disclosures.

The guidance also includes a new definition of “supply chain”, explaining what a supply chain is, its scope, and the fact that it “includes physical assets and labour within all tiers of suppliers who contribute to a product or service”. 

FCA announces its strategy for 2025-30

The Financial Conduct Authority (FCA) have published their Strategy for the next five year period, as they target a “shift in our collective attitudes towards risk” and an increased trust in the financial services. In order to achieve this, the FCA will focus on 4 main areas of priority:

• Being a “smarter regulator” which harnesses more “efficient and effective” technologies and processes.
• “Support sustained economic growth” through facilitating competitiveness, innovation and investment in the industry, as well as maintaining its programme for capital market reforms.
• Help protect consumers to improve the resources available to them when making financial decisions.
• Combatting financial crime by acting as an “effective line of defence” against those who attempt to use their authorised status as a means of causing harm.

FRC publishes 3-year strategy alongside its plan and budget for 2025-2026

On 20 March 2025, the Financial Reporting Council (FRC) published its Strategy for 2025-2028. The strategy sets out the FRC’s four principal goals:

• Implementing standards and expectations which will increase corporate governance whilst supporting UK growth and investment.
• A proportionate regulation of actuarial work which expects high standards of quality by those responsible, and the effective and fair treatment of cases which fall below these standards.
• An “agile” approach to future opportunities and challenges in the actuarial markets it oversees.
• An emphasis on being a “modern organisation” which targets the improvement and continual learning, whilst being respected by others as an effective regulator.

The FRC has similarly published its Annual Plan and Budget for 2025-2026.

FRC updates publications to reflect amendments to reporting thresholds

On 21 March 2025, the FRC announced the release of updates to several of its publications in light of changes to the non-financial reporting requirements introduced under the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 which is due to come into force on 6 April 2025. The Regulations increasing the turnover and balance sheet criteria that help determine whether a company is a micro-entity or small, or medium-sized, or large by approximately 50% and remove several reporting requirements from the directors’ report which overlap with other reporting requirements or are considered of little material value.

FTSE Russell announces changes to FTSE UK Index Series Ground Rules

FTSE Russell has announced two updates to the FTSE UK Index Series Ground Rules and eligibility criteria, which will become effective at the 22 September 2025 index review:

• The requirement for securities to trade exclusively in pound sterling (GBP) will be removed. Securities trading in Euro or US dollars will be eligible, provided they meet all other index eligibility criteria, including the UK nationality of a company. This modification will hopefully result in a more accurate representation of UK companies listed on the London Stock Exchange, and better align the FTSE UK Index Series with other FTSE Russell domestic indices that already allow non-local currencies.

• The thresholds for "Fast Entry" will be lowered to allow more companies, particularly those conducting significant IPOs, to be included intra-quarter. Companies with a market capitalisation ranking of 225th or above and a minimum investable market capitalisation of £1 billion will be eligible.

Legislation

Finance Act 2025 receives Royal Assent

On 20 March 2025, the Finance Act 2025, which implements many of the changes announced by the Chancellor in her Autumn Budget, received Royal Assent. These changes include the announced tax avoidance measures, the increases in Capital Gains Tax and reforms to the tax treatment of non-UK domiciled individuals, Employee Ownership Trusts and Employee Benefit Trusts.

Case Law

Rukhadze and others v Recovery Partners GP Ltd and another [2025] UKSC 10

Supreme Court dismisses appeal to change the law in relation to an account of profits by a fiduciary by adding in a 'but for' test

The Supreme Court has dismissed an appeal which argued that a “but for” test should be applied where the Court is identifying accountable profits in the hands of a fiduciary. Fiduciaries are obliged to account for unauthorised profits and gains which arise either as a result of their position, or where a conflict (or significant possibility of conflict) existed between their fiduciary duties and personal interest. Where a gain has been made and remains traceable, beneficiaries are able to claim that the fiduciary holds the unaccounted profits on constructive trust for their benefit.

In this case, the appellants, directors of a BVI-incorporated company (the respondent), had resigned from the company and taken for themselves a business opportunity to provide asset recovery services to a wealthy family. The main issue was whether the defendants should be required to account for the entirety of the payments they received from the family as a fiduciary of the respondent, as ordered by the trial judge (subject to a 25% equitable allowance in respect of their own work and skill) and upheld by the Court of Appeal.

The appellants appealed to the Supreme Court on the basis that the previous authorities (Regal (Hastings) Ltd v Gulliver [1967] 2 AC 134 and Boardman v Phipps [1967] 2 AC 46) (which were both House of Lords authorities) should be departed from, in favour of the “but for” causation test being applied to an account of profits, that is, by asking whether the fiduciary would have made the same profit but for the breach of fiduciary duty. It was argued that the test would bring the law in relation to account of profits into line with the law on equitable compensation

The appeal was unanimously dismissed by the Court. In Lord Briggs’ leading judgment, it was felt that to apply factual causation in the way suggested by the appellants would be to “water down” the strict fiduciary duty not to make profits, and would detract from the deterrent effect of the profit rule. Further, since an account of profits is not about compensation for loss, Lord Briggs did not see the relevance of aligning the test with that for equitable compensation.

Whilst the other judgments given reached the same conclusion, they did so on different bases. It is clear, however, that the “but for” test was unanimously rejected as an appropriate means of causation analysis when identifying profits stemming from a breach of this fiduciary duty.

Publications

The ESG and DEI discussion – from Brussels to Washington

Saughter and May has released a podcast, in which partners, Harry Hecht and Philippa O’Malley and Head of Business and Human Rights, Moira Thompson Oliver, along with Michael Arnold, partner at Cravath, Swaine & Moore LLP, revisit how ESG has been increasingly caught up in the electoral cycle on both sides of the Atlantic, with a particular focus on the diversity, equity and inclusion (DEI) discussion. The podcast explores environmental and DEI developments across the US, UK and EU (including EU’s recent ‘Omnibus’ simplification package) and how boards can navigate the legal, reputational and remuneration-related tensions between UK, US and EU approaches, both internally and externally.