United Kingdom

FCA Issues Reminder on Board and Executive Management D&I Disclosure Obligations

The UK Financial Conduct Authority (“FCA”) has provided a reminder to primary market participants in its Primary Market Bulletin 44 of the need to make diversity and inclusion-related (“D&I”) disclosures in their annual reports. The obligations were introduced last year through amendments to the Listing Rules  and the Disclosure Guidance and Transparency Rules (“DTRs”), as set out in the FCA’s Policy Statement PS 22/3 (and covered in our previous blog post here).

At a glance, the amendments to the Listing Rules oblige in-scope companies to disclose annually on a “comply or explain” basis whether they meet specific board diversity targets, and to publish standardised data on the composition of their board and senior management, in each case in relation to sex or gender and ethnic background.

Changes to the corporate governance rules were introduced (through the amendments to the DTRs) to encourage a broader consideration of diversity at a board level, including with respect to a wider pool of diversity characteristics, spanning ethnicity, sexual orientation, disability, and socio-economic background

The rules are intended to increase transparency with better, more comparable information on the diversity of companies’ boards and executive management. The FCA believes that greater transparency will provide improved data for companies and investors to assess progress in this area, and inform shareholder engagement and investment decisions, thereby enhancing market integrity and promoting greater D&I.…

Continue Reading FCA Primary Market Bulletin No. 44

At the beginning of a new year, we are looking ahead to five key technology trends in the EMEA region that are likely to impact businesses in 2023.

1. Technology Regulations across EMEA

European Union

If 2022 was the year that the EU reached political agreement on a series of landmark legislation regulating the technology sector, 2023 will be the year that some of this legislation starts to bite:

  • The Digital Services Act (DSA): By 17 February 2023, online platforms and online search engines need to publish the number of monthly average users in the EU. Providers that are designated as “very large online platforms” and “very large search engines” will need to start complying with the DSA in 2023, and we may start to see Commission investigations kicking off later in the year too.
  • The Digital Markets Act (DMA): The DMA starts applying from 2 May 2023. By 3 July 2023, gatekeepers need to notify their “core platform services” to the Commission.
  • The Data Governance Act (DGA): The DGA becomes applicable from 24 September 2023.

Also this year, proposals published under the European Data Strategy—such as the Data Act and European Health Data Space—and EU legislation targeting artificial intelligence (AI) systems—including the AI Act, AI Liability Directive and revised Product Liability Directive—will continue making their way through the EU’s legislative process. These legislative developments will have a significant impact on the way that businesses ingest, use and share data and develop and deploy AI systems. In addition, the new liability rules will create potentially significant new litigation exposure for software and AI innovators.…

Continue Reading Top Five EMEA Technology Trends to Watch in 2023

A Re-cap

The Good Friday Agreement (GFA)

The 1998 GFA brought an end to the 30 years of violent sectarian strife, euphemistically known as ‘The Troubles’. The GFA was carefully constructed so as to balance the competing positions of both communities and to remove all infrastructure on the border between N and S Ireland.  Importantly, it also created a power-sharing system in N Ireland, with the largest political party appointing the First Minister and the second largest party appointing the Deputy First Minister. 

The GFA was ‘guaranteed’ by the UK and the Republic of Ireland both being members of the EU and therefore subject to the same trading and legal arrangements. When the UK left the EU, it became necessary to work out a new arrangement for Northern Ireland which did not risk re-creating a border between N and S Ireland, but still enabled the UK as a whole to be treated as a third-country outside the EU.

The Northern Ireland Protocol (NIP)

A third country outside the EU requires a land border. The solution to squaring this complex and sensitive this circle (one of the most difficult elements of the UK’s departure from the EU, along with the status of Gibraltar) was The Northern Ireland Protocol (the NIP), an integral part of the broader Trade and Cooperation Agreement between the UK and the EU (The TCA).

The NIP allows N Ireland to remain in the EU Single Market, but takes it out of the Customs Union.  This deliberate fudge imposes the requirement to carry out checks on goods coming from GB to N Ireland to  avoid them entering the EU’s Single Market via the ‘back door’ of N / S Ireland trade.  Since the GFA means there can be no infrastructure on the N/S Ireland Border, those controls have to be carried out ‘in’ the Irish Sea – in practice on arrival of goods in N Ireland.…

Continue Reading The Northern Ireland Conundrum: A Path Forward?

During its 40-year membership of the EU, the UK incorporated many thousands of pieces of EU legislation (including swathes of employment, workers and environmental protection legislation introduced under the EU’s Social Chapter) into UK law.  To ensure a smooth transition when the UK left the EU, that legislation was swept across onto the UK Statute Book as ‘Retained Law’.  Since one of the arguments of the Leave campaign had been to ‘take back control’ of the UK’s legislation, it was only to be expected that Retained Law would eventually be inspected for the logic of keeping it in a UK outside the EU – not least since part of the purpose of EU legislation was to ensure legal conformity across a 28-nation trading bloc. 

Ideally, each piece of legislation would have been individually assessed to decide on its merit and value to the UK’s international competitivity and its compliance with international norms on climate change, environmental protection, human and employment rights etc.  Laws which met those requirements would then have been redrafted to suit the UK specifically: those which did not and which the UK outside the EU did not need would have been jettisoned after due consideration. 

The Bill…

Whilst it is widely accepted that a review and redraft of EU legislation is necessary and even logical for a UK outside the EU, concerns have been increasingly focused, not on the changes per se, but on the method that the government is planning to use to make those changes.…

Continue Reading A Brexit Legislation Bonfire?

This half-yearly update on insurance coverage litigation summarises significant insurance coverage cases in the English courts and provides a detailed analysis of the Corbin & King v AXA Insurance UK Plc case, highlighting the key takeaways for policyholders. In the first half of 2022, the English courts have delivered important judgments on a number of critical issues for policyholders, including Covid-19 business interruption insurance, aggregation clauses, insurers’ implied obligation to pay claims within a “reasonable” time, and the effect of lenders’ mortgagee interest insurance policies; some of which are policyholder friendly, some less so.  

Significant cases 2022 H1

Corbin & King v AXA Insurance UK Plc [2022] EWHC 409 (Comm): In the most anticipated decision of the last half-year relating to Covid-19 business interruption losses, the English High Court determined in favour of a restaurant business, that a prevention of access clause in its policy was triggered by the Government-mandated lockdowns arising from Covid-19 in 2020 and 2021. Given the importance of this case for policyholders, we analyse the court’s findings in further detail below.

Spire Healthcare Limited v Royal & Sun Alliance Insurance Limited [2022] EWCA Civ 17: This decision is the latest word on the interpretation of “aggregation clauses” in insurance policies that require a policyholder to aggregate similar or related losses into a single claim against the insurer, which is then subject to a liability cap on each claim. The Court of Appeal held that several claims against the policyholder could be aggregated into one claim against the insurer on the basis that there was “one source or original cause” of the policyholder’s loss. As a result, the policyholder’s recovery was limited to £10 million, the policy limit per claim.…

Continue Reading Half Year Review: Insurance Coverage Litigation (H1 2022)

The UK Government’s (UKG) proposals for new, sector-specific cybersecurity rules continue to take shape. Following the announcement of a Product Security and Telecommunications Infrastructure Bill and a consultation on the security of apps and app stores in the Queen’s Speech (which we briefly discuss here), the UKG issued a call for views on whether action is needed to ensure cyber security in data centres and cloud services (described here).

In recent weeks, the UKG has made two further announcements:

  • On 30 August 2022, it issued a response to its public consultation on the draft Electronic Communications (Security measures) Regulations 2022 (Draft Regulations) and a draft Telecommunications Security code of practice (COP), before laying a revised version of the Draft Regulations before Parliament on 5 September.
  • On 1 September 2022, it issued a call for information on the risks associated with unauthorized access to individuals’ online accounts and personal data, and measures that could be taken to limit that risk.

We set out below further detail on these latest developments.

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Continue Reading A packed end to the UK’s cyber summer: Government moves forward with telecoms cybersecurity proposals and consults on a Cyber Duty to Protect

Over the summer, the UK Secretary of State for Business, Energy and Industrial Strategy (“BEIS”) delivered the first decisions, in the form of final orders, under the National Security and Investment Act 2021 (“NSIA”).  We consider these decisions and other cases in the context of the first nine months of the UK’s new (quasi) Foreign Direct Investment (“FDI”) regime.

Key takeaways:

  • The NSIA has broad reach, and BEIS has shown willingness to exercise the powers to review transactions that can stretch beyond mergers and acquisitions, for example, to licensing agreements.
  • NSIA review involves the weighing of a number of factors relating to the target, the acquirer and the level of control being obtained.  Early decisions suggest that target’s products/services and activities are just as important a factor as the acquirer’s identity, among the cases that have engaged the attention of the Investment Security Unit (“ISU”).
  • “Behavioural” undertakings, e.g. involving implementation of security controls or granting of audit rights to regulators appear to be a continuation of trends seen in the predecessor UK ‘public interest’ regime, and similar to other EU FDI procedures.

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Continue Reading UK FDI: Decision-making practice emerging under the National Security and Investment Act

On 6 September 2022, Liz Truss was appointed prime minister of the United Kingdom. With her appointment, Government business will resume after the inevitable hiatus caused by the Conservative Party’s internal election process.

PM Truss has been busy – making her first speech (in which she set out her priorities); taking her first set of Prime Minister’s Questions in the House of Commons; and appointing her Cabinet and junior Ministers as well as the support staff in her own Office. These actions provide the first reliable indicators of her strategic vision for the country – and of her capacity to deliver it.

Truss’s first speech was aspirational but short on strategic vision for her government. The speech did set out a statement of intent in focusing on boosting economic growth, tackling the energy crisis and investing in the National Health Service, but there was no plan for how these goals will be delivered.

However, Truss’ Cabinet appointments perhaps provide a much clearer guide as to the nature and intentions of her government. She has surrounded herself with Ministers and Senior Advisors who share a common intellectual framework and ideology. Almost all are alumni of think-tanks and policy groups that are on the right-wing of the Conservative Party: the Adam Smith Institute, the Institute for Economic Affairs, and the Taxpayers’ Alliance. All espouse reducing the size of the state, increasing competition, enabling free markets, and reducing taxation.…

Continue Reading The Truss Government – What Inferences Can We Draw?

On June 23, 2022, the UK introduced a series of further trade restrictions in relation to Russia, including in connection with certain security-related goods and technology, iron and steel products, communications interception and monitoring services, jet fuel and fuel additives, UK or EU currency banknotes and a broad category of “revenue generating goods” which includes a range of items used by various industries. The UK supplemented these measures with additional asset-freezing sanctions on June 29.

This alert summarizes these new sanctions measures and touches upon further recent UK sanctions developments, including proposals for further restrictions on the import of gold into the UK and Russian access to UK trusts services.

New Trade Restrictions

The Russia (Sanctions) (EU Exit) (Amendment) (No. 10) Regulations 2022 further amended the UK’s Russia sanctions Regulations (the “UK-Russia Regulations”) to introduce the new trade restrictions outlined, which came into force on June 23, 2022.…

Continue Reading UK Introduces Further Sanctions Measures Relating to Russia

The UK government has reported a successful start to the implementation of the National Security and Investment Act 2021 (the “NSIA” or “Act”). During the first three months (Jan-March 2022) in which the new NSIA regime has been active, the Investment Screening Unit (“ISU”) received 222 filings and reviewed 17 transactions in depth. Of those 17 transactions, three have been cleared unconditionally, with the other 14 transactions still under review at the end of the reporting period.

Mandatory NSIA filings, which represented 196 of the total flings, were most commonly made in six sectors: defence, military and dual-use, critical suppliers to government, artificial intelligence, data infrastructure and advanced materials.  There were significantly fewer filings in other sectors, with fewer than five filings per sector in areas such as synthetic biology, civil nuclear, advanced robotics and transport.

Collectively, these figures and other data suggest that the NSIA regime is operating, so far, broadly in line with expectations. While there are fewer filings than expected overall, this may reflect a broader global slowdown in M&A and investment activity. The ISU further reports that it is meeting, and often working well within, the maximum statutory time periods for the assessment of filings. The ISU indicates its willingness to complete reviews expeditiously where possible, including for in-depth assessments.…

Continue Reading UK National Security and Investment Regime Working Well