EXECUTIVE SUMMARY

The Artificial Intelligence Act (Regulation (EU) 2024/1689 or the “AI Act”) integrates into the European legislative framework with the aim of establishing a harmonized set of rules for the use of artificial intelligence within the European Union. Proposed in 2021 by the European Commission and adopted on May 21, 2024, by the Council of the European Union, the AI Act is a fundamental part of the EU’s digital strategy, aiming to promote innovation and ensure safe and responsible use of AI technologies. It provides, indeed, the EU with the most advanced regulation on Artificial Intelligence (“AI”) among all the major geopolitical players in the world, aiming at ensuring the generalized application to all AI systems throughout the main industries and the development of safe and trustworthy AI systems.

While some countries have set forth rules to deal with specific issues where AI is involved, the AI Act takes an innovative - and more wholesome - approach. It provides a specific definition of AI, which delimits its scope of application. Then, it classifies specific developments of AI systems into four levels of risk (i.e. the risk-based approach), each one imposing specific duty to developers. AI systems classified in the unacceptable risk category (such as governmental social scoring) are prohibited. High risk systems must be closely monitored by the European institutions and must be subject to risk assessment and risk mitigation practices. Limited risk systems must undergo public disclosure of relevant information to enhance their transparency. Lastly, minimal risk AIs (the category that counts most types of AI) remain free to use. The international nature of the AI Act and its all-embracing regulatory ambition aim at influencing positively other international players such as the United States and China.

The AI Act, being fully and directly applicable in all the MSs, interacts with other regulations and provisions such as the General Data Protection Regulation (“GDPR”), the Cybersecurity Act, and the Digital Services Act, creating a coherent and comprehensive regulatory environment covering various aspects of digital technologies and data protection. In addition, few States already have some kind of legislations that directly involve AI, Greece being the most remarkable example. Others have a mix of different legal sources that directly or indirectly influence the development of AI, setting forth provisions that might impact the AI future development. Moreover, some States have already taken action to complement the AI Act’s provisions, introducing a stricter regime for some specific technologies while others like France and Spain, are still considering the need of introduce complementary legislation to avoid risks related to errors in AI-generated decisions, or cybersecurity issues.

While individual countries within the European Union were not directly providing funding specifically earmarked for compliance with the AI Act itself, as it primarily focuses on regulatory frameworks rather than direct funding initiatives, countries like Switzerland, Sweden, France, Germany and Hungary and the EU as a whole have been actively investing in AI-related research, development, and innovation through various programs and funding mechanisms. These initiatives are generally aimed at supporting the broader digital transformation goals of the EU, which includes enhancing AI capabilities and competitiveness.

But what is the future of the concrete application of the AI Act? To answer this question mark, it is needed to dig into the preliminary characteristics of individual States as well as their potential intervention in terms of finance by asking: (i) Do States already regulate AI at national level? (ii) Do they plan to complement, or even enhance, the AI Act’s provisions? (iii) Do they want overall to financially support the development of AI systems?

The following analysis provides a critical overview of the most relevant countries in Europe, namely Albania, Belgium, Bulgaria, Cyprus, France, Germany, Greece, Hungary, Italy, North Macedonia, Portugal, Romania, Serbia, Sweden, Switzerland and Spain.

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Albania

Albania is gradually integrating AI into its digital programs to enhance efficiency and innovation in the public sector. Law 87/2923 ratifies the agreement for the adhesion to the “Digital Europe” program, which focuses on advanced digital skills in general, though specific details on AI are not set forth. Law 43/2023 regulates electronic public services that do not require the physical presence of the applicant, while the Decision of the Council of Ministers No. 370/2022 approves the Intersectoral Strategy “Digital Agenda for Albania”, which promotes AI to improve public services, AI integration in the public sector, and data management. It also established a High-Performance Computing Center. Unfortunately, official information on governmental funding of AI is not yet available.

Belgium

In Belgium there isn’t a specific regulation on AI. However, Collective Bargaining Agreement No. 39 is applicable to these systems. The bargaining requires businesses with more than 50 employees to preemptively inform and consult trade unions, if they invest in technologies that impact on 10% of the personnel, or more. Additionally, the collective labor agreement enacted by the Royal Decree of 21 February 2024 in the banking sector makes it mandatory to train workers in the use of AI. Additionally, acts and resolutions adopted by the Belgian legislative branches regulate the use of AI in sectors such as defense, public administration and automotive (especially relevant is the permission to run tests on automated vehicles). Government funding is split into regional and state levels. The Flemish region allocated 32 million euro for AI Research and Development. It also set forth fiscal incentives for supporting the cost of labor. On the other side, the Walloon region launched the “Application and Research for Trusted Artificial Intelligence” project for the development of AI systems that enhance the competitiveness of Walloon’s businesses and awarded it 32.3 million euro. Brussels also offers many grants and subsidies to businesses in the AI industry. These three regional levels all complement the Federal programs, which mostly invest in defense.

Bulgaria

The Bulgarian Government adopted the “Concept for the Development of Artificial Intelligence in Bulgaria until 2030”, which recommends conducting a detailed analysis for a legislative proposal to be carried out only after the entry into force of the AI Act. No proposals will be forwarded until then. In the meantime, Bulgaria plans to use the European Structural Funds, the “Horizon 2020” programs, the National Recovery and Sustainability Plan, and the state budget to fund projects in the AI sector. Moreover, Bulgaria established the “Institute for Computer, Science, Artificial Intelligence and Technology” (“INSAIT”) and invested 85 million euro in it through the Ministry of Education and Science. The INSAIT is set to be the most advanced research institution in Eastern Europe, as it can rely on world-class partnerships with the most important players in the field, such as Switzerland’s “ETH” in Zurich and “EPFL” in Lausanne (two prestigious technical universities), as well as donations by Google, Amazon Web Services, DeepMind, SiteGround, VMware and other tech entrepreneurs.

Cyprus

Cyprus declared that the AI Act will be the first legislation that directly regulates AI. It presented a Strategic Plan for 2024-2026 which has allocated 282 million euro until 2026 for digitalization in general, including AI. However, much information on the development of AI in the country is lacking.

France

France’s own regulation of AI systems mostly revolves around the GDPR, and the “Loi Informatique et Libertés” of 6 January 1978, which apply to the processing of personal data. However, France is one of those countries that also legislate on more specific applications of AI systems, namely automated decisions. Individuals subject to those decisions have a right to obtain a human review of their personal situation, to express their point of view, to obtain a precise motivation in support for the decision, but also to challenge it (in line with Article 22 of the GDPR). On 12 September 2023, French representatives of the Assemblée Nationale proposed a legislation to regulate copyright-related issues, but the proposal was deemed unfeasible, and it was blocked. In 2021, President Emmanuel Macron launched its France 2030 plan, investing 2,5 billion euro in AI Research and Development. On 19 September 2023, the Government established the “Generative Artificial Intelligence Committee” to provide better guidance to the Cabinet for its decisions in the AI sector.

Greece

In Greece, Law 4961/2022 covers multiple technological developments, including smart contracts, the Internet of Things and AI. Only a few modifications are required for the Law to be fully compatible with the AI Act, which testifies Greece’s ability to legislate carefully in the area. In terms of Government funds, the Ministry of Digital Governance issued between 150 and 200 million euro for the development of AI.

Germany

Germany declared that the AI Act will be the first legislation that directly regulates AI. In 2018, Germany adopted a federal strategy for AI, significantly increasing the invested funds in the sector. Indeed, the Federal Ministry of Education and Research annual budget for technology investment increased by 20 per cent since 2017, reaching 1,6 million euro in the current legislature. These funds will be invested in eleven specific areas, including enhancing research to be a driver of innovation, setting up an agenda to expand the AI infrastructure, building the AI infrastructure, promoting social dialogue with stakeholders to responsibly integrate AI into Germany’s institutional systems, and ultimately drafting and enforcing a more effective, innovative and agile AI regulation, that fosters innovation.

Hungary

In Hungary, Government Decree 1573/2020 sets forth the national strategy on AI. This strategy has been developed by the Artificial Intelligence Coalition, which comprises more than 70 Hungarian and International companies, universities, and research groups. The Coalition’s main goal is to place Hungary as a leading power in AI, and to strengthen national businesses’ competitiveness with it. The strategy focuses on transformative programs in the manufacturing, healthcare, energy and logistics sectors. It aims at enhancing Hungary’s technologies and infrastructures, while also fostering the public comprehension of AI and its applications. The Hungarian government, through the venture capital program “Széchenyi” made funds available to support the development of AI. The funded projects include the “AI Innovation and Competence Centre and Data Asser Management”, which promotes the application of AI systems to Hungarian small and medium enterprises, the development of AI-based technology for various purposes and the establishment of the national “Laboratory for Artificial Intelligence”.

Italy

In Italy, the GDPR and copyright legislation are the main tools used to regulate the application of AI and its functioning. In particular, these are significantly important as far as the training process of AI models is concerned, since training sets may incorporate and process personal data or copyrighted work, triggering legal obligations, prohibitions and sanctions. Additionally, Italy plans to further regulate the topic, complementing the upcoming AI Act. Indeed, the Italian Government recently proposed to the Italian Senate the introduction of a new law (Disegno di legge 1146/2024 - “DDL”), which is currently being discussed by the relevant committees. The announced goal is to strike the right balance between the protection of human rights on the one hand, and the development of innovative and beneficial tools on the other. In other words, the DDL dictates general principles to follow, in order to prevent AIs from negatively impacting on human autonomy, excluding humans from the processes in which AI is employed, and depriving them of their individual decision power. Thus, the DDL safeguards freedom of information and communication, fairness in the use of data, and transparency in the training of models. The DDL also proposes to introduce more sector-specific provisions, authorizing, for example, the use of AI systems in public administration and in intellectual professions only in secondary activities in support of the core one. The Italian Government has allocated 1 billion euro to the acquisition of shares in Italian innovative businesses, including those that develop AI systems. It also plans to facilitate partnerships between the public and the private sector, for the development and the employment of fair and efficient AI systems in the public administration.

North Macedonia

In North Macedonia the main regulation that deals with AI is the national Data Protection Law, which is harmonized with the GDPR, while no other specific proposals targeting AI are planned. In 2023, the Government launched “ADA”, an AI-powered digital assistant, which provides information to citizens and businesses. Moreover, the Governmental “Fund for Innovation and Technology Development” has invested approximately 138 million euro since 2013, to support start-ups and innovative projects in North Macedonia.

Portugal

Portugal plans to align its legislation on AI with the AI Act. Portugal is one of the first countries to have developed a national strategy. In fact, in 2019 it adopted the “National Strategy on AI”, which fosters innovation in healthcare, agriculture and education. In line with the AI Act, the National Strategy too is based on a risk-based approach that aims at developing ethical and human-rights-oriented AI. Importantly, Portugal’s strategy includes the establishment of sandboxes, which are secure environments where AI systems can be tested, under the supervision of public authorities, before getting released to the public, mitigating risks related to privacy and security.

Romania

The Romanian Senate has started public discussions on 19 March 2024 for a new legislative proposal on AI. As of today, the proposal would prohibit the automatization of the flow of human resources, as well as the use of biometric data of natural persons (except for crime prevention and detection purposes). It is worth highlighting that the Romanian approach might conflict with the AI Act, therefore it might me heavily modified to align with it. In February 2024, the Ministry of Investments and European Projects published Order No. 464/2024 for the approval of a state aids scheme, and a scheme of contributions to support entrepreneurs in the development of advanced digital technologies. These schemes allocate 3 million euro in grants to foster the development of advanced technologies, including AI.

Serbia

As of today, Serbia set forth voluntary guidelines and recommendations in the AI sector, such as the “Strategy of Development of Artificial Intelligence in the Republic of Serbia for 2020-2025”, and the “Conclusion on Adoption of Ethical Guidelines for Development, Application and Use of Reliable and Responsible Artificial Intelligence”. Besides providing guidance for the development of safer AI models, these acts also envisage the enactment of new regulations and the amendment of existing laws to better face the risks posed by AI (such as a new Data Protection Law). Serbia is currently developing its 2024-2030 national strategy on AI, which is expected to be adopted by the end of the year. As Serbia is also preparing to become an EU Member, it is also likely that it will transpose and issue a law on AI that parallels the AI Act. The Serbian Government also financed AI-related projects with 1 billion euro per year, in the 2020-2025 period. The Fund for Science currently funds 12 projects under the “Program for Development of Projects in the AI Field”.

Sweden

The Swedish Government is currently collecting information to draft a national law on AI, that is in line with the AI Act. But Sweden’s most important tool to get ahead in the AI race comes in the form of investments in the AI field, and the focus on the training of human capital. In fact, Microsoft announced a 3 billion euro investment in AI-related projects, and the training of 250,000 people, highlighting the attractiveness of Sweden in the industry. In 2023 the Government established a commission on AI to enhance the competitiveness of businesses in the sector, which concluded that the public administration would benefit approximately of 14 billion euro per year thanks to the integration of AI in its processes. Sweden also established “AI Sweden”, a government-funded national center for the application of AI, in partnership with entities in both the public and the private sector, as well as universities.

Switzerland

As of today, Switzerland chose a sector-specific approach to AI regulation, including the federal data protection law of 2020 which disciplines automated decisions, granting enhanced transparency and other individual rights that are similar to those granted under the GDPR. However, the legislation might soon be integrated by a new tool, as the Federal Council started an analysis to develop general legislation on AI, by 2025 (which is set to consider the norms of the EU and of the European Council). The goal is to provide Switzerland with a clear and AI-compatible normative landscape. Additionally, the Swiss Federation supports digitalization and technological development projects, including AI programs, in partnership with universities and research institutions, such as the “ETH” in Zurich, or the “EPFL” in Lausanne. Also, “Digital Administration Switzerland” and “AI Switzerland” promote innovation and training in AI-related fields.

Spain

Spain’s main tool to regulate AI is the “National Strategy for Artificial Intelligence 2024”, in line with the AI Act. The Spanish strategy mainly focuses on cybersecurity, which is an essential element for the digital transformation of the economy. In fact, Spanish institutions are currently discussing a Cybersecurity Law, which is set to enter into force in late 2024, to grant a better protection of digital systems. Additionally, Spain established the “Spanish Agency for Artificial Intelligence Supervision” (“AESIA”), with the purpose of granting ethical and transparent practices in the use of AI. The National Strategy allocates 1,5 billion euro – from the National Recovery and Sustainability Plan – and 600 million euro from the State budget, which have already been mobilized. The plan includes investments in supercomputing, the development of language models in Spanish and other co-official languages, the promotion of talents in the AI field, and the expansion of AI in the public and private sectors, with special attention for small and medium enterprises.

United Kingdom

The United Kingdom heavily relies on the GDPR to regulate AI (which also influences automated decisions). The “Artificial Intelligence Regulation Bill” was a tentative to provide the country with horizontal regulation on AI, although its progress was stopped due to the UK’s early elections. However, the Government has already launched several initiatives in support for AI. The “AI Sector Deal” of 2018 invested 1 billion pounds for Research and Development, training and ethical research on AI. Additionally, the “AI and Data Grand Challenge” provides businesses with 2,6 billion pounds from the public sector, and 3 billion from the private one. The “United Kingdom Research and Innovation” program further invested 300 million pounds for proper computing, 250million pounds for the development of AI in healthcare and zero-emission economy, and 100 million pounds in academic centers for technological talents.

UPDATES FROM OUR LONDON BRANCH 

Your source of financial, corporate and commercial law insights

Week of November 6, 2023

Greetings from the London office of Grimaldi Alliance!

We are excited to bring you the latest news and updates from the heart of the UK’s vibrant legal and business landscape. Our team of legal experts is at the cutting edge of corporate, financial, and commercial law, pioneering innovative and strategic solutions to our clients' most complex challenges. Below is a glimpse of our recent impact in London and across the UK.

Highlights from the London Office

Our firm has recently advised a client, world leader in its category of products, in relation to the termination of an agreement concerning a sophisticated and complex sale workforce. The agreement was complex and the advice involved aspects such as the definition of the scope of the exclusivity, the determination of a reasonable notice, and other crucial elements under English law. We have been working closely with our client  in order to understand their needs, to evaluate the pros and cons of the existing agreement and to identify the specific objectives that it was trying to achieve in the UK market. We have conducted a thorough review of English law on all relevant legal issues, which has enabled us to advise our client on the specific steps to take to terminate the agreement in a legally enforceable manner, and to reorganise their sale force in a manner better suited to the new market conditions. 

 Navigating Legal Waters 

Agency or Distribution: Key Characteristics  

Agency and distribution are two common channels to market for manufacturers. They both involve working with third parties to sell products to customers, but they have different legal structures and implications.

In an agency relationship, the manufacturer (principal) appoints the agent to represent them and sell their products. The agent acts on behalf of the principal and negotiates and/or concludes contracts with customers. The agent is typically paid a commission on sales. In a distribution relationship, the manufacturer sells products to the distributor, who then resells them to customers as an independent business. The distributor owns the products and has the contractual relationship with the customer. 
There are a number of key differences between agency and distribution, including: 1. In an agency relationship, the manufacturer owns the products until they are sold to the customer. In a distribution relationship, the distributor owns the products from the time they are purchased from the manufacturer. 2. In an agency relationship, the customer contracts with the manufacturer, even though they are dealing with the agent. In a distribution relationship, the customer contracts with the distributor, not the manufacturers. 3. Agents are typically paid a commission on sales, while distributors are typically paid a mark-up on the products they sell. 4. In the UK, commercial agents are entitled to compensation if their contract is terminated without serious breach. Non-commercial agents and distributors are not entitled to compensation unless the contract provides for it.
Which channel to market is best for a manufacturer will depend on their specific needs and goals. If the manufacturer wants to maintain control over the sales process and have direct contact with customers, then an agency relationship may be the best option. If the manufacturer wants to delegate more responsibility to a third party and focus on their core business activities, then a distribution relationship may be a better fit. It is important to note that courts will look at the actual relationship between the parties, not just the label of "distributor" or "agent." If a manufacturer has a close relationship with a distributor and gives them significant control over the sales process, then the court may find that the relationship is actually an agency relationship, even if the parties have labelled it as a distribution relationship.

Manufacturers should carefully consider their needs and goals before choosing a channel to market. They should also have a written agreement in place with any third-party partners to clarify the relationship and protect their interests.

UK financial authorities set out proposals for stablecoin regulation

The Financial Conduct Authority (FCA) and the Bank of England (BoE) have published discussion papers on the regulation of stablecoins, and a cross-authority paper explaining how UK authorities’ current and proposed regulatory regimes will interact. The Prudential Regulatory Authority (PRA) has also published a letter on how it expects deposit-takers to address the risks that arise from issuing multiple forms of digital money, while welcoming the benefits that could come from innovation in this area.The proposed regulatory approach put forward by the FCA, the BoE and the PRA looks to harness the potential benefits stablecoins could provide to UK consumers and retailers. The proposals aim to protect consumers, prevent money laundering, and safeguard financial stability. The regime(s) applicable to firms engaged in issuing different forms of money and money-like instruments and operating payment systems will depend on the purpose of their business, how it is conducted, and the risks it presents. As well as discussing how the PRA expects deposit-takers to address the risks that arise from issuing multiple forms of digital money, the PRA’s letter also sets out its broader expectations for banks regarding their use of digital money for retail or wholesale innovations, covering areas such as operational resilience; anti-money laundering and countering the financing of terrorism (AML/CFT); and liquidity and funding risks.

Financial Insights FRC publish policy update

In May 2023, the Financial Reporting Council (FRC) proposed 18 changes to the UK Corporate Governance Code (UKCG Code). After a consultation period, the FRC has decided to implement only a small number of these changes, in response to the government's withdrawal of draft legislation that would have added additional corporate reporting requirements.The main substantive change is to the proposals on internal controls. The FRC will merge the requirements of Principles C and O into one Principle, making the board responsible for both establishing and maintaining the effectiveness of the risk management and internal control framework. The annual report will include a declaration from the board on the effectiveness of the company's risk management and internal control systems, but the FRC has not yet provided details of the other supporting information that will be required.The FRC will not be taking forward some proposals, including giving the audit committee responsibility for monitoring the integrity of narrative reporting, and sustainability reporting and moving away from the current UKCG Code approach of specifying particular diversity characteristics that should support companies' appointments and succession plans. 

Committee launches inquiry into EU Entry/Exit and the UK border

The European Scrutiny Committee has launched a new inquiry into the EU Entry / Exit System (EES) and its potential implications for the UK's border.The EES is a new automated IT system proposed by the EU to replace manual passport stamping, which will allow to record when travellers enter and exit the Schengen Area. The EU stressed that this system will ensure that rules, such as the 90-day limit for travellers within a 180-day period, are followed. The aim is for this automated system to be operational by Autumn 2024. However, as the current plan for EES does not allow travellers to register remotely before their trips, this may cause disruption, in particular at UK ports operating 'juxtaposed' border controls, where EU checks are conducted on UK soil.The Committee invites experts to submit written evidence on several topics, such as the history and development of EES proposals, challenges that EU Member States may face in implementing EES, and the impact on third-country nationals and the potential disruptions resulting from the EES at UK ports. 

Parliamentary and Legal News AI safety summit at Bletchley Park

The UK hosted an AI safety summit at Bletchley Park, where experts from around the world discussed the risks and benefits of artificial intelligence. The UK, US, EU, Australia, and China have joined forces to warn of the potential dangers of artificial intelligence, in the first international declaration to address the rapidly developing technology. Twenty-eight governments signed the Bletchley Declaration on AI safety at the start of the AI safety summit hosted by the UK government. Rishi Sunak stressed the importance of implementing strong AI regulation to ensure safety for future generations. The EU is close to passing its AI Act, but UK officials have said that they don't think regulation is needed yet, or even possible, given how quickly the AI industry is developing.

However, most countries agree that international summits like this one are important, especially to help define the problem that different countries are trying to address.

Takeover of the week Tadweld Limited announces successful acquisition of AJAX Safe Access from Canal Engineering

Tadweld, a Tadcaster-based engineering and fabrication specialist, has acquired AJAX Safe Access from Canal Engineering, strengthening its position in the UK engineering sector. AJAX has a reputation for providing cutting-edge safe access solutions to a variety of industries, including warehousing, quarrying, mining, petrochemicals, and road tanker access. The addition of AJAX's well-established products, such as folding tanker access steps, roller step units, and various pallet gates, enhances Tadweld's already strong product offerings.

Tadweld Managing Director Chris Houston commented, "AJAX's innovative product range is a great complement to our existing portfolio of access solutions and walkways, and aligns perfectly with our commitment to quality and safety. We are eager to explore synergies and invest in the brand further." Canal Engineering Managing Director Gareth Bull expressed confidence in the acquisition, stating, "Tadweld's reputation and expertise assure us that the AJAX brand is in capable hands, poised for continued growth and innovation."The acquisition includes all finished and work-in-progress goods, drawings, and tooling of AJAX Safe Access. Additionally, Tadweld has welcomed Mike Godbert to the team as Business Development Manager. Godbert's 17 years of experience as AJAX's Technical Sales Manager will be invaluable in accelerating the integration of AJAX products into Tadweld's portfolio. Houston warmly welcomed Godbert, stating, "Mike's in-depth knowledge of AJAX's offerings and industry insights will be essential in ensuring a smooth transition and sustained innovation. We are excited about the expertise and energy he brings to the table." The acquisition has created three new jobs at Tadweld's Tadcaster site, and the first shipments of AJAX products have already been completed.

Weekly updates from our London branch

 Your source of financial, corporate and commercial law insights

Week of September 25, 2023       

Greetings from the London office of Grimaldi Alliance! 

We are excited to bring you the latest news and updates from the hearth of the UK’s vibrant legal and business landscape. Our team of legal experts is at the cutting edge of corporate, financial, and commercial law, pioneering innovative and strategic solutions to our clients' most complex challenges. Below is a glimpse of our recent impact in London and across the UK.

Highlights from the London Office

Our London office is currently engaged in the ongoing process of assisting a valued Italian client within the agricultural industry as they work towards acquiring the UK branch of a prominent distributor. This strategic endeavour showcases our steadfast commitment to providing comprehensive support to our clients in their international ventures. Our team of legal experts has been working diligently to facilitate a smooth and successful acquisition process. The advice covered all corporate and transactional aspects as well as real estate assistance for the negotiation of a commercial lease for the acquisition of an industrial unit. As this acquisition unfolds, it not only aims to strengthen our client’s presence in the UK but also stands as testament to our proficiency in guiding clients through intricate cross-border transactions.  

Navigating Legal Waters with our Experts

A Guide to Directors' Duties in the UK
Navigating the intricacies of directors' duties is essential for every director in the UK, as stipulated in the Companies Act 2006. This guide breaks down the seven key duties and sheds light on their practical implications: 
1. Duty to Act Within Your Powers: Directors must operate within the bounds of their company's constitution, encompassing the articles of association, resolutions, and agreements. Deviating from these powers can result in legal action. 
2. Duty to Promote the Success of the Company: Directors must make decisions that benefit all shareholders while considering long-term consequences, employees, business relationships, the environment, community, and maintaining fairness among shareholders. The focus is on holistic success, not just profits.
3. Duty to Exercise Independent Judgement: Directors must act independently and not be influenced by third parties, although they can seek expert advice as long as they exercise independent judgment. 
4. Duty to Exercise Reasonable Care, Skill, and Diligence: Directors are held to a standard of competence, taking into account their general knowledge and any specific expertise. Falling below this standard can lead to breaches of duty. 
5. Duty to Avoid Conflicts of Interest: Directors should steer clear of situations where their interests conflict with those of the company. Seeking authorisation from independent directors can mitigate such conflicts. 
6. Duty Not to Accept Benefits from Third Parties: Directors should refrain from accepting personal benefits from third parties connected to their role as a director, as it can be seen as a breach of duty. 
7. Duty to Declare an Interest in Transactions: Directors must declare any interest, including indirect ones like family connections, in transactions involving the company. Consequences of breaching these duties vary, ranging from repaying profits, compensating the company for losses, returning misappropriated property, to facing injunctions against certain actions.In particular, directors are encouraged to maintain a thorough understanding of these duties and seek guidance when in doubt. Compliance not only ensures ethical governance but also safeguards against potential legal repercussions. We encourage you to reach out to our London team should you require further guidance on this topic.  

Financial Insights UK

Inflation and Interest Rates: Current Developments Unveiled
In a recent Bank of England meeting, an unprecedented decision was made to maintain the policy interest rate at 5.25%, marking the first halt in rate hikes since November 2021. This comes as consumer price inflation for the year ending August was at 6.7%, slightly down from July's 6.8%. While this dip in inflation hints at a potential shift, the decision not to raise interest rates suggests that the ongoing cycle of monetary tightening may have reached its peak. UK inflation, well above the 2% target, could keep interest rates above 5% in the medium term, impacting both savers and the broader economy with higher mortgage rates and limited investment opportunities due to costly borrowing. Forecasts from both the Bank and the National Institute of Economic and Social Research (NIESR) indicate a gradual easing of inflation, with the consumer price index (CPI) expected to remain above the 2% target beyond 2024. The intricate link between inflation and interest rates, along with the role of monetary policy in managing inflation, remains crucial in understanding these developments. Multiple factors, such as supply shocks, geopolitical events, Brexit, and a tight labour market, contribute to the UK's high inflation, exacerbated by its dependence on imported goods and services. While a gradual decline in inflation is anticipated, its timeline remains uncertain, contingent on global and domestic factors, making ongoing economic resilience and inflation persistence key factors in future monetary policy decisions.  

City of London’s Ambitious Post-Brexit Financial Vision
The City of London has unveiled a strategic proposal to reinvigorate the UK's financial sector after Brexit. The plan aims to boost the economy by £225 billion ($281 billion) by 2030, with a focus on enhancing global competitiveness. To achieve this, a new council is proposed, chaired by the finance ministry and composed of industry experts and regulators. This initiative comes as London grapples with the relocation of key financial activities to the EU post-Brexit. The report emphasises the need for a systematic, forward-looking strategy akin to rival financial hubs like Singapore. The plan's success hinges on the adoption of eight key "big moves," including regulatory reforms to free up capital. Discussions with political parties ahead of an upcoming general election aim to gather broad support. If realised, these measures could catapult London's financial sector to unprecedented success. 

Takeover of the week UK
Regulator Approaches Approval for Microsoft's Activision Blizzard Buyout
The UK's competition regulator has expressed optimism about Microsoft's revised takeover proposal of Activision Blizzard, signalling that it "opens the door to the deal being cleared." This comes after the initial $69 billion transaction was blocked earlier due to concerns about potential competition restrictions in the emerging cloud gaming sector. In its revised offer, Microsoft has proposed divesting cloud rights for existing and future Activision PC and console games to French game publisher Ubisoft Entertainment. While the regulator acknowledges some residual concerns, Microsoft's proposed remedies have been provisionally accepted to address these issues. The regulator’s consultation on the matter will end on October 6. Microsoft and Activision both welcomed the positive development and are working towards final approval, with a deadline set for October 18. The UK's regulatory response is part of a broader investigation into the acquisition, which has also faced scrutiny from European and U.S. authorities.