Weekly Updates from our London Branch
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 London office is has been assisting a prominent public company in the food sector in the bidding process for the acquisition of a private limited company based in the UK, renowned for its expertise and success in the same field. In line with our commitment to providing comprehensive legal support, our team has conducted a thorough due diligence exercise, covering a wide spectrum of practice areas, aiming to provide our client with actionable insights to mitigate potential risks and maximise opportunities. Furthermore, we have been instrumental in the drafting of key transactional documents aligned with our client’s strategic objectives.
Navigating Legal Waters
Changes to the taxation of non-UK domiciled individuals
Effective April 6, 2025, the non-domiciled tax regime that allowed UK-residents who met certain requirements to only pay tax on money they earned in the United Kingdom will be abolished. A new transitional regime will be implemented, offering a four-year exemption on foreign income and gains (FIG).
This exemption applies to those who establish UK tax residency after a period of ten consecutive years of non-UK tax residence. During this initial four-year period, qualifying individuals can utilise FIG in the United Kingdom without incurring additional tax liabilities. Additionally, distributions from non-resident trusts will be exempt from taxation. The standard taxation of UK-sourced income and gains for non-domiciled individuals remains unchanged.
The Overseas Workday Relief (OWR) that had been granted to reduce UK tax liability in certain circumstances where an individual completes work overseas, while being a UK-resident, will be retained and simplified for the initial three years of UK residence. Eligibility for OWR, effective April 6, 2025, will be determined by an employee’s residency.
Starting April 6, 2025, the current protection from taxation on future income and gains arising from trust structures will be eliminated for non-domiciled and deemed domiciled individuals who do not qualify for the new four-year FIG regime. Any FIG arising within non-resident trust structures will be taxed on the settlor or transferor (if resident in the UK for over four years). This aligns with the current treatment of trust income and gains for UK-domiciled settlors. FIG generated within the trust structure before April 6, 2025, will be subject to taxation on the settlor or beneficiaries if it can be matched to worldwide trust distributions.
Governmental News
The Government has unveiled a new proposal to introduce a new way for private companies to scale and grow
The government has unveiled a new proposal for a novel platform, PISCES (Private Intermittent Securities and Capital Exchange System). PISCES will provide a controlled environment for private companies to trade their securities on an occasional basis. It blends features of public stock markets, like multilateral trading, with the flexibility of private markets regarding company disclosures. Participation in PISCES will allow private companies to scale more easily. It facilitates liquidity, assists shareholders (including employees) in realising their gains, and allows companies to streamline their shareholder base. Investors will gain better access to private companies while enjoying greater transparency and efficiency compared to traditional private markets.
UK Governance Concludes Consultation on Cybergovernance
The UK Government has recently concluded its consultation on a proposed Cyber Governance Code of Practice, which aims to provide directors and shareholders with practical guidance, tools and strategy to enhance cybersecurity measures within their organisations. The suggested Draft Code is part of the government’s strategy to boost cyber resilience as detailed in 2022 National Cyber Strategy, which allocates £2.6 billion investment in improving the nation’s cyber and legacy IT infrastructure.
Why the Draft Code matters
This strategy aims to ensure the UK remains secure and resilient in a rapidly evolving digital world while leveraging the opportunities within the growing cyber and tech landscape. With nearly a third of UK firms experiencing a cyber breach or attack this past year, there was an increased need for a governmental strategy to address this cooperate criminal activity. The Draft Code, developed collaboratively by the department for Science, Innovation and Technology, industry leaders (‘DSIT’), and the National Cyber Security Centre (‘NCSC’), targets the vulnerabilities in IT systems that malicious actors frequently exploit.
This proposal strengthens the pipeline for future UK initial public offerings (IPOs) by fostering a smoother interface between private companies and public markets. It complements the government’s ongoing and comprehensive reforms aimed at solidifying the UK’s position as a premier listing destination.
Furthermore, the Draft Code underscores the necessity of integrating cyber risk management with overall business risk management practices. This holistic approach ensures that cybersecurity is given the same priority as financial or legal risks, which is crucial for maintaining business continuity in a ever growing tech-sphere. The Draft Code also highlights the potential benefits of voluntary compliance with the Draft Code. Although it is not statutory requirement, adhering to the Code can help organisations stay ahead of cyber threats, align with regulatory expectations and gain confidence from stakeholders. The government’s collaboration with regulators like the Information Commissioner’s Office (‘ICO’) ensures that the Draft Code complements existing legislation, providing a comprehensive approach to cybersecurity. In conclusion, while compliance with the Cyber Governance Code of Practice is not compulsory, it is intended to be a voluntary tool to help organisations orient themselves in an ever-growing tech world. Compliance with the Draft Code might also be viewed favourably in the event of regulatory scrutiny or enforcement actions following a data breach or cyber incident. It remains vital provides practical steps on how companies can protect themselves, and the broader implications for business continuity and regulatory compliance.
Financial Insights
BoE and FCA’s joint consultation on the Digital Securities Sandbox
The Bank of England (BoE) and Financial Conduct Authority (FCA) are seeking feedback on their proposed strategy for operating the Digital Securities Sandbox (DSS). This initiative, overseen by both regulators, aims to facilitate the integration of innovative technology in digital assets within the UK. The DSS will adapt UK regulations to allow financial market participants to leverage new technology, such as Distributed Ledger Technology (DLT), in the trading and settlement of digital securities like shares and bonds. Successful applicants to the DSS will gain authorisation to provide securities depository and settlement services, as well as operate a trading venue under the adjusted regulations. This marks the first instance where these services can be provided by a single legal entity. The DSS will be accessible to a broad spectrum of firms, including emerging financial markets infrastructure (FMI) providers, to maximize learning opportunities and foster innovation and competition within the UK financial system.
FCA Introduces New Anti-Greenwashing Rule
Effective May 31, 2024, the UK Financial Conduct Authority (FCA) will implement a new anti-greenwashing rule, referred to as “the AGW rule,” in its already established AGW guidance. This development is significant, due to the absence of a current legal definition of ‘greenwashing’ in the UK and part of an ongoing effort to require FCA regulated firms to adhere to new movements of disclosure within the eco-advertising business. As a result, the commercial sector must rely on the AGW guidance, which clarifies the terms that denote false or misleading statements regarding eco-advertising and the performance, production, or provision of services. This includes misleading advertising and environmental claims. Under the new AGW rule, all FCA-regulated firms are mandated to ensure that their sustainability claims are accurate and not misleading.
The DSS represents a significant step in exploring digital asset innovation in the UK, potentially leading to swifter and more cost-effective methods for trading, settling, and utilising these securities among financial market participants. The DSS will operate for a five-year period and may pave the way for a new permanent regulatory framework for securities settlement. The consultation seeks input from interested stakeholders on how the DSS will operate to maximise the potential benefits of the technology while safeguarding financial stability and market integrity. The new sandbox reinforces the UK’s leading position as a a global and dynamic financial hub by driving the adoption of new technologies for trading and settling traditional assets, such as bonds and equities.
Detailed guidance accompanies this rule to facilitate adherence to fairness and accuracy standards. Moreover, the AGW rule extends beyond financial services to encompass retail, professional business-to-business communications, and business-to-consumer projects. It is advised all FCA authorised firms commit to reviewing and updating all of their customers’ materials, websites, marketing and all T&C documents. FCA-regulated firms and companies have until May 31, 2024, to comply with the regulation, where failure to do so may result in fines up to millions of pounds.
