Five key corporate law developments to look out for in 2025

Following the significant changes of 2024, 2025 looks set to be another busy year for corporate-related legal reform. This article highlights some of the key corporate law and capital markets developments that UK businesses should be aware of this year.

Economic Crime and Corporate Transparency Act 2023: Identity verification and failure to prevent fraud

The Economic Crime and Corporate Transparency Act 2023 (the Act) received Royal Assent on 26 October 2023 and is coming into force in stages. It introduces wide-ranging reforms to combat economic crime and to prevent the abuse of corporate structures.

Although various important provisions of the Act are already in force, some of its most significant reforms will only become effective during the course of 2025. These include the introduction of compulsory verification procedures for all new and existing company directors and people with significant control (PSCs), and the requirement for a person filing information at Companies House to be either registered as an “Authorised Corporate Service Provider” (ACSP) or to be a verified individual. Individuals will be able to verify their identity directly with Companies House, or through an ACSP.

In October 2024, the Government published an outline transition plan setting out the intended timetable for implementation of some of the remaining key reforms under the Act, including:

• By spring 2025 – firms regulated by anti-money laundering legislation can apply to be registered as an ACSP, and once registered can then carry out identity verification services for individuals. Individuals should be able to voluntarily verify their identity from this time.
• By autumn 2025 – mandatory identity verification requirements should be introduced for initial directors and PSCs of newly incorporated companies. There will be a 12 month transition period for existing directors and PSCs to verify their identity.
• By spring 2026 – new filing restrictions should come into effect requiring a person filing a document at Companies House to either be registered as an ACSP or to have completed identity verification.

The Act also introduces a new corporate offence of failure to prevent fraud. Under the new offence, which comes into effect on 1 September 2025, relevant organisations will be criminally liable if an “associate” commits a specified fraud offence in order to benefit the organisation or its clients, and the organisation does not have reasonable fraud prevention procedures in place.

For more information on identity verification and the other reforms being implemented by the Act, access our Economic Crime and Corporate Transparency Act hub here.

Prospectus regime reform

The planned overhaul of the UK’s prospectus regime picked up steam in 2024 and is expected to be finalised in 2025. The new regime is intended to simplify and modernise prospectus regulation without lowering regulatory standards, whilst also improving the quality of information investors receive.

The framework for the new prospectus regime is set out in the Public Offers and Admissions to Trading Regulations 2024. The effect of these regulations will be to replace the existing prospectus regime with a new public offers and admissions to trading regime. Detailed rule-making powers have been delegated to the FCA and these new rules must be implemented to bring the reforms into effect.

Under the FCA’s proposals for the new regime, a prospectus will no longer be required for a public offer. Instead, there will be a general prohibition on public offers with a set of exemptions from that prohibition (including where securities are being admitted to trading on a regulated market or a primary multilateral trading facility (MTF), or where the offer is under £5m).

If an offer does not fall into an exemption, it will need to be made by means of a new “public offer platform”. Public offer platforms are intended to provide a framework for issuers looking to make offers of securities to a broad investor base (including retail investors) outside public markets when raising more than £5m.

Under the FCA’s proposals, a prospectus will still be required for the admission of transferable securities to trading on a regulated market, unless an exemption applies. The FCA is intending to broadly replicate the current admission to trading exemptions, but with some additional relaxations. However, in a significant change for secondary capital raises on regulated markets, the threshold below which a prospectus will not be required will increase from 20% of the issuer’s existing share capital to 75%.

In a further significant change, the FCA is proposing that primary multilateral trading facilities (MTFs) that allow retail participation – such as AIM – must require the publication of an “MTF admission prospectus” on all initial admissions and reverse takeovers (with exceptions for existing simplified routes to admission).

The FCA is aiming to finalise rules for the new regime by the end of H1 2025. The FCA has noted, however, that it will need additional time before the new regime comes into force to enable firms to apply for permission to carry on the new regulated activity of operating a public offer platform.

For more information, see our previous articles Prospectus regime reform: FCA consultation and Equity capital markets reform: where are we now?

PISCES: a new regulated market for private company shares

In a further step towards reinvigorating the UK’s capital markets, a new regulated market for private company shares – the Private Intermittent Securities and Capital Exchange System (PISCES) – is expected to be open for business during H2 2025.

PISCES will provide a new regulatory framework for the intermittent secondary trading of shares in unquoted companies. It is not a trading venue in itself, but trading platforms will be able to operate within the PISCES framework. PISCES will be subject to its own bespoke regulatory regime that will be developed within a financial services “sandbox”. This will allow the framework to be tested during a five-year trial period.

Key features of the new trading framework include the following:

• PISCES will be open to any company whose shares are not already admitted to trading on a public market (in the UK or abroad);
• PISCES platforms will operate as secondary markets and so can only be used to sell existing shares. They will not be used to support capital raising through the issuance of new shares;
• During the trial phase, the categories of investor permitted to purchase shares on PISCES will be restricted to institutional and professional investors, employees of participant companies, and self-certified or certified sophisticated investors and high net-worth investors;
• Trading on PISCES platforms will occur during trading windows that are set by the participating companies (but subject to operator rules). These windows could be weekly or monthly, for example, and there will be flexibility as regards the duration of each window; and
• PISCES transactions will be exempt from Stamp Duty and Stamp Duty Reserve Tax.

The FCA has recently published a consultation on the regulatory framework for PISCES, including its proposals for the disclosure of information by PISCES companies, how PISCES operators must run trading events and the role of a PISCES operator in monitoring trading on its platform.

Feedback on the FCA’s consultation is requested by 17 February 2025. The FCA is then intending to publish the final PISCES rules once the Government has laid the implementing PISCES legislation before Parliament – expected to be by May 2025. The PISCES sandbox will open for applications shortly afterwards.

For more information, see our previous articles PISCES: A new share trading platform for “private” companies and PISCES: Government confirms new trading market for private company shares.

UK Corporate Governance Code

The revised version of the Financial Reporting Council (FRC)’s UK Corporate Governance Code (2024 Code) will apply to financial years beginning on or after 1 January 2025 (except for changes to Provision 29, which will apply to financial years beginning on or after 1 January 2026). The FRC has also published guidance to accompany the 2024 Code.

The changes in the 2024 Code are not as extensive as originally proposed, with the FRC prioritising revisions in respect of internal controls. In that regard, Provision 29 now includes expanded annual report disclosure requirements and a requirement for the board to declare on the effectiveness of the risk management and internal control framework (the Board Declaration).

Other key changes include:

• a new Principle C to encourage companies to report on board decisions and their outcomes in the context of the company's strategy and objectives;
• an amendment to Principle J to provide that appointments to the board and succession planning should promote diversity, inclusion and equal opportunity. References to specific characteristics and groups have been removed;
• updating Provisions 25 and 26 to incorporate the FRC’s Minimum Standard for audit committees into the 2024 Code; and
• updating Provisions 37 and 38 to provide that directors’ contracts that cover director remuneration should include malus and clawback provisions, and that annual reports should include a full description of malus and clawback provisions (including when they can be used and how long they last for).

The FCA is consulting on proposed changes to the UK Listing Rules and the Disclosure Guidance and Transparency Rules to reflect the new 2024 Code. The consultation closes on 13 January 2025 and the FCA then intends to finalise and publish the revised rules as soon as possible.

Reform of reporting framework

In October 2024, the Government announced details of changes it proposes to make to company law and to the UK’s reporting framework. The first set of regulations under this initiative – the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (the Regulations) – have now been published and take effect in relation to financial years beginning on or after 6 April 2025.

The Regulations reduce reporting burdens on companies by increasing by approximately 50% the turnover and balance sheet criteria used when determining the size of a company for reporting and audit purposes. The revised thresholds under the Regulations are as follows:

• micro entities: turnover of not more than £1m and balance sheet total of not more than £500,000;
• small companies: turnover of not more than £15m and balance sheet total of not more than £7.5m; and
• medium-sized companies: turnover of not more than £54m and balance sheet total of not more than £27m.

The Regulations also remove several reporting requirements from the Directors’ Report (part of a company’s Annual Report) which overlap with other reporting requirements or provide little material value to investors.

In its October announcement, the Government also confirmed that it will launch a consultation in 2025 aimed at simplifying and modernising the UK’s non-financial reporting framework. It will also review the potential for updating shareholder communication in line with technology and for clarifying the law in relation to virtual AGMs. The timing for these proposals has yet to be confirmed.