Company law and M&A

• FTPF Offence: As previously reported, the Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced a new failure to prevent fraud offence (FTPF Offence), intended to hold large organisations to account for fraud committed by their associates. The FTPF Offence will come into force on 1 September 2025. Under the FTPF Offence, organisations will be liable where a fraud offence is committed by an employee or agent, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place. New guidance outlines what organisations can do to help prevent fraud and avail themselves of a defence to the FTPF Offence.
  
  For more, read our briefing Failure to prevent fraud guidance published – what do businesses need to do now? PE Sponsors should also see our PE-focused briefing Failure to Prevent Fraud: What Do PE Sponsors Need to Know?, which examines the FTPF Offence specifically from the perspective of a PE Sponsor, where the FTPF offence is committed 'corporately' by a portfolio company.
  
  
• ACSP Registration and IDV: A key element of ECCTA is the implementation of a new identity verification (IDV) regime for individuals associated with UK companies and LLPs. Individuals can complete IDV themselves directly with Companies House or through an authorised corporate service provider (ACSP) that has been registered and approved by Companies House.
  
  In the previous edition of Insights, we reported that the Government intended to roll out IDV measures from Spring 2025. Since then, Companies House has launched its ACSP registration service and individuals can voluntarily verify their identity from 8 April 2025. As of now, Companies House is still working towards mandatory IDV measures coming into force from Autumn 2025 for all new directors, PSCs of UK companies, and all new members of UK LLPs upon incorporation. A 12-month transitionary period will commence at the same time for existing directors, PSCs, and LLP members to complete their IDV or risk facing penalties including fines and prohibitions on acting as a director.

For further information on IDV, see our briefing: Economic Crime and Corporate Transparency Act 2023: What to Expect from the New Identity Verification Regime

Last autumn, we reported that the Private Equity Reporting Group (PERG) and the British Private Equity & Venture Capital Association (BVCA) had initiated a consultation to update the Walker Guidelines (Walker Guidelines) on Disclosure and Transparency in Private Equity.

The revised Walker Guidelines were published by the BVCA late last year and take effect for financial years that end after April 2025. The main changes include redefining which private equity firms and transactions will fall within the scope of the Walker Guidelines and revised reporting requirements for in-scope portfolio companies in three main areas: principal risks and uncertainties; environmental matters; and diversity, equity and inclusion (DEI). For further information on the revised Walker Guidelines, please see our briefing note: Revised Walker Guidelines published.

The results from a recent poll on the use of AI in minute-taking by listed and large private companies highlight mixed views on the use of AI in the boardroom. Instigated by the GC100 (the association of general counsel and company secretaries working in FTSE 100 companies), the poll analysis highlights a number of key issues and practice points for companies to consider when looking at the use of artificial intelligence in minute-taking. Although the poll was aimed at listed companies, the general principles will also be relevant to private companies.

Surprisingly, use of AI is still limited, in practice, with 92% of respondents have not yet used AI in their minute-taking processes. Where companies have reported trialling AI technologies in preparing board and committee minutes, these are typically reviewed by a member of the company secretarial team.

Here are some key takeaways from the poll analysis:

• Generative AI can assist board-minute preparation and minute-taking in various ways, for example, the preparation of agendas, real-time transcriptions and the organisation and identification of actions. Some users of AI in the boardroom highlighted time and cost efficiencies, and the advantages of streamlining time-consuming and administrative tasks.
  
  
• The key risks involved in using AI include the following:
  
  
  • Accuracy - the accuracy of minutes could be affected by the risk of "hallucination" and AI's limited ability to filter information and exercise discretion. AI also lacks the contextual understanding to frame discussion appropriately and correctly identify the most relevant points.
  • Confidentiality - There is a risk that information would become part of a pool of data on which an AI product is trained. For certain confidential or highly sensitive board-level discussions (for example, strategy and financial results), companies should consider whether it is appropriate to use generative AI tools at all or whether those tools should be used only subject to certain conditions or restrictions, for example only where there are appropriate contractual confidentiality obligations placed on the model supplier or only where that use is of a locally hosted instance of the tool (to which the supplier does not have access). Listed companies should also ensure that any use of such tools complies with their market abuse obligations, in particular the requirement to keep insider lists.
  • Security - Companies should assess the extent to which the use of generative AI may increase their exposure to cyber-attacks and consider how best to protect against this risk.
  • Data privacy - Companies will need to take measures to ensure that the use of AI tools complies with their privacy and data protection obligations (for example, notifying the attendees of a board meeting if using an AI tool that continuously monitors and processes discussions of attendees).
  • Recording – There are reservations regarding the verbatim recording of confidential and sensitive discussions, given the risk they could be subject to disclosure in a litigation or regulatory context.
  • Impact on discussions – The recording of discussions may also affect directors' willingness to speak freely, which, in turn, has broader governance obligations.

We are advising a number of clients on these issues, so if you'd like guidance on how to deal with digital transcription and AI note takers, please get in touch with your usual contact at the firm.

The thresholds by which a company are classified by reference to its economic size under the Companies Act 2006 have changed. This impacts certain reporting obligations which are triggered by a company's size, for example the requirement to report on payment practices.

The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 came into force on 5 April 2025 and so the changes will apply to financial years beginning on or after this date. The Regulations will increase by approximately 50% the annual turnover and balance sheet thresholds in CA 2006 for micro-entities, small and medium-sized companies. Any company exceeding the medium-sized thresholds will be classified as large. The employee thresholds will remain the same. Corresponding amendments will be made for LLPs. Previously, the qualifying conditions for each size classification required that a company did not exceed two out of three specified maximum thresholds for annual turnover, balance sheet total and number of employees. There will be some companies that were previously in scope that may now fall outside due to these changes.

The Companies House and HMRC joint accounts and company tax return filing service will close next year on 31 March 2026. The service no longer aligns to modern digital standards, enhanced corporation tax requirements or changes to UK company law under ECCTA. Companies should start preparing now by:

• downloading and saving at least 3 years of accounts filings, as they will no longer be able to access any previous filings on this service after 1 April 2026; and
• considering their software filing options and find a suitable software provider that can meet their filing needs for both Companies House and HMRC.

For more, read the Government's guidance on preparing for the closure of the online service.