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The Listed Company Bi-Annual Update - April 2021

The Listed Company Bi-Annual Update - April 2021
Corporate governance & reporting

2021 AGMs and Annual Reporting

  • The COVID-19 pandemic (the "Pandemic") has significantly impacted the way companies hold their AGMs and, as they look to prepare their annual report and accounts for FY2020, will form the basis of some of the key disclosures. In addition to the Corporate Insolvency and Governance Act 2020, which provided some important changes to AGMs and reporting, there has been a raft of Government and institutional guidance released for companies to consider as they look toward this year's AGM and annual reporting. We have summarised this information, together with details of other important corporate governance guidance which has been recently released (including on gender and ethnic diversity, climate change and energy reporting), in our briefing note here.

  • In March 2021, PIRC published its 2021 Shareholder Voting Guidelines. While many aspects of the guidelines remain unchanged from 2020, key areas of note for this year include (i) remuneration, (ii) the Pandemic and (iii) reporting on the UN's sustainable development goals. Also of interest is that PIRC continues to support only a general disapplication of pre-emption rights of up to 5% of a company's issued share capital, and not the additional authority permitted under the Pre-Emption Group Statement of Principles.


  • Following the publication of the 2020 Stewardship Code (which applies from 1 January 2021), at the end of September 2020 the FRC published a review of the early reporting under the new Code and we have summarised its findings in this briefing note.

  • In February 2021 the Investment Association (the "IA") published its Good Stewardship Guide 2021 which highlights, from a stewardship perspective, the IA's published expectations on a number of matters including Task Force on Climate-related Financial Disclosures and board diversity.

Modern Slavery Statements

  • The Home Office has published new guidance on Modern Slavery Act reporting, which acknowledges the challenges presented by the Pandemic and that some businesses may not be able to publish their statement within usual reporting deadlines. See our briefing on Reporting on MSA during Coronavirus for further details.

Timetables for Annual and Half-yearly Financial Statements

  • In January 2021 the FCA and the FRC published a joint statement reminding companies that extended financial information timelines (including an additional two months for audited annual financial reports and one month for half-yearly financial reports) continue to apply. The FCA has also published a summary of the temporary reliefs available.

Parent Company Liability

  • In February 2021, the Supreme Court held that it was at least arguable that the UK listed Royal Dutch Shell parent company owed a duty of care to the claimant Nigerian citizens in relation to alleged environmental damage and human rights abuses by Shell's Nigerian subsidiary. Amongst other things, the court considered that the claimants' arguments that Royal Dutch Shell group decision making is organised along business and functional lines, rather than according to separate corporate entities, had the potential to give rise to a parent liability and so merited being explored in a full trial. The setting of policies by Royal Dutch Shell at a group level was also a key consideration.

  • This follows a string of recent high-profile decisions where the UK courts have shown a willingness to contemplate parent company liability (notable others include the Vedanta and Unilever cases), in what increasingly seems a policy-based approach. Key to whether a duty of care, and therefore liability, may arise is how these companies are governed, where decision making takes place, and the public commitments and assurances a parent may have given (including in its annual reports) on environmental, social and governance matters. A detailed discussion of recent case law in this area in the UK is available in our Dispute Resolution team's yearbook, here.

  • This is part of a wider trend towards increased responsibility and risk being placed on parent entities. A recent hearing against Royal Dutch Shell on related issues before the Dutch courts in the Hague applied similar reasoning (see our briefing here). Current EU proposals to require businesses in the EU, or those providing goods and services to the EU, to implement an adequate compliance system to identify and assess human rights, environmental and governance risks throughout their organisation and supply chain and establish a due diligence strategy, may also increase the onus on parent entities to consider wider group or third party risks in this area.

Board Evaluations

  • In January 2021, ICSA published a report following its review (at the request of the Department of Business, Energy and Industrial Strategy ("BEIS")) of the effectiveness of independent board evaluation in the UK listed sector. It concluded that broader adoption of existing good practice should be encouraged, there should be greater transparency in the processes followed and these objectives should be achieved by a voluntary (rather than regulatory) approach. To this end, ICSA published some proposed guidance: a voluntary Code of Practice for providers of external board performance reviews to FTSE 350 companies, voluntary Principles of Good Practice for listed companies using external board reviewers and Guidance for listed companies when reporting on their evaluations.

Financial Reporting Lab guidance on corporate reporting in the context of the Pandemic

  • In October 2020 and as part of its response to the Pandemic, the FRC's Financial Reporting Lab published two reports: Resources, action, the future and Going concern, risk and viability in the context of the Pandemic.

  • Each of these reports provide a refresher to guidance on the same topics published earlier in the year and reflect developing market practice and thought on corporate reporting as the Pandemic progressed. They will help companies when preparing their annual reports and contain questions for boards, as well as examples. The FRC notes that (i) going concern is not as simple as a pass/fail concept and that it is important to disclose the uncertainties and management's considerations of these; (ii) the Pandemic has created additional risks for companies and it is essential to explain to investors how the risks have changed, the specific impact on the group and how management have responded; and (iii) a viability statement with realistic scenarios and clear assumptions provides boards with an opportunity to communicate their longer-term prospects, even when the short term outcome is less certain.

Market Abuse Regulation

  • At the end of the transition period at 11pm on 31 December 2020 the UK version of the EU Market Abuse Regulation ("UK MAR") came into force. The amendments made to the EU Market Abuse Regulation ("EU MAR") as part of the onshoring process were largely technical in nature and intended to maintain the position in terms of the effect on UK and EU market participants and issuers. For example:

    • UK MAR retains the notification requirements and processes for issuers to report certain information to the relevant national competent authority ("NCA") but the obligations are limited to securities admitted to trading on UK trading venues and emission allowance participants registered in the UK to avoid double reporting;

    • ESMA's powers and functions have been transferred to the FCA to enable it to enforce UK MAR and ensure there is a functional UK market abuse regime in place;

    • UK MAR retained EU MAR's requirement that firms and venues located in the UK provide suspicious transaction and order reports (STORs) to the FCA;

    • the European Commission's power to make delegated acts under certain Articles of EU MAR was transferred to HM Treasury, which is given power to make regulations under these same Articles in UK MAR; and

  • EU MAR's requirement that Member States' NCAs co-operate and share information with EU authorities has been altered so that the UK is no longer obliged to share information or co-operate with the EU on a unilateral basis and with no guarantee of reciprocity. Instead, UK authorities will rely on the existing domestic framework for co-operation and information sharing, which allows for this on a discretionary basis.

Audit Reforms and ARGA: Following the Kingman and Brydon reviews, it is proposed to implement audit reforms and to replace the FRC with a new independent regulator, the Audit Reporting and Governance Authority, ARGA.  On 18 March 2021, the government published White Paper: Consultation on restoring trust in audit and corporate governance. The White Paper seeks views on wide-ranging reforms intended to strengthen the UK's audit, corporate reporting and corporate governance system, and responds to recommendations made by the Kingman review on the regulation of the audit industry and the Brydon review into the quality and effectiveness of audit. In particular, the White Paper proposes that (a) large public companies would be held to higher standards of governance; and (b) directors would have increased liabilities (for example greater accountability for internal controls, dividends and capital maintenance, new reporting requirements, investigation and enforcement powers for the audit regulator to deal with wrongdoing by directors and strengthening malus and clawback provisions within executive directors' remuneration). A further proposal is to expand the definition of "public interest entity" to include large private companies with two possible options for the meaning of "large" in this context. The consultation closes on 8 July 2021.

European Single Electronic Format ("ESEF"): The FCA has confirmed that the application of the ESEF has been delayed and will now apply to financial periods starting on or after 1 January 2021, for publication from 1 January 2022. ESEF requires issuers to publish and file their reports in XHTML format. For their 2020 financial year, issuers may choose to file their reports in ESEF or may continue to use the current PDF format.

Corporate transparency and register reform consultation: In September 2020 the Government published its response to its consultation on options to enhance the role of Companies House and increase the transparency of UK corporate entities. The proposals include compulsory identity verification for all directors, 'persons with significant control', general partners in limited partnerships, designated members in LLPs, and all individuals who file information on behalf of a company, and providing the Registrar of Companies with stronger powers to query, seek evidence for, amend, or remove information and to share it with law enforcement partners when certain conditions are met. The Government was due to consult on the technical detail of these proposals last year.

Corporate Reporting: In October 2020 the FRC published a discussion paper on corporate reporting, exploring a new principles based corporate reporting system and challenging existing thinking about how companies can more effectively meet the information needs of investors and other stakeholders. Final comments were submitted to the FRC in early February 2021. In February 2021 the IA published its response to the discussion paper.

UK Listing Review: In March 2021 HM Treasury published the UK Listing Review report following the review of the UK listing regime chaired by Lord Hill. The report identifies an urgent need to reform the Listing Rules and the prospectus regime to ensure the UK remains competitive post-Brexit. For further information, see our briefing note.

Announcement of PDMR and PCA dealings: Under UK MAR all persons disclosing managerial responsibilities ("PDMRs") and their "persons closely associated" ("PCAs") must notify the issuer and the FCA of all dealings in any of the issuer's securities by them or on their account (including all dealings by their investment managers). Currently such notification must be made no later than three business days after the date of the transaction and the Company must announce such dealing(s) no later than three business days after the transaction. Under the Financial Services Bill, which is currently at the Committee stage in the House of Lords, the time period for announcing the dealing(s) will be amended to allow issuers two working days to disclose the transaction after receiving the notification from the PDMR or PCA.

People, diversity and inclusion

Workforce related corporate reporting

  • Following the FRC's Financial Reporting Lab report published in January 2020, workforce related corporate reporting remains a key agenda item for investors. For example, in its Annual Review of Corporate Governance Reporting, published in November 2020, the FRC notes that whilst the majority of companies had disclosed their choice of employee engagement mechanism (i.e. a designated NED, a workforce advisory panel or a director from the workforce) or alternative arrangement pursuant to the UK Corporate Governance Code, further clarity was often needed as to why the method selected was considered most effective for the company. We have provided an overview of the relevant investor guidance in our AGMs and Reporting briefing note here This includes a report on the progress towards meeting the ethnic diversity target of at least one director of colour set by the Parker Review, which must be met in 2021 by FTSE 100 companies and in 2024 by FTSE 250 companies.

Gender Pay Gap Reporting

  • The Equality and Human Rights Commission (the "EHRC") has announced the suspension of enforcement of the gender pay gap reporting deadlines for 2020-21 until 5 October 2021 effectively giving employers an additional six months to meet their reporting obligations for this year.

  • The EHRC has also prepared guidance on how to deal with furloughed employees in pay gap reporting. The Government Equalities Office also addresses this issue in its guidance on the data to be gathered to make the calculations. In December 2020 the Government Equalities Office also published a collection of guidance for employers on gender pay gap reporting more generally.

Social Security

  • The Trade and Cooperation Agreement agreed between the UK and the EU includes a protocol on social security coordination to ensure that at the end of the transition period employees and employers are only subject to the social security regime of a single state at any one time. All Member States have expressed their wish to opt-in to apply the "detached worker" provision meaning that workers moving temporarily between the UK and the EU will continue to pay social security contributions in their home state, and receive necessary healthcare treatment in the country where workers are temporarily posted. For further information see our briefing note here.

Coronavirus Job Retention Scheme

  • The Government's Coronavirus Job Retention Scheme ("CJRS"), where employers can place their workers on furlough and claim a reimbursement of a proportion of the workers' wages, is due to end on 30 September 2021. Under the scheme, employees must receive 80% of their usual wages for hours not worked, up to a cap of £2,500 per month (prorated for any hours worked).

  • The Government currently funds the 80% of wages up to the cap, but this subsidy will step down to 70% for July 2021 and 60% for August and September 2021. Employers will have to top up the shortfall to ensure employees get 80% of wages for unworked hours (so employers will have to contribute 10% of wages in July and 20% for August and September for any hours not worked). Employers must also pay employer NICs and employer pension contributions on the Government subsidy, as well as full pay for any hours worked during furlough.

Furloughed employees and all-employee share incentive plans

  • Furloughed employees are still employees for the purposes of all HMRC tax-advantaged share option or share incentive plans and their participation in such plans should be unaffected by any periods on furlough. In addition, payments under the CJRS to employees furloughed during the Pandemic can constitute a salary for the purposes of an HMRC tax-advantaged Share Incentive Plan ("SIP") and SIP contributions can continue to be deducted from CJRS, although all employees (not just those that have been furloughed) can pause contributions at any time in accordance with the SIP Rules

  • Where furloughed employees continue to make contributions under a SIP partnership share agreement, additional care may be needed by the employer when calculating the appropriate CJRS claim, to ensure that the relevant NIC saving from employees acquiring partnership shares out of pre-taxed income is reflected in the CJRS claim amount (i.e. so that they do not inadvertently claim too much under the CJRS).

Further back-to work H&S guidance

  • Businesses should continue to update their Pandemic-specific health and safety risk assessments and related policies and procedures as and when UK government guidance changes to ensure they are keeping their staff and contractors safe as well as avoiding potential Pandemic-related health and safety claims. This is particularly the case for those businesses preparing to bring workforces back to the workplace in larger numbers as and when the latest lockdown eases. The guidance we prepared on returning to work safely in Summer 2020 (which can be found here) remains applicable in this respect.

Section 172, Payment Practices: In June 2019, the Government announced that it was working with the FRC to implement its proposed requirement for large companies' audit committees to review payment practices and report on them in their annual accounts. The Government has asked the FRC to review how well payment practices were reflected in the first year of the new reporting requirement in the Section 172 Statement. We understand that the outcome of the FRC's review of Section 172 Statements, which we are still awaiting, will inform the Government's future decision making and timing on this.

Ethnicity pay gap reporting: The Government is proposing to introduce a new mandatory requirement for large companies to report on their ethnicity pay gap figures, to increase equality in pay and reduce barriers to progression by ethnic minorities. It is likely that the requirement will apply to all organisations that employ more than 250 employees in the UK, in line with the existing requirement for gender pay gap reporting. The Government had said it would respond by the end of 2020 to a consultation on its proposals which ran over 2018/2019, but it is yet to respond to the consultation or set out its plans.

Modern Slavery Statements: In September 2020, the UK Government published its response to the Transparency in Supply Chains Consultation it undertook in 2019. Its proposals include making reporting against certain specified areas (supply chains, related policies and due diligence processes, risk assessment, effectiveness and training) mandatory, introducing a single reporting deadline and considering further enforcement options for non-compliance (see our briefing for more detail). There is no clear timeframe for these reforms as yet with the Government stating only that it will introduce the necessary changes to the Modern Slavery Act 2015 "when parliamentary time allows" and a new Government-run modern slavery registry is due to be launched this year. The proposals come amidst increased focus on modern slavery issues in the UK, including as a result of the recent Leicester manufacturing industry allegations.

Post termination non-competes: The Government has published a consultation paper proposing major reforms of post termination non-compete clauses which prevent ex-employees working for a competitor. The Government is considering requiring employers to pay ex-employees during any non-compete period or, alternatively, banning non-compete clauses altogether. The reforms are designed to foster an environment where start-ups will flourish. The consultation closed on 26 February 2021.



  • The Pensions Regulator relaxed some reporting requirements during the early months of the Pandemic but these are now generally restored.

  • Some employers deferred or reduced deficit recovery contributions to defined benefit pension schemes. The Pensions Regulator was relaxed about this being done, to allow breathing space for assessment of the employer's covenant and discussion of affordability going forward. Any longer-term reduction or suspension now needs to be explained to the Pensions Regulator.

Executive remuneration

  • The IA has published guidance explaining when it will "red-top" remuneration reports and policies for pension-related disclosures (for example) where it isn't explicitly stated that pension contributions for new executive directors will be aligned with the wider workforce. See our AGMs and Annual Reporting briefing note referred to above for further details about this and guidance on investors' expectations for other remuneration related policies.

Defined benefit pension scheme funding: The Pension Schemes Act 2021, which received Royal Assent on 11 February 2021, will require defined benefit pension schemes to prepare a statement of the scheme's "funding and investment strategy". This is its strategy for ensuring that scheme benefits can be provided over the long term. The Pensions Regulator will produce a new code of practice to accompany this requirement: under this, schemes will have to adopt either a "fast track" valuation approach, details of which are yet to be set, or a "bespoke" approach which will need to be justified to the Regulator. The impact on employers will depend on the extent to which the scheme is already doing what the Regulator expects. This is likely to take effect in late 2021 or early 2022.

The Act also includes (among other things) new powers for the Pensions Regulator in relation to corporate activity and new criminal offences and heavy civil penalties for acts or omissions which put defined benefit pension scheme members' benefits at risk. There will also be new requirements to notify the Regulator and scheme trustees in connection with corporate activity.  None of these provisions are yet in force (this may begin in autumn 2021) and some further detail is awaited in regulations and guidance.

Pension schemes and climate change risk: Pension schemes will be required to incorporate climate change risks and opportunities into their governance systems and make specific additional public disclosures about climate change targets and policies. These requirements are to be phased in over time, starting from October 2021 with the largest schemes and authorised master trusts. A Government consultation on draft regulations and guidance closed on 10 March 2021.

The growing focus on these matters may have an impact on trustees' investment decisions. Employers might wish to engage with trustees on this topic, especially where ESG and sustainability are also a business priority.

Climate change and environment

Climate-related Financial Disclosures

  • The Listing Rules were amended in December 2020 to require UK incorporated commercial companies which have a premium listing to state, in their annual reports for financial years beginning on or after 1 January 2021, whether they comply with the Task Force on Climate-related Financial Disclosures ("TCFD") recommended disclosures and to explain any non-compliance (i.e. 'comply or explain'). Further details of the change, and the implications and scope of TCFD disclosures, can be found in our briefing here.

  • The FCA is expected to launch a consultation shortly on extending the application of this new listing rule (still on a comply or explain basis) to a wider scope of listed issuers. It is also considering consulting on guidance making clear that listed issuers should only take the 'explain' (rather than 'comply') route in limited circumstances.

Non-Financial Disclosures (UK and EU): In November 2020, the UK Government published its roadmap for the transition to mandatory climate-related reporting in line with the TCFD recommendations across the entire business and financial community within five years, as part of its Green Finance Strategy. As noted above, premium-listed companies are already required to disclose in accordance with the TCFD on a 'comply or explain' basis. However, the roadmap implies that mandatory reporting may be brought in for all listed companies by 2023. Accordingly, the FCA is considering consulting (although it may not do so until 2022) on when listed issuers should be subject to mandatory TCFD disclosures. BEIS has recently launched a consultation on climate-related financial disclosures, which proposes that companies and LLPs in scope would have to disclose climate-related financial information in line with the four pillars of the TCFD recommendations in their non-financial statement for financial periods beginning on or after 6 April 2022. As well as companies already required to produce a non-financial statement, this would cover certain AIM and private companies. For further information, see this briefing note.

Commercial contracts

Creative approaches to address contractual disputes in the context of COVID-19

  • As a result of the Pandemic, disputes between contractual parties may arise more than usual. We have drafted a briefing here to outline a 'creative toolkit' to assist with any contractual issues.

Brexit: contractual points to watch out for

Brexit has had and will continue to have particular implications for commercial contracts. For a general checklist on Brexit proofing your contracts, see this article. Other contract related issues to consider include:

  • Incoterms: to the extent they haven't done so already, EU businesses purchasing or selling goods to the UK should review the Incoterms they use to ensure that they remain appropriate now that the UK has left the EU Single Market and Customs Union. Click here for more detail.

  • Force majeure and material adverse change clauses: even with a deal, disruption to UK-EU goods and services contracts is widely expected and may well give rise to contractual disputes. In many cases, force majeure and material adverse change clauses are likely to be significant. Click here for more detail.

  • Goods shortages: the introduction of new border red tape from 1 January 2021 has caused and will continue to cause disruption to EU-UK goods trade. This article discusses how contracts can help mitigate this risk.

  • References to "EU", "EEA" etc: many existing contracts will refer to the EU as if it includes the UK. This article discusses how UK courts are likely to interpret these contracts (assuming they have not been amended to reflect the post-Brexit situation).

For more information about Brexit generally, including our business friendly guide to the EU-UK Trade Deal, please see here.

Worked examples in contracts

  • In Altera Voyageur v Premier Oil, the High Court considered how much weight should be placed on worked examples when interpreting contracts. The key takeaway from this case is that worked examples are helpful to include in contracts but should always be double-checked to ensure that there is no discrepancy between the operative wording in the main agreement and the worked examples. It also critical that during negotiations, adequate attention is paid to any worked examples to ensure that they genuinely reflect the parties' intentions. Watch our video on this case and worked examples more generally.

CMA beats the drum on resale price maintenance

  • In our briefing, we examine how the UK Competition and Markets Authority ("CMA") has effectively put suppliers and retailers on notice that it will not tolerate efforts to fix or otherwise stabilise resale prices for consumers, having assessed five cases in the past year and awarded fines totalling £13.7 million.

Missed deadlines for the exercise of contractual rights

  • Many contracts require contractual rights to be exercised within a particular timeframe. The UK Court of Appeal recently looked at issues of missing deadlines in the case of Joseph v Deloitte. Click here to read our briefing on this case, which discusses issues including implied terms and promissory estoppel.


  • Indemnities are much misunderstood and often over relied on. In this video recording, we shine the spotlight on them, why they can be useful, and what to consider when drafting and negotiating them.
IP & technology

Copycat websites

  • Cybersquatting/a copycat website occurs when a third party sets up a website with a domain name that is identical or confusingly similar to your organisation's website, copies content from your website such as using your logo or trade mark, or even mimics your website such that the copycat website looks like it is run by your organisation. For UK-based infringing websites, there are preliminary steps organisations can take against third parties engaging in this behaviour, such as establishing the ownership of the website via an online WHOIS search and reporting the website to the appropriate organisations or aiming to get the website taken down or the domain name transferred to your organisation. To find out more, please see our latest presentation on cybersquatting.

Sky v Skykick: broad trademark registrations require justification

  • In April 2020, in an important case for UK trademark owners and applicants, the English High Court found that trademarks should only be registered in respect of broad categories of goods and services if there is a rationale for doing so and with a genuine intention to use the trademarks in respect of such goods and services.

  • A wide registration could otherwise be interpreted as bad faith resulting in a partial invalidation of the registration by the courts. The judgment did at least recognise that there might be cases where trademarks would be registered in respect of broad categories, not because of bad faith, but where it is difficult to define the precise goods and services covered by the registration. Please see our briefing for further details.

Our technology lawyers in our Commercial, IP and Technology practice, have recently launched a "Tech.Spotlight" series covering a variety of topical legal updates and discussion points on tech and data by means of short video instalments. The series can be found here and new episodes are added regularly. The latest instalment is on the use of open source software and why we should be embracing the value of it whilst being conscious of the risks, and previous instalments include a look at international data transfers and the fallout from Schrems II (see below for further details on this case).

Data protection

Data Protection Guidance

  • The ICO has recently published guidance to assist businesses to navigate the use of personal data in the context of coming out of the COVID-19 lockdown. The guidance includes advice on the data protection issues surrounding (i) COVID-19 testing; (ii) surveillance measures for monitoring staff; and (iii) contact tracing. The ICO has emphasised six relevant data protection principles that businesses should already be complying with, to (i) only collect and use data where it is necessary, (ii) keep data collected to a minimum, (iii) be transparent in their use of data, (iv) treat data subjects fairly, (v) keep data secure; and (vi) ensure that data subjects can exercise their information rights.

  • We have also published briefings on contact tracing apps (here), processing employee data for COVID-19 purposes (here) and a 'Tech Spotlight' video (here) exploring key considerations of collecting customer data as pubs and restaurants re-open.

Court of Justice of the European Union ("CJEU") Schrems II judgment

  • In a landmark decision, the CJEU has considered the validity of two important mechanisms under the General Data Protection Regulation 2016 ("GDPR") to transfer personal data outside of the EEA: (i) the EU-US Privacy Shield; and (ii) the standard contractual clauses. The CJEU found that (i) businesses will no longer be able to rely on the EU-US Privacy Shield as a valid mechanism to transfer personal data to the US; and (ii) standard contractual clauses are still, in principle, a valid means to transfer personal data to countries outside the EEA that have not been whitelisted by the EU as having adequate data protection regimes for keeping EU personal data safe. For more information, please see our briefing on the topic here.

International data flows and Schrems II judgment update

  • In November last year, the European Data Protection Board (which consists largely of EU data protection supervisory authorities) ("EDPB") provided further draft guidance about the Schrems II judgment, and the steps which must be taken when standard contractual clauses are relied on as your safeguarding mechanism for a restricted personal data transfer, to assess the local laws of the destination country and if needs be put supplementary technical, organisational and contractual measures in place where the local laws do not provide an equivalent standard of protection for personal data to that provided in the EU. In a further development, the European Commission released a new set of draft standard contractual clauses which, if adopted by the EU early this year as expected, will replace the current set of model clauses. The new clauses reflect some of the points made by the CJEU in Schrems II and provide for a variety of data transfer scenarios. If adopted, organisations currently relying on model clauses will then have a year to repaper their arrangements to the new clauses.

  • In conjunction with techUK, Travers Smith hosted a webinar on international data flows in November, which looked at the EDPB's guidance in Schrems II and the new standard contractual clauses, amongst other issues, such as the UK's new National Data Strategy. Please see here for a selection of video clips and a summary briefing from the webinar.

EU adequacy decision in respect of the UK

  • Now that the UK has left the EU, it is deemed a third country for the purpose of EU data protection, which means that unless an adequacy decision is granted by the EU in respect of the UK, ordinary transfers of personal data from the EEA to the UK would need to be undertaken using an appropriate safeguard, such as Standard Contractual Clauses ('SCCs'), or under one of the GDPR mandated derogations. However, the new Trade and Cooperation Agreement includes an interim bridging provision under which the EU agrees to continue to treat the UK as an adequate jurisdiction for data protection purposes for at least 4 months (until the end of May 2021), with a possible extension by a further 2 months (until the end of June 2021) provided neither party objects, to give the EU time to reach a decision about its adequacy assessment of the UK. This means that the transfer of personal data from the EU to the UK is permitted without the need to put in place any additional measures during this bridging period. The bridging period will automatically end if an adequacy decision is made in respect of the UK and is subject to certain conditions which are designed to prevent UK data protection law deviating from EU law during the bridging period.

  • Separately, the ICO has confirmed that UK to EU transfers are also permitted. The ICO has advised that notwithstanding the data bridge, organisations should plan the basis on which data can lawfully be transferred from the EU to the UK if no adequacy decision is forthcoming. Many organisations rely on standard contractual clauses as their method for transfer, but bear in mind the additional complications with their use as referred to above. Please see our briefings on Brexit and personal data transfers, and Brexit and processing European personal data for more information about the implications of Brexit for data protection compliance.

Cyber-security fines

  • In Autumn 2020, the ICO announced its final decisions on the level of penalty to be levied against British Airways and Marriott in respect of personal data breaches which came to light soon after the implementation of GDPR in May 2018. The fines were set at £20 million and £18.4 million respectively. Whilst the final penalties were significantly reduced to reflect the prompt response of both organisations in terms of early notification to, and co-operation with, the ICO, and addressing their IT security problems swiftly, both BA and Marriott are now the subject of class actions brought by individuals pursuant to GDPR and the UK Data Protection Act 2018, for compensation for both material and non-material damage caused by the data breaches.

Age Appropriate Design Code: The 12-month implementation period for the ICO's statutory code of practice, the Age Appropriate Design Code, commenced on 2 September 2020 and comes to an end on 1 September 2021. The Code is aimed at protecting children in the digital world and addresses how to design data protection safeguards into online services that are "accessed" or "likely to be accessed" by children (specified as anyone under the age of 18), a definition which has potentially broad application. Businesses will need to look at existing and new services/websites and to consider whether these services fall under the scope of the Code. Further information about the Code can be found on the ICO's website.

Data Sharing Code of Practice: The ICO also issued its Data Sharing Code of Practice in the autumn of last year, and this is expected to come into force in 2021. The code sets out the issues related to, and the steps which must be followed to ensure compliance with UK GDPR, when an organisation shares personal data with a third party.

Accountability Framework: Last September the ICO released its Accountability Framework, designed as a practical tool to show organisations what good accountability looks like in practice.


Implications of Brexit for Finance transactions

  • The UK-EU Trade and Cooperation Agreement ("TCA") makes little reference to financial services and so has essentially brought in a "hard Brexit" for finance transactions. UK based lenders have in the past made use of an EU banking services "passport" to provide services into EU jurisdictions by virtue of being regulated entities in the UK. UK firms lost these "passporting" rights with effect from IP completion day, as the UK became a "third country" and the TCA does not provide for access to the EU single market for UK financial services firms. Finance providers therefore risk exclusion from EU credit markets and the range of cross border sources of finance available to borrowers could be restricted as a result.

  • On the positive side, recent publications by the Loan Market Association confirm that there are only minor documentation changes for parties to navigate when agreeing new loan finance documentation. For a wider consideration of the implications of Brexit for finance transactions and for restructuring and insolvency, see our guidance note here.

LIBOR discontinuation

  • LIBOR, the reference rate of interest for many financial contracts including cash products, loans, debt securities and derivatives transactions, will for the most part be discontinued after 31 December 2021. We have now seen a significant volume of financial products adopting new so called "risk free" reference rates developed to replace LIBOR. SONIA (the "Sterling Overnight Index Average") is the preferred replacement rate for LIBOR in sterling markets.

  • Corporate borrowers should ensure that, as a minimum, new loan issuance features widely worded amendment provisions to allow for the conversion to SONIA-based (or Base Rate linked) pricing with minimal friction. It will also be important to identify older contracts (not just loans) which reference LIBOR and do not feature such provisions and to engage with counterparties to commence the process of amending affected contracts. In September 2020 UK Finance published an excellent guide for Business Customers, which is available here.

  • The Bank of England and the FCA have confirmed that there is no intention to postpone transition as a result of the Pandemic and they have increased pressure on market participants to meet key transition milestones. For instance by end Q1 2021, market participants are expected to cease initiation of new GBP LIBOR linked loans that expire after the end of 2021. For further details, please see our client briefing note.

Brexit: direct taxation and VAT

  • Please see our guidance note here for more information on where the UK has committed to observing certain international standards in relation to governance and standards in tax policy, the applicability of subsidy control (state aid) rules to certain tax reliefs and VAT and customs cooperation under the Trade and Cooperation Agreement.

  • Please see our guidance note here and our video which consider and explain the changes to the VAT treatment in relation to supplies of goods between the UK and the EU and the UK and Northern Ireland.

EU Mandatory Disclosure Regime

  • An amended EU directive (DAC 6) obliging companies or intermediaries (such as company advisers) to disclose information on cross-border arrangements that meet certain criteria largely ceased to apply to the UK at the end of the transition period for the withdrawal of the UK from the EU at 11pm GMT on 31 December 2020, however arrangements which meet hallmarks under category D will still be required to be reported for a limited time. In the coming year, the UK will consult on and implement the OECD's model Mandatory Disclosure Rules. Taxpayers should still consider whether DAC 6 reporting may be required in an EU member state concerned in the cross-border arrangement.

  • The revised rules apply from 1 January 2021 and arrangements must be notified within 30 days of implementation. Disclosure is also required (by 28 February 2021) in relation to arrangements implemented between 25 June 2018 and 30 June 2020. Not all implementing countries have chosen to defer the implementation of DAC 6 so reporting obligations may still arise in those countries.

Off-Payroll Working

  • From 6 April 2021, businesses will become responsible for assessing the employment status of the off-payroll workers they engage e.g. workers that businesses contract with via personal service companies (including where businesses contract with an agency and the agency contracts with the worker's personal service company and irrespective of whether it is an existing or new contractual relationship). For further details, please see our briefing note.

Tax Treatment of Support Grants

  • The Government has enacted legislation which ensures that payments to businesses, employers, individuals and individual members of a partnership received under the coronavirus supports grants are taxable payments like other taxable receipts (to reflect the principle that grants replace revenues).

  • The legislation provides HMRC with enhanced compliance and enforcement powers in order to ensure that support grants have been administered properly and to protect against fraudulent claims. HMRC has the power to recover coronavirus support grants by imposing a 100 per cent. tax charge where the recipient of a support grant has not administered that payment properly or where the grant has been fraudulently claimed or used for inappropriate purposes. Companies should, therefore, ensure they are making and retaining accurate records of all coronavirus support grants received, as well as ensuring that records are kept of the use to which the payments have been put. The measure applies to all payments made under the coronavirus support schemes, regardless of when those payments were made. For further details, please see our briefing note.

Spring Budget 2021

  • On 3 March 2021, the Chancellor released the Spring Budget 2021. With effect from 1 April 2023, corporation tax will increase to 25% on profits over £250,000. For businesses with profits less than £50,000 and £250,000, a taper will apply to increase the rate proportionately from the small profits rate (19%) to the main rate (25%). For further details of the 2021 Budget measures (including on the extended trading loss carry-back rules and the capital allowances super-deduction) please see our dedicated webpage here.

VAT on termination payments: HMRC has changed its published guidance on the VAT treatment made by customers pursuant to contractual provisions for early termination (including liquidated damages clauses and clauses which, where the contract is breached, terminate the contract or allow the supplier to terminate it) following some recent cases decided by the CJEU. HMRC now considers that such payments are normally further consideration for the underlying supply of goods or services for which the customer originally contracted.

As at the date of writing, HMRC has indicated that the updated guidance will not apply until a future date. Accordingly, businesses can until that time either:

  • continue to treat such payments as further consideration for the contracted supply; or

  • go back to treating them as outside the scope of VAT, if that is how they were being treated prior to the updated published guidance.

Suppliers should review their existing contractual arrangements to identify whether they allow the supplier to pass on any VAT costs on termination fees to the customer. Suppliers should also ensure that contracts currently being negotiated and any future contracts allow the supplier to pass on these costs.


30 March 2021: The provisions of the Corporate Insolvency and Governance Act 2020 allowing companies to hold closed meetings ceased to apply.

April 2021: The new off-payroll rules apply from 6 April 2021. See here and here for further details.

5 October 2021: Gender pay gap reporting deadline for 2020-21.

April 2023: With effect from 1 April 2023, corporation tax will increase to 25% on profits over £250,000. For businesses with profits less than £50,000 and £250,000, a taper will apply to increase the rate proportionately from the small profits rate (19%) to the main rate (25%).


COVID-19: For all our legal briefings and articles relating to COVID-19 please see our dedicated page.

Brexit: For all our legal briefings and articles relating to Brexit please see our dedicated page.

Spring 2021 Budget: For all our legal briefings and articles relating to the Spring 2021 Budget please see our dedicated page.

Sustainability: For all our legal briefings and articles relating to sustainability please see our dedicated page.

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