Corporate Law Update: 16 – 22 September 2023

The Taskforce on Nature-related Financial Disclosures (TNFD) has published its eagerly anticipated final recommendations for organisations when reporting on nature-related financial risks.

The TNFD is an initiative of 40 senior executives from major companies and financial institutions with operations and value chains in over 180 countries. It has consulted with a range of stakeholders, including scientific and conservation organisations, business executives and associations, portfolio managers, and indigenous community and civil society groups to create its Recommendations.

The purpose of the TNFD Recommendations is to provide a risk management and disclosure framework for companies and financial institutions of all sizes to identify nature-related issues.

The Recommendations deliberately adopt a similar structure to that of the recommendations of the Taskforce on Climate-related Financial Disclosures (the TCFD Recommendations). They are grouped into four “pillars” – Governance, Strategy, Risk and Impact Management, and Metrics and Targets – which are collectively sub-divided into 14 specific recommendations.

Alongside the Recommendations, the TNFD has also published a series of supporting papers, including a starter guide, guidance for specific sectors and ecosystems (biomes), guidance on scenario analysis, and a guide to engaging with indigenous peoples and local communities.

Currently, reporting against the TNFD Recommendations is optional for UK businesses and the Recommendations have not yet been incorporated into international reporting standards, although this may well change in the coming years.

This differs from climate-risk reporting. Companies listed in the UK are already required to report against the TCFD Recommendations, and, for financial years beginning on or after 6 April 2023, larger businesses in the UK are required to report against a series of statutory climate risk disclosures that effectively incorporate most of the TCFD Recommendations. In addition, the TCFD Recommendations have now been subsumed into the ISSB’s International Sustainability Standards S1 and S2.

The High Court has confirmed that, when considering a challenge to a company name, it will adopt the same approach as when considering a challenge to a trade mark.

Under section 69 of the Companies Act 2006, a person can object to a UK company’s registered name if (among other things) it is so similar to a name in which the applicant has goodwill that its use in the United Kingdom would likely suggest a misleading connection between the company and the applicant.

The Economic Crime and Corporate Transparency Bill will extend to the use of a similar name anywhere in the world and not merely in the United Kingdom.

In this case, a company registered as “Axa Wholesale Trading Limited” challenged a decision by the Company Names Adjudicator that its name was too similar to that of the French insurance group.

The court confirmed that, when assessing the legal and factual matters relating to a challenge to a company name (specifically, an appeal against a decision that a name must be changed), the court will adopt the same approach as it would when assessing a challenge to a trade mark.

This was in large part because the nature of the exercise before the court is similar to that done by UK trade mark examiners, and the task of acting as Company Names Adjudicator has been given to officers of the Intellectual Property Office.

The decision is unsurprising but underscores the importance of retaining skilled intellectual property counsel if looking to challenge an existing company name.

HM Revenue and Customs (HMRC) has published a policy paper confirming that it is not intending to reintroduce the charge to stamp on issues and transfers into depositary receipt systems and clearance services.

Historically, when shares were issued into a depositary receipt system or clearance service, or were transferred into such a system or service in connection with a capital raising, a 1.5% charge to stamp duty or stamp duty reserve tax (SDRT) arose.

However, in 2012, both the Court of Justice of the European Union and the UK First-Tier Tax Tribunal found that the charge was incompatible with EU law. Since then, the charge has not been levied.

Following Brexit and the recent enactment of the Retained EU Law (Revocation and Reform) Act 2023, there has been concern that the charge may automatically apply again from 1 January 2024. However, HMRC has confirmed that it will be tabling delegated legislation to ensure the charge does not arise. However, if there is any gap between 1 January 2024 and when legislation is actually enacted, participants will need to give careful thought to circumstances where the charge could apply.