[authors: Sara Ellis and Angela Kindness, Eversheds Sutherland (International) LLP Team]
Welcome to Commercially Connected shorts, our weekly bitesize newsletter summarising the latest international commercial law updates.
This week we look at:
- Are your records in order – responding to ECCTA and other measures
- Privacy - European Commission launches call for evidence on functioning of the EU-US Data Privacy Framework
- Digital assets as personal property – where are we with crypto?
- Technology – tech trends reshaping the Middle East: tech in FS; AI in employment and innovative tech
Two developments in the past week which provide the opportunity to reflect on record keeping and reporting: firstly, news from Companies House on its plans for 2024/2025 and secondly, an opportunity to shape digital reporting policy with the FRC.
On 12 August 2024, Companies House published its business plan for the year (to end March 2025). This includes a focus on implementing the ECCTA changes which include ensuring accuracy of information, documents are filed correctly and the prevention of unlawful activities. Information campaigns and updating systems for ease of use are priority and a “targeted and proportionate approach” will be adopted to query, remove and reject inaccurate information and target economic crime.
They highlight their role in the ECCTA requirements for Companies House to hold a registered email address and an appropriate registered office address (not PO boxes).
They also discuss plans to:
- expedite the process of striking off companies where there is evidence of fraud
- introduce a registration process for company incorporation and services agents to become authorised corporate service providers
- update their systems ready for identity verification in March 2025
- scale up data governance processes
- develop a strategic intelligence assessment to identify strategic threats posed through the misuse of corporate structures
- work proactively, alongside law enforcement colleagues, to disrupt the use of UK property to hide illicit wealth
Now would be a good time to check the information Companies House has for your organisation is accurate and up to date.
The following day (13 August 2024), the Financial Reporting Council (FRC) published a discussion paper which seeks views on the future policy direction of the UK digital reporting framework.
The FRC is leading discussions on the transition away from paper reporting, supported by other UK regulators whose remits include digital reporting requirements (the FCA, Companies House, HMRC and the Charity Commission).
The discussion paper addresses changes in the regulatory landscape and considers the impact of the recently passed ECCTA. It seeks feedback from a wide range of stakeholders to “help shape the future of digital reporting in the UK, ensuring it meets the needs of all users while promoting transparency, comparability, and efficiency in corporate reporting.
Feedback is sought on a range of topics, including:
- Rules for listed companies – a potential alternative taxonomy
- Assurance of digital accounts
- ECCTA 2023 changes
- Guidance required
The paper is presented as an opportunity to influence policy direction and states that “no specific decisions will be taken as a result of responses…, but they will inform the FRC's thinking on the technical and practical implications of policy decisions (and may result in future consultations from specific regulators or agencies on the implementation of digital reporting requirements)”.
Those involved in the preparation and filing of annual reports and accounts, investors, software vendors and regulators may wish to respond. Responses are required by 1 November 2024.
With thanks to Sarah Turner and Kawaljeet Bhakar for their input.
On 9 August 2024 the European Commission launched a call for evidence from the public on the EU-US Data Privacy Framework.
The adequacy decision for the EU-US Data Privacy Framework (DPF) was adopted by the European Commission on 10 July 2023 (read our briefing here), enabling personal data to flow from the EU to US companies participating in the DPF. The adequacy decision provided for a periodic review – the first one of which is to take place within one year, to assess whether all parts of the framework are in place and working as intended.
The Commission has gathered information from different sources and stakeholders. In July, a review meeting was held between representatives of the European Commission and of EU data protection authorities, and representatives of the competent U.S. authorities. All aspects of the DPF were discussed, taking into account relevant legal developments since the adoption of the adequacy decision. The Commission will publish a report, containing its findings and conclusions, which will be submitted to the European Parliament and the Council.
The contributions collected through this call for evidence will complement the information gathered in the context of the preparation of the review and during the review meeting. The call for evidence closes at midnight on 6 September 2024.
With thanks to Lizzie Charlton.
In a week which has seen the US considering redefining “money” to include crypto and digital assets in new financial institution reporting requirements and a landmark ruling in Dubai approving the payment of salaries in crypto, it is timely to highlight where the UK is up to in its consideration of digital assets:
On 29 July 2024, the Law Commission published a supplemental report to its June 2023 report which concluded that certain types of digital assets (such as crypto tokens) should have their own category of “personal property” at law.
The supplemental report is accompanied by an amended draft Bill aimed at implementing the recommendation that legislation should recognise this third category of personal property. The report sets out the rationale for this recommendation and how the third category of asset - a “thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights” differs from the two currently recognised as personal property in England and Wales:
- things in possession (i.e. actual goods) and
- things in action (an intangible property right or property which is not legally in a person’s possession)
and outlines how the Courts will determine the boundaries of the definition.
The amended draft Bill reflects responses to the short consultation held earlier this year to test whether the clauses achieved the Bill’s aim: to recognize crypto-tokens and other digital assets (such as voluntary carbon credits) as property, reduce litigation costs (providing legal certainty in cases of theft and insolvency), and enhance the UK’s legal system’s attractiveness for dealing with such assets. It will complement other legislation (such as the Economic Crime and Corporate Transparency Act 2023 which brought new powers for law enforcement to seize crypto assets). “Non substantial changes” have been made to reflect consultees views who largely agree that the aims are achieved.
This Bill will now be considered by Government alongside the other recommendations from the 2023 report (see our summary here) and the recommendations apply to England and Wales with Scotland and Northern Ireland considering their own way forward.
In other news and staying with a crypto theme, the Financial Conduct Authority (FCA) has recently reviewed crypto firm compliance with the financial marketing rules for consumers. Their report highlights:
- a need for clarity in some areas of compliance with the rules, the FCA have shared the examples of good and poor practice to “help firms get their compliance right”
- firms are encouraged to engage with the guidance and the FCA themselves on their compliance processes rather than benchmark against their comparators (who may not be doing it right)
- the FCA will take action if financial promotions are not managed compliantly and warns a firm’s compliance will be considered as part of any application for authorisation under the future financial services regulatory regime for cryptoassets.
The FCA review is a recommended read for all firms subject to the FCA crypto compliance rules to ensure they are operating in the correct manner.
For more on this topic see:
UK’s FCA writes to cryptoasset firms marketing to UK consumers about new financial promotion rules
UK’s FCA FG24/1: Finalised guidance on financial promotions on social media
The Financial Conduct Authority’s new regulatory gateway for approval of financial promotions
With thanks to Tom Pritchard for input.
In this series, we bring you the latest legal insights on the tech trends reshaping the Middle East and leaving a mark on the global AI landscape. Stay informed about how these innovations are transforming industries, driving economic growth, and presenting unique legal challenges. Our series is designed to provide you with the knowledge needed to navigate this dynamic region and make well-informed business decisions. This month:
The impact of technology on the Middle East’s financial sector - Episode 3: in the third episode of our Tech Imprints series, Geraldine Ahern, Managing Partner in Abu Dhabi, and Principal Associate Sarah Khatib discuss the deployment of technology in the financial services sector in the Middle East. They explore how these organisations leverage technology and the nature of their relationships with tech providers and highlight successful use cases within the industry
How AI is redefining employment in the Middle East – Episode 4, Geraldine Ahern and Lisa Bryson discuss the deployment of AI in the Middle East. They provide recommendations and tips for employers on mitigating AI-related risks and effectively integrating AI within the workplace
Leaving a mark on innovation in the Middle East – Episode 5 - Geraldine Ahern and Muhammad Anum Saleem explore the transformative impact of advanced technology in Saudi Arabia. They discuss how various sectors are being reshaped and how these innovations are driving economic growth.
[View source.]
