Companies House & The Economic Crime and Corporate Transparency Act 2023 (ECCTA)

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) received Royal Assent on 26 October 2023 and will come into force in 2024. It provides Companies House with new and increased powers to improve the quality and reliability of its data by verifying the identity of directors and PSCs and playing a more active gatekeeping role over company creation and filings. Companies House will also have stronger investigation and enforcement powers with the ultimate aim of protecting personal information and preventing fraud.

The following objectives have been introduced by the ECCTA which the Registrar of Companies must promote:

• those delivering a document to the registrar do so in a manner compliant with the proper delivery requirements;

• information contained in the register is complete and accurate;

• records kept by the registrar do not create a false or misleading impression to the public; and

• Companies and others are prevented from carrying out (or facilitating others to carry out) unlawful activities.

The first set of changes set out below are likely to be introduced on or shortly after 4 March 2024.

The Act will also see the introduction of a new failure to prevent fraud offence, which is detailed in our Dispute Resolution update below.

How could it impact your business?

Registered Office Address: Companies will be required to have an ‘appropriate address’ as the registered office address. An ‘appropriate address’ is one where any documents sent to that address should be expected to be marked for the attention of a specific person acting on behalf of the Company and any documents sent to that address can be recorded by an acknowledgement of delivery. As such, companies will no longer be able to use a PO Box as a registered office address. Companies who do not comply with the obligation to have an appropriate registered office address risk being struck off the register. Directors have a continuing duty to maintain the appropriate address and should be aware that failure to maintain is a criminal offence.

Registered Email Address: Companies will be required to provide Companies House with a registered email address, either on incorporation or with its next confirmation statement (with a prompt to do so when filing the confirmation statement online). Companies House will use this email address to communicate with the company and, as such, this email address will not be made available to the public. As above, directors have a continuing duty to maintain this information at Companies House and should be aware that failure to maintain is a criminal offence.

Lawful Purpose Statement: On incorporation, shareholders will be required to confirm that the company is being formed for a lawful purpose. Each year, on filing the confirmation statement, the directors will need to confirm that the company’s intended future activities will be lawful.

The Act will give Companies House greater powers to scrutinise and reject information which may be incorrect or inconsistent with information already on the register. In some cases, Companies House will be able to remove information. More specifically, Companies House will have the ability to conduct stronger checks on company names, annotate the register to make the public aware of any potential issues with the information filed at Companies House, tidy up the register (using data matching to identify and remove inaccurate information), and share data with other government departments and law enforcement agencies to meet the objectives set out in the ECCTA.

Further guidance from Companies House is expected as to the above and other changes arising from the ECCTA.

What steps should you take?

As Companies House will be working closely with government departments and law enforcement agencies, these changes at Companies House should not be overlooked. The changes resulting from the ECCTA provide for stricter sanctions for non-compliance, which include financial penalties, prosecution, and an annotation on a company’s record at Companies House which is likely to cause reputational damage to a company, its directors, and its shareholders.

Companies should ensure that both the appropriate registered office address and registered email address each meet the requirements of the ECCTA. Directors should ensure these details are maintained to avoid the company being struck off the register, potential reputational damage, and sanctions in their capacity as director.

Existing companies currently using a PO Box as their registered address should note that this will need to be updated by 4 March 2024 to an address which meets the requirements for an appropriate office address.

Upcoming changes in 2024

Below we have set out an overview of some of the corporate changes anticipated in 2024. However, it is important to note that the planned general election this year may impact these changes.

Financial Promotions

Amendments to the Financial Promotion Order 2005 to reform exemptions relating to High Net Worth individuals and sophisticated investors are expected to come into force on 31 January 2024. The window for applications to the FCA by authorised firms who wish to continue to approve financial promotions for unauthorised persons closes on 6 February 204. The new regulatory gateway for financial promotions created by s20 Financial Services and Markets Act 2023 comes fully into force on 7 February 2024.

M&A and Investment transactions

The Cabinet Office call for evidence on the impact, scope and operation of the National Security and Investment Act 2021 closed on 15 January 2024 with announcements on proposed changes to the regime anticipated later in the year.

Intermittent trading venues

The Chancellor of the Exchequer has announced the creation of a new intermittent trading venue (ITV) to facilitate the auction-based sale of existing shares in private companies. This initiative aims to enable private companies to attract new investors, including institutional ones, through secondary transactions without having to go public.

The first ITV is expected to be operational by the end of 2024, likely launched by the London Stock Exchange (pending FCA approval). The ITV will be implemented through the Financial Market Infrastructure (FMI) sandbox powers within the Financial Services and Markets Act 2023, with plans for consultation on the ITV sandbox in the second quarter of 2024.

Private businesses should look into ITV’s as a potential option for considering capital investment.

Digitisation of shares

The Digitisation Taskforce, initiated in response to the Secondary Capital Raising Review, is due to release its final report in March 2024. The taskforce addresses issues like eliminating paper share certificates for traded companies and improving the intermediated system for share ownership.

The interim report suggested seven potential recommendations, with the final report likely requiring legislative and regulatory changes. Implementation timelines will vary, but the interim report proposes swift action, including stopping the issuance of new paper certificates within six months.

The move from paper share certificates to solely electronic share certification is not only beneficial from an environmental perspective but also a data management perspective, allowing all shareholding to be logged and recorded will be hugely beneficial for share administration.

Companies should ensure they are equipped to move to purely electronic share certificates and have appropriate infrastructure to manage and access shareholding information.

Corporate Governance

The revised UK Corporate Governance Code 2024 (UKCG Code 2024) was published on 22 January 2024 with guidance published on 29 January 2024. Whilst the Code only applies to companies with a premium listing on the London Stock Exchange, many companies that are not required to follow the UK Corporate Code still choose to do so, looking to the Code as a benchmark for good corporate governance. 

Parker Review Committee recommends that FTSE 250 companies should have at least one director from a minority ethnic background on their board by 2024. FTSE 350 companies are expected to set out their chosen target for ethnic diversity within senior management in the annual reports they publish in 2024.

New QCA Corporate Governance Code will apply in relation to accounting periods commencing on or after 1 April 2024.

The Corporate Sustainability Reporting Directive 2022 came into force in the EU on 5 January 2023, with reporting requirements phased in from 1 January 2024. The European Commission proposes extending the timeframe for sector-specific standards until June 2026.

Financial Reporting Requirements

The UK government is set to develop detailed proposals to reform non-financial reporting requirements for consultation during 2024, considering the inclusion of the International Sustainability Standards Board's (ISSB) IFRS Sustainability Disclosure Standards.

The draft Companies (Strategic Report and Directors’ Report) (Amendment) Regulations 2023, aimed at introducing new reporting requirements, were withdrawn in October 2023. However, the government plans to propose a new reform package for a more targeted reporting framework.

Upcoming changes in 2024

Below we have set out an overview of some of the changes anticipated in relation to cyber security in 2024. However, it is important to note that the planned general election this year may impact these changes.

Product Security and Telecommunications Infrastructure Act 2022 (PSTI)

The PSTI received royal assent back in December 2022. Part 1 of the Act imposes obligations and liability on certain manufacturers, importers and distributors of smart products caught by the provisions of the Act to comply with minimum security requirements to secure the products against possible cyber-attacks.

Manufacturers, distributors and importers that will have specific duties under the Act should look to put in place suitable procedures and policies to facilitate performance of their responsibilities.

The obligations are scheduled to go live on 29 April 2024.

Code of practice for app store operators and app developers

The government has produced codes of practice for app store operators and app developers to protect app users. The voluntary code sets out eight principles that app store operators and app developers should comply with, including adhering to baseline security and privacy requirements, and taking appropriate steps when a data breach arises. The code can be accessed here.

The code was updated in the second half of 2023 and, as a result, the implementation period has been extended to June 2024. Annex A of the code contains the ICO comments about the legal obligations from the UK data protection law relevant to the code. Annex A can be found here.

Any business that develops apps, or operates an app store, should be aware of the code and take steps to ensure compliance with the principles as part of its security and privacy compliance regime.

ICO consultation on draft guidance for employers and recruiters

The ICO is in the process of building an online resource centre that will contain guidance on specific employment practices and data protection principles. The aim of the guidance is to help organisations assess how to comply with their data protection obligations.

The centre already includes published guidance on “Information about workers’ health” and “Monitoring workers”. The ICO has also recently released draft guidance on “keeping employment records” and “recruitment and selection”. Further guidance on employment related topics is expected.

A consultation has opened whereby interested parties can provide their comments on this draft guidance. This is expected to close on 5 March 2024.

How could it impact your business?

The guidance lists what organisations must, should and could be doing to comply with their obligations. Checklists are provided which contain helpful lists that organisations can follow.

Employee records

The guidance includes suggestions as well as detailing employer obligations as to what information can be retained, the lawful basis for retention, whether consent is required, conditions for special category information, record keeping, workers right for their information, and who is responsible within the organisation for data protection.

It also lists what organisations must tell their workers. This includes the purpose of collecting and using the personal information, the lawful basis, condition for processing, retention periods, where the information will be shared, and employees’ rights over the information, as well as where the information was obtained from, how you will use it and who it will be disclosed to.

Recruitment and selection

The first section of this guidance contains an overview of how data protection law applies to processing candidates’ information for recruitment purposes, looking at the data protections principles and basis for compliance.

The remaining part of the guidance focuses on the specifics of the recruitment process and details what the law requires organisations to do, with hints for good practice.

What steps should you take?

Firstly, businesses should consider whether it should take part in the consultation process. This could be helpful if you have a large number of employees and a detailed recruitment process which involves the processing of a large amount of personal data.

Whilst the guidance is only in the draft form, it provides a clear indication as to how the regulator expects organisations to be approaching matters of retention and recruitment, and interpreting the legislation. It would be prudent to review your policies and procedures to assess if they are consistent with the draft guidance, and of course keep an eye out for the final version.

Upcoming changes in 2024

Below we have set out an overview of some of the changes anticipated in relation to data in 2024. However, it is important to note that the planned general election this year may impact these changes.

Data Protection and Digital Information Bill (DPDI)

In our 2023 Horizon Scanning updates we monitored the progress of the DPDI. The Bill is continuing its journey through the legislative procedure, with the government expecting it to be implemented in spring 2024. However, as stated above, the planned general election may impact the progress of the DPDI.

The DPDI plans to make a raft of ‘common-sense’ changes to the data protection regime in the UK by changing current obligations on businesses. The changes may affect the current practices and policies that businesses have in place and it’s important that businesses are aware of the possible changes and poised to implement any necessary updates to their compliance regime when the Bill becomes law.

Information Commissioner’s Office (ICO)

The ICO is currently following its ICO25 plan which details the risks and opportunities the ICO believes needs its most urgent attention, as well as where it intends to focus its efforts, both for the long-term and in next 12 months.

The ICO Audit: a year in focus (2022/2023) details what the organisation has done, what it has found and its recommendations from the audits it conducted across various sectors in the previous year. Common themes for recommendations included documenting processing activities, risk assessing projects using DPIAs, providing privacy information to individuals, embedding privacy management frameworks, training staff on data protection, and ensuring data sharing and data processing relationships are appropriately managed, both contractually and practically. Prudent data controllers will be keen to assess the recommendations within the ‘ICO Audit: a year in focus’ against their own current practices.

Looking forward to 2024, the ICO plans to cover the following areas:

• The use of Artificial Intelligence in recruitment;

• Financial services;

• Data sharing in child protection / safeguarding project;

• Mobile Phone Extraction; and

• Privacy & Electronic Communications Regulations audits.

Statutory Debt Repayment Plans

2024 is expected to see a proposal for a new Statutory Debt Repayment Plan (SDRP). The proposed legislative change is intended as an alternative mechanism for debtors to repay their debts over a period of up to ten years, while benefiting from a pause on creditor action.

The proposals include greater contributions being made to the administration of the SDRP than are currently required under non-statutory Debt Management Plans.

The government is currently consulting on draft regulations to introduce the new statutory debt solution, the result of which is unlikely to be implemented quickly, due to the necessary changes to be made to secondary legislation.

How could it impact your business?

Creditors may be negatively impacted as a result of the greater protection afforded to debtors utilising the scheme, the risk of limited control of the process and an obligation to make greater contributions to fund the administration of the SDRP.

It is recognised in the proposals that creditors will face front-loaded costs arising from the development of new systems required to comply with and deliver SDRPs, which will include initial familiarisation, training, and dissemination of the scheme. It is also likely that creditors will face a certain degree of additional administration costs.

However, it is estimated that creditor businesses could gain longer-term benefit by improving returns and increased recoveries from SDRP in the first 10 years of the scheme.

What steps should you take?

Businesses may wish to consider implementing a statutory debt repayment plan and breathing space scheme in their company policy.

Debtor control teams should be aware of the impending changes and to start considering changes to policies, training and managing the administration of the changes in advance of their implementation.

The Economic Crime and Corporate Transparency Act 2023

As mentioned in our corporate update for January 2024, The Economic Crime and Corporate Transparency Act 2023 comes into force this year.

The Act will see the introduction of a failure to prevent fraud offence, which will impose criminal liability on a large organisation that fails to prevent fraud if the fraud is intended to benefit the organisation.

Corporate criminal liability will be extended to a broader class of persons, for example, an organisation will be guilty of an offence where a “senior manager … acting within the actual or apparent scope of their authority” commits a relevant offence.

Organisations will have a defence if they can demonstrate that adequate procedures were in place to prevent fraud.

ECCTA will also see reforms being made to Companies House, which will impact on filing requirements and are detailed in our Corporate update above.

How could it impact your business?

The offence of failing to prevent fraud will impact companies which satisfies two or more of the following criteria in the preceding financial year:

• Have a turnover of over £36M

• Balance Sheet total of more than £18M

• More than 250 employees

Or the parent company of a group where the group has:

• Aggregate turnover of £36M net or £43.2M gross

• Aggregate balance sheet of £18M net or £21.6M gross

• More than 250 employees.

What steps should you take?

Companies should already be thinking about:

• Reviewing existing policies and risk assessment processes.

• Communicating policies to employees.

• Carrying out internal training (on an on-going basis).

• Reviewing and amend third party contracts.

• Monitoring compliance and carrying out risk assessment reviews.

Alternative Dispute Resolution (ADR)

Following the government’s proposal to introduce automatic mediation sessions for all small claims (valued up to £10,000), the Ministry of Justice confirmed on 25 July 2023 that this proposal would be implemented. This would mean that, unless the court were to grant an exemption, parties to a small claim will be required to attend a free one-hour mediation session before they will be able to progress to a hearing. This goes further than the Civil Justice Council’s recommendation in their report (“The Resolution of Small Claims” published on 28 January 2022) to implement compulsory attendance at a mediation appointment for claims up to the value of £500.

No date has been given for when this change will be implemented; the government have said that details will be announced in “the coming months”. However, we expect to see the implementation take place in 2024.

How could this impact your business?

Currently, this will impact all civil claims valued up to £10,000 (i.e. small claims). The aim is to implement this change for all specific money claims issued through the Part 7 procedure and allocated to the small claims track. The future aim is for the policy to apply to all standard Part 7 small claims with there being no case type exceptions to this requirement to mediate.

The Ministry of Justice have estimated this scheme will positively affect circa 92,000 claims annually. This would have the impact of freeing up to 5,000 court sittings each year which would significantly increase their capacity. Justice Minister Lord Bellamy KC commented that “A vast number of cases that go through the civil courts each year could be settled far more swiftly and with less stress through mediation.” and that “By integrating mediation for small civil claims we will create valuable court capacity, freeing up time for judges and reducing pressures on the courts.”

Under the scheme, if a party does not comply with the requirement to mediate, the judge will be able to exercise their discretion to impose such sanction as they deem suitable, whether that be striking out their application or sanctioning the party on their costs.

What steps should you take?

No immediate action is required as the scheme has not yet been implemented. It is important to monitor the government updates to stay informed on when the changes will take place and what action needs to be taken as a result.

Justice Select Committee call for evidence on work of County Court

An inquiry was launched by the Justice Select Committee to examine the work of the County Court due to the long-standing concerns over Court capacity and resources. The committee expressed concern over “significant increase in delays” in certain cases in the County Court.

On 14 December 2023, the Committee completed their call for evidence and the outcome of this is awaited. More details can be found here.

How could it impact your business?

Other than the growing delays and frustration in the County Court system, this will have no immediate impact but this will be an interesting one to follow.

Delays in the County Court are extreme and so any improvement in the efficiency and effectiveness of the County Court service will be welcome.

What steps should you take?

Pending the outcome of the inquiry, the County Courts are likely to remain a bottle-neck for dispute resolution.

Pre-Action Protocols review

In August 2023, the Civil Justice Council published Part 1 of its report on Pre-Action Protocols full details of which can be read here.

In addition to a review focusing on potential reforms to the litigation-specific PAPs and potential creation of dedicated litigation PAPS, the report included the following recommendations:

• introducing a new General Pre-Action Protocol (PAP);

• amending the overriding objective to include reference to the need to comply with, and enforce, the PAPs;

• making PAPs mandatory pre-action processes which result in sanctions for non-compliance when litigation is formally commenced (with urgent cases exempt);

• the potential for digital pre-action portals to make dispute resolution more accessible and more efficient;

• adding questions about compliance with the PAPs to the DQs;

• replacing the Practice Direction on Pre-action Conduct and Protocols (PD-PAC) with a practice direction (PD) that contains the general PAP and creating a separate PAP for small claims worth £500 or less (small claims PAP).

The recommendations contained in the report are still at “review/proposal” stage and will require policy and Civil Procedure Rule Committee (CPRC) consideration.

How could it impact your business?

When this comes into effect, this will impact all areas of dispute resolution. Parties will need to ensure the PAPs are being followed and any digital solutions are understood and used. If not complied with, the Court may make and order for costs against the offending party.

What steps should you take?

As policy is required to bring these changes into effect, no action is currently needed beyond monitoring these changes. Once introduced, parties engaged in pre-action dispute resolution will need to ensure they are aware of the requirements and any digital solutions.

Upcoming changes in 2024

Below we have set out an overview of some of the changes anticipated in relation to ESG and Sustainability in 2024. However, it is important to note that the planned general election this year may impact these changes.

Environmental Outcomes Report (EOR)

In December, the environmental impact assessment (EIA) and strategic environmental assessment (SEA) were replaced by the environmental outcomes report (EOR). Part of the Levelling Up and Regeneration Bill, the EOR introduces a more straightforward process to assess plans and projects against environmental outcomes.

As part of the changes, the government has significant powers to set specified outcomes that reflect its environmental priorities, against which plans will be assessed.

Between March and June 2023, the Department for Levelling Up. Housing and Communities conducted a consultation on the Development of EORs and more detail on this can be found here.

Corporate Reporting on ESG

The FCA will consult on updated climate-related disclosure rules for listed companies to reference the Transition Plan Taskforce disclosure framework and IFRS S1 and S2 during 2024

The Financial Stability Board has requested that the International Sustainability Board (ISSB) reports on progress in companies' climate-related disclosures during this year.

ISSB Sustainability Disclosure Standards IFRS S1 and S2 are effective for annual reporting periods beginning on or after 1 January 2024 and the new sustainability reporting requirements created by the Corporate Sustainability Reporting Directive will start to apply from 1 January 2024.

UK Corporate Governance Code

Following the policy statement by the Financial Reporting Council (FRC) in November 2023, the long awaited amendments the UK Corporate Governance Code were published on 22 January 2024. As announced, the FRC dropped its earlier proposals for revisions to the Code relating to the role of audit committees on ESG issues, expanding diversity and inclusion expectations, over-boarding provisions and expectations on Committee Chairs' engagement with shareholders. The revised UKCG Code 2024 reflects this policy decision and omits the emphasis on ESG issues. For example, the previously suggested requirement for an annual report description on how environmental and social factors are considered in the company's strategy has not been included, although companies can, of course, voluntarily adopt such practices.

Regarding diversity and inclusion, there is no reference to protected and non-protected characteristics, despite previous proposals in this direction. Although the UKCG Code 2024 lacks reference to this, companies should continue to focus on diversity and inclusion. Businesses can voluntarily adopt practices that promote diversity at all levels and create an inclusive workplace culture.

As previously stated, the Code applies to all companies with a premium listing on the London Stock Exchange. However, many companies that are not required to follow the UK Corporate Code still choose to do so, looking to the Code as a benchmark for good corporate governance. So, we expect to see a trickle down of ESG objectives into the governance of most UK companies.

Fraudulent trading under section 213 of the Insolvency Act 1986

In 2024, there is potential for clarification and broadening of the scope of fraudulent trading under section 213 of the Insolvency Act 1986. Traditionally, this has given rise to claims against directors or controlling minds of a company known to be carrying on a business to defraud creditors.

However, the Supreme Court has granted permission to appeal the Court of Appeals decision in Tradition Financial Services Ltd v Bilta (UK) Ltd and other [2023] EWCA Civ 112, to consider whether the Court was correct to hold that a fraudulent trading action can be brought against “outsiders” (i.e. a third party who did not have a controlling or managerial function within the insolvent company).

How could it impact your business?

This may impact all third parties including suppliers, collaborators, joint venture partners with companies that are at risk of insolvency. Outsiders who are party to the carrying on of a business trading to the deliberate detriment of creditors, may be exposed to offences and claims pursuant to section 213 of the Act.

What steps should you take?

Directors should remain aware of their duties and obligations in circumstances where a company is at risk of insolvency and the potential risk of allegations of wrongful or fraudulent trading. However, organisations will want to consider ensuring that there is wider understanding among their employees of the risks of claims against third parties in circumstances where other companies, including contracting parties, suppliers and joint venture partners, become insolvent.

On the positive side, the judgment will be welcomed by creditors as it strengthens the liquidators' ability to make recoveries for the benefit of creditors. Unsecured creditors who have been the victim of fraudulent trading should consider whether there is potential third-party liability for fraudulent trading.

Applying for trade marks in bad faith

There has been a development in the ongoing case of SkyKick UK Ltd and another (Appellants) v Sky Ltd and others (respondents) concerning trade mark infringement and the test to determine when a party acts in bad faith.

Proceedings for the case were first brought by Sky against SkyKick for trade mark infringement. SkyKick stated that the trade marks relied upon by Sky were invalid, as a result of Sky deliberately registering overly broad marks containing specified goods and services which are not used by the party.

How could it impact your business?

If Skykick is successful, this may set a precedent that puts owners of broad trade mark specifications at greater risk.

What steps should you take?

• Ensure that any trade mark applications filed only contain specified goods and services which you currently use or are planning to use within five years.

• Consult a trade mark solicitor or trade mark attorney to ensure all specified goods and services included in an application are relevant.

Patents involving Artificial Intelligence

The UK Supreme Court (UKSC) has ruled that an ‘inventor’ as contained in the Patents Act 1977 must be a ‘natural person’.

This ruling follows the case of Thaler v Comptroller [2023] UKSC 49, where Dr Thaler tasked an AI system dubbed ‘Dabus’ to create a patentable design. Despite Dabus creating such a design, Dr Thaler was unable to convince the court that he obtained any rights as owner of the system as no inventor could be established.

Whilst the UKSC did not accept that under the current law an AI could create patentable designs, they referenced the Court of Appeal judgment that stated if this were to occur in the future, the Patents Act 1977 would need to be amended.

How could it impact your business?

This ruling reduces ambiguity as to the true owner of patentable designs and also opens the door for discussions on future legislative amendments which would impact businesses operating in the UK.

What steps should you take?

Businesses should ensure that AI is not the sole creator of any potentially patentable designs as this may invalidate the design.

Issues with generative AI training

Since proceedings in the first case of Getty Images (US) Inc v Stability Al Ltd were issued in early 2023, key questions have arisen on the legitimacy of generative AI training.

In this dispute, Getty claimed that Stability AI unlawfully used millions of images from their website to train an AI system without having any consent to do so.

Further to the High Court’s decision to reject Stability AI’s application for reverse judgement on some aspects of the claim, the case is expected to go to full trial, where copyright and database infringement issues will be reviewed through judicial examination.

How could it impact your business?

The outcome of this case will significantly impact the development of future AI systems and so the courts will be keen to balance the needs of the copyright holder against those of the AI innovator.

Should the courts limit the ability for generative AI to be trained through readily available content then this may slow AI innovation.

What steps should you take?

Business should ensure that they have obtained consent to use any content that is not owned by their company.

Upcoming changes in 2024

Below we have set out an overview of some of the changes expected to occur in relation to Intellectual Property in 2024. However, it is important to note that the planned general election this year may impact these changes.

Further work on the IPO’s five-year digital transformation programme ‘ONE IPO’.

Launched in April 2021, the programme seeks to deliver ‘fast, flexible and high quality digital services’, whilst also aiming to remove barriers to innovation and access to intellectual property services.

As part of ONE IPO, new digital services will be launched, with a pilot for the patents service launching this Spring. If the pilot is successful, then further digital services will follow in late 2025, which include a trade mark and design service as well as a digital hearings and tribunals service.

The Government has also demonstrated their support for this programme, confirming last year that they would be open to amending legislation to facilitate IPO changes to processes or practices, as well as providing clarification to the IPO’s powers on intellectual property hearings and tribunals.

More information can be found here.

Code of practice on copyright and AI

A new voluntary code of practice on copyright and AI is being developed after the Government’s initial intention to introduce copyright and database exceptions to Text and Data Mining (TDM) received backlash from the House of Lords Communication and Digital Committee.

The voluntary code follows Sir Patrick Vallance’s March 2023 ‘Pro-innovation Regulation of Technologies Review’. The Review looked to strike a balance between the rights of copyright holders and the need to Text and Data Mine by AI developers, with the new code attempting to make TDM more readily available.

If the code is not adopted, the Government has confirmed that legislation may be drafted to ensure barriers for AI companies can be overcome and that protections are in place for copyright holders.

Requirement for a UK agent

As mentioned in our December update, from the 1 January 2024 all new proceedings and requests through the UKIPO require an address for service, to be located in the UK, Gibraltar or Channel Islands.

There may be instances where comparable marks, that were created when the UK left the EU, do not require a representative or owner to have an address in one of the above locations, however this will only apply if no action is required to the mark. This exception will apply to all trade marks (excluding those derived from international registrations) registered on or before 31 December 2023.

More information can be found here: Embracing the changes to the IP landscape in 2024

AI Guidance

The UK Government has recently published an AI white-paper to provide additional guidance entitled, A pro-innovation approach to AI regulation.

The policy paper aims to encourage UK regulators to publish guidance on the use of AI within five principles:

1. Safety, security, and robustness;

2. Transparency and explainability;

3. Fairness;

4. Accountability and governance; and

5. Contestability and redress.

Included in the policy is a commitment by the Government to the key regulators that if they have not published guidance by April 2024 they will be assisted to do so.

The Government’s ‘light touch’ approach to AI regulation has further been demonstrated in their response to the House of Commons Committee’s interim report, where they confirmed that there are no plans for immediate AI legislation.

Shortly after the Government’s response, the Artificial Intelligence (Regulation) Private Members Bill was introduced to the House of Lords with an aim to create a central AI Authority to oversee the regulation of AI.

Minimum Energy Efficiency Standards and Green Leases

The Minimum Energy Efficiency Regulations (MEEs) are back in the spotlight after the Government announced in that there would be changes to their environmental targets.

Since April 2023 it has been unlawful for Landlords to let commercial properties with a rating below “E” (subject to certain exceptions). As stated on our September Horizon Scanning update, it was widely expected that the minimum rating would rise to “C” by 2027 and “B” by 2030 in order to meet the Government’s net-zero emissions target by 2050. It is estimated that 90% of offices have a rating of “C” or below and at the current rate of improvements properties would not obtain a “B” rating until 2036. However, it is now uncertain when the changes to the ratings will be implemented, so the rate of improvements are likely to slow even further. As leases are often over 10 years the parties need to consider the implications of changes to the minimum rating.

How could it impact your business?

A breach of the regulations does not make the lease invalid but the landlord would be subject to a penalty of 20% of the rateable value up to a maximum of £150,000. In a multi-let building this could be substantial.

We have also seen increases in “Green Lease” provisions in leases which place the obligations on complying with any changes on the tenant. In addition, Green Leases may restrict alterations which reduce environmental performance and include the costs of audits and works to improve performance in the service charge, as well as extensive provisions for data monitoring and sharing. Consequently, tenants could face higher rents or service charges to cover the costs of improving the EPC rating. As energy costs rise, tenants may want to look for buildings with lower ratings to reduce current costs and which have less risk of increased payments to cover the costs of improvements.

What steps should you take?

We would recommend that any businesses that either let, or occupy let properties review their EPC ratings and consider what improvements need to be made to increase the ratings and the likely costs. You should consider whether the lease covers the costs of the improvements and if the costs fall on the landlord or the tenant.

If you are entering into a new lease, particularly longer-term leases, you should request information and factor in the energy costs and the cost of improvements to the property costs. Although the timescales are now uncertain it is only a matter of time until the ratings increase.

Upcoming changes in 2024

Below we have set out an overview of some of the changes expected to occur in relation to Property / Real Estate in 2024. However, it is important to note that the planned general election this year may impact these changes.

Review of Landlord and Tenant Act 1954

The Law Commission’s consultation on Part 2 of the Landlord and Tenant Act 1954 (LTA) is anticipated to be published in early 2024. The review aims to ensure that the LTA 1954 works for the current commercial leasehold market and will look at the security of tenure, notices and renewal lease terms.

Register of Overseas Entities

There is likely to be an amendment to the regulations in 2024 which will affect overseas entitles that hold UK property as a nominee. Currently if property is owned by the overseas entity as a nominee there is no requirement to disclose the ultimate beneficial owner. The amendment will expand the definition of beneficial owner and a new condition for beneficial ownership of an overseas entity with be introduced.