Recent Developments for UK PLCs — April 2025

Companies and Advisers to Address Culture of Strategic Leaks on M&A 

On 14 March 2025, the FCA published Primary Market Bulletin 54, which raised concerns around the leaking of inside information by individuals at a company or by its advisers on live M&A transactions. The FCA specifically noted as an example the deliberate leaking of details of discussions between the board of a target company and a potential bidder following an approach, or where the target board has rejected an approach but an increased offer is likely.

This FCA publication reminds companies and advisers of their confidentiality obligations under the Takeover Code and the requirements under the Market Abuse Regulation around the handling of inside information. Therefore, in addition to adopting the usual written policies and procedures, listed companies should foster a culture and set of practices that actively discourage leaks.

High Court Ruling Highlights Need for Clear Communication to Avoid Unintended Fee Obligations

On 12 March 2025, the High Court handed down judgment on a claim brought by an investment bank for fees and expenses arising out of the 2018 merger between Barrick Gold Corporation and Randgold Resources.

H&P Advisory, a boutique investment bank, facilitated discussions for a proposed deal between Barrick and Randgold during the first half of 2018, and undertook other work in relation to the deal, including structuring proposals and financial modelling. During this period, H&P believed it was appointed as Randgold’s financial adviser. Ultimately, both deal counterparties engaged other banks, and no retainer was entered into with H&P. Following the merger announcement in September 2018, H&P issued an invoice to Randgold for US$18.1 million (comprising its success fee and expenses). Randgold proposed to pay “[US]$2m plus expenses or, if contested, nothing other than expenses”. H&P rejected this offer and sued the merged entity.

The High Court ruled that no contractual basis existed to justify the payment of H&P’s claimed fee. However, because Randgold did not communicate to H&P that it did not intend to pay for the work done, H&P was entitled to recover US$2 million through the English law concept of “unjust enrichment” to reflect the value of its work. This non-contractual obligation arose because, broadly, Randgold’s conduct encouraged H&P to carry out work for Randgold which unjustly enriched Randgold at H&P’s expense. The US$2 million figure was determined through Randgold’s internal correspondence, which proposed paying H&P this amount for its work on the early stages of the merger. The High Court also ruled that a separate binding oral contract required Randgold to reimburse H&P’s expenses.

Key takeaways for listed companies:

• This case serves as a reminder that companies may incur an obligation to remunerate service providers for work done, even if they have not been formally mandated.
• Companies can mitigate this risk by clearly communicating payment terms to service providers.
• Acquirers should seek warranties to identify service providers of the target, given the risk of inheriting unexpected liabilities for fees and expenses.

FCA Drops “Name and Shame” Proposals

On 12 March 2025, the FCA announced that it will not be taking forward its proposals to introduce a public interest test for announcing enforcement investigations. Instead, it will continue to use its existing “exceptional circumstances” test to determine if it should publicise investigations.

However, the FCA indicates that it will take forward certain aspects of the proposals that received broad support:

• Reactively confirming investigations that are officially announced by firms or other regulators
• Making public announcements in relation to the potentially unlawful activities of unregulated firms and regulated firms operating beyond the regulatory perimeter
• Publishing issues under investigation in greater detail and anonymously; perhaps, as respondents to the consultations suggested, through a new regular “Enforcement Watch” bulletin

For further details, please see this Latham blog post.

Parker Review Publishes Latest Report on the Ethnic Diversity of UK Boards

On 11 March 2025, the Parker Review Committee published the 2024 results of its voluntary census on the ethnic diversity of the boards of FTSE 350 companies and 50 of the UK’s largest private companies.

Summary of key data as at December 2024:

• 95 FTSE 100 companies met the Parker Review’s target, with at least one minority ethnic director on their boards, which is consistent with last year.
• 204 of the 236 FTSE 250 companies reported having at least one ethnic director, compared to 175 last year — a rise of 17%.
• In the average company (i.e., across the FTSE 100, FTSE 250, and in-scope private companies surveyed within the Review), ethnic minority executives comprised between 9% and 11% of the total number of UK-based senior managers. The average target level (for ethnic representation in senior management) set by these companies for 2027 is between 13% and 15%.

Listed companies may also be interested in the Review’s supplementary guidance on the practicalities around executive recruitment for boards in the FTSE 250. In particular, the guidance notes that FTSE 250 companies face greater challenges in meeting diversity targets compared to the FTSE 100 due to smaller board sizes, limited seat rotation, cost concerns, and a higher demand for directors with broad leadership skills, which necessitates openness to candidates with specific expertise or those lacking public company experience.

The Review also provided supplementary guidance on the legal considerations for collecting ethnicity data from employees in the UK and internationally, covering issues around compliance with privacy and data protection legislation when gathering ethnicity data, satisfying varying reporting standards, and navigating diverse legal frameworks across jurisdictions.