Geoffrey Caesar, Solicitor

Business law is a dynamic and complex field that affects every aspect of the economy and society. In 2024, we can expect to see some significant changes and challenges in this area as new regulations, technologies, and trends shape the future of business. Here are some key developments that business owners, managers, and lawyers should know about in the coming year.

1. Digital Markets Regulation

A critical development for 2024 will be the commencement of the UK’s new regulatory regime relating to digital markets, set out in the Digital Markets, Competition and Consumers Bill (DMCC Bill). Once in force, the digital markets regime will change how sizeable digital technology companies are regulated in the UK.

The DMCC Bill will establish a new Digital Markets Unit (DMU) within the Competition and Markets Authority (CMA), which will have the power to designate certain firms as having “strategic market status” (SMS) if they have substantial and entrenched market power in at least one activity that provides a gateway or bottleneck for other businesses or consumers. SMS firms will be subject to a legally binding code of conduct, which will aim to promote fair trading, open choices, trust, and transparency in digital markets. The DMU will also be able to impose fines of up to 10% of global turnover for code breaches and order SMS firms to take remedial actions or impose behavioural or structural remedies.

The DMCC Bill will also give the CMA enhanced powers to enforce consumer protection laws online, such as preventing false or misleading advertising, unfair terms and conditions, or harmful content. The CMA will be able to issue civil fines of up to 10% of global turnover for breaches of consumer law and seek injunctions or redress orders.

The DMCC Bill is expected to receive Royal Assent by early 2024, with the first SMS designations and codes of conduct expected to follow later that year. Businesses that operate in digital markets, especially those that may be considered to have SMS, should monitor the progress of the legislation and prepare for compliance with the new regime.

2. Online Safety Act

Another major piece of legislation that will affect online businesses in 2024 is the Online Safety Act 2023, which was introduced in Parliament in May 2021 and is expected to come into force by mid-2024. The Online Safety Act will introduce a new duty of care on online platforms to protect users from illegal and harmful content and activity, such as terrorism, child sexual abuse, cyberbullying, fraud and hate speech.

The Online Safety Act will apply to any platform that allows users to share or discover user-generated content or interact with each other online, such as social media platforms, messaging services, video-sharing platforms, online forums, dating apps and online games. The duty of care will require these platforms to take reasonable steps to prevent or remove illegal content and activity on their services and limit the spread of harmful content that may cause significant physical or psychological harm to adults. The duty of care will also require platforms to protect users’ rights to freedom of expression and privacy online and safeguard children from inappropriate content and contact.

The Online Safety Act will be enforced by Ofcom, which will have the power to issue codes of practice, guidance and notices to platforms, as well as impose fines of up to 10% of global turnover or £18 million (whichever is higher) for breaches of the duty of care. Ofcom will also have the power to block access to non-compliant platforms or require internet service providers to take action against them.

The Online Safety Act will have significant implications for online platforms operating in the UK, as they must ensure they have robust systems and processes to identify, assess and address illegal and harmful content and activity on their services. They must also balance their duty of care with their obligations under data protection, human rights and e-commerce laws.

3. National Payments Vision

In 2024, we will also see some developments in the regulation of payment systems in the UK, following the publication of a National Payments Vision by HM Treasury in late 2023. The National Payments Vision will set out the government’s priorities for UK payments over the next decade, aiming to unlock the full potential of Open Banking and foster innovation, competition and resilience in payments.

The National Payments Vision will build on the recommendations of two reviews commissioned by HM Treasury: the Payments Landscape Review (PLR) and the New Payments Architecture (NPA) Programme Review. The PLR examined how payment regulation could be updated to reflect technological changes and consumer preferences, while the NPA Programme Review assessed the progress and governance of the NPA, a new infrastructure for retail payments in the UK.

The National Payments Vision is expected to propose some reforms to the payments regulatory framework, such as consolidating the roles and responsibilities of the Payment Systems Regulator (PSR) and the Bank of England, enhancing the PSR’s powers and objectives, and introducing a new statutory duty for payment system operators to act in the public interest. The National Payments Vision is also expected to support the delivery of the NPA, which will enable faster, cheaper and more secure payments, as well as new services such as Request to Pay, Confirmation of Payee and Enhanced Data.

The National Payments Vision will have implications for payment service providers, payment system operators and users of payment services in the UK, as they will need to adapt to the changes in the regulatory landscape and the opportunities and challenges presented by the NPA.

4. Corporate Governance Reform

Another area of business law that will see some changes in 2024 is corporate governance, following the government’s consultation on restoring trust in audit and corporate governance in March 2021. The consultation proposed a series of reforms to improve the quality and reliability of corporate reporting and audit, enhance the accountability and oversight of directors and auditors, and strengthen the regulatory framework for corporate governance.

The government is expected to publish its response to the consultation and introduce legislation to implement the reforms in 2024. Some of the key proposals include:

• Extending the scope of audit and assurance to cover broader aspects of corporate reporting, such as environmental, social and governance (ESG) information, internal controls and risk management.
• Establishing a new regulator, the Audit, Reporting and Governance Authority (ARGA), to replace the Financial Reporting Council (FRC) and oversee audit, corporate reporting and corporate governance.
• Introducing new reporting and attestation requirements for directors on internal controls, dividend and capital maintenance decisions, resilience planning and payment practices.
• Strengthening the directors’ duty to promote the company’s success under section 172 of the Companies Act 2006 by requiring directors to consider stakeholders’ interests more explicitly and report on how they have done so.
• Increasing sanctions and enforcement powers for ARGA against directors who breach their duties or fail to comply with reporting requirements, including civil fines, reprimands, orders for restitution or compensation, or disqualification orders.
• Creating a new professional body for corporate auditors with common principles, standards and ethics and a new registration and oversight regime.

The proposed reforms will significantly impact companies, directors and auditors in the UK, as they will need to comply with higher standards of corporate reporting and audit quality, as well as face greater scrutiny and accountability from regulators and stakeholders.

5. The Economic Crime and Corporate Transparency Act 2023

The Economic Crime and Corporate Transparency Act 2023 is a landmark legislation that aims to prevent and detect economic crime and corporate transparency offences in the UK. The Act introduces several new measures that affect companies registered in England and Wales and their directors, shareholders and other relevant persons.

Some of the key provisions of the Act are:

• Identity verification: All new and existing company directors, persons with significant control (PSCs) and members of a limited liability partnership (LLP) must verify their identity with Companies House before they can act in their respective roles. Failure to do so will be a criminal offence. The identity verification process will also apply to relevant officers of a registrable relevant legal entity (RLE), which is an entity that has significant control over a company.
• Company formation: Companies must provide information about their subscribers, proposed officers and persons with initial significant control when they apply for incorporation. They must also state that their purposes are lawful and that they are not using a name for criminal purposes or that suggests a connection with a foreign government or an international organisation.
• Company names: Companies must not use names that contain computer code, give a misleading indication of their activities, or are similar to names that another company has been directed to change. Companies House has new powers to direct companies to change their names if they breach these rules or if they are used for criminal purposes.
• Registered offices and email addresses: Companies must provide an appropriate address for their registered office, which cannot be a PO box or a DX number. They must also provide a registered email address, which will be used for official communications with Companies House and other authorities.
• Disqualification: The Act introduces new grounds for disqualifying directors and PSCs, such as persistent breaches of companies legislation, summary conviction of certain offences, or being designated under sanctions legislation. The Act also gives the Secretary of State the power to impose sanctions on disqualified persons, such as fines or restrictions on holding shares or voting rights.
• Corporate directors: The Act prohibits the use of corporate directors, unless they meet certain exceptions based on national security or public interest. Existing corporate directors must cease to act within 12 months of the prohibition coming into force.
• Record keeping: Companies must keep their statutory registers up to date and make them available for public inspection at their registered office or on the public register. They must also notify Companies House of any changes to their registers within 14 days.
• Companies House powers: The Act gives Companies House new powers to check, remove or decline information submitted to, or already on, the companies register. Companies House can also share information with other authorities to prevent, detect or prosecute economic crime or corporate transparency offences.

The Act is expected to come into force gradually over the next year, subject to secondary legislation and guidance from Companies House. The Act will have significant implications for companies and their officers, who will need to comply with the new requirements and ensure that their information is accurate and up to date. The Act will also enhance the UK’s reputation as a leader in fighting economic crime and promoting corporate transparency.

Conclusion

These are some key developments we can expect to see in business law in 2024. They reflect the changing nature of business in a digital age and the government’s priorities for economic recovery, consumer protection and social responsibility. Companies should keep abreast of these developments and prepare for their operations, compliance and strategy implications.