Corporate update: the latest corporate law developments March 2024

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In this month’s update we:

  • highlight changes for companies coming into force on 4 March under the Economic Crime and Corporate Transparency Act 2023;
  • explain the limits of a limitation of liability clause; and
  • consider when a negotiating party may owe fiduciary duties to another.

ECCTA 2023: first changes for companies, increased filing fees and new financial penalties

On 4 March 2024 the first significant changes for companies under the Economic Crime and Corporate Transparency Act 2023 (ECCTA 2023) will come into force. Companies House has also announced that its various filing fees will be increasing in order to fund its expanded role and functions under ECCTA 2023 and new financial penalties signal a stricter approach to compliance.

Lawful purpose statement

When a new company is incorporated on or after 4 March 2024 the subscribers must confirm that the company is being formed for a lawful purpose. There will then be a continuing obligation for all companies to confirm in their annual confirmation statement that the company’s future activities will be lawful.

Registered email address

All companies will need to provide an “appropriate” email address to Companies House. An email address will be an “appropriate” one if emails sent to it by Companies House would be expected to come to the attention of someone acting on behalf of the company.

The email address will not be publicly available and will only be used by Companies House to communicate with the company.

New companies formed after 4 March will need to provide an appropriate email address on incorporation; existing companies will need to provide one with their first confirmation statement filed after 4 March.

Registered office address

All companies will need to have an “appropriate registered office address”, that is a physical address where documents delivered to it would be expected to come to the attention of someone acting on behalf of the company and where an acknowledgment of delivery can be obtained.

A third party will still be able to offer a registered office service for companies provided they have appropriate procedures to monitor and forward any post received.

New companies formed after 4 March will need to provide an appropriate registered office address on incorporation. Existing companies that do not currently have an appropriate registered office address (for example, a PO Box) will be asked to change that address when filing a confirmation statement.

Increased fees and new financial penalties

Companies House fees will be increasing from 1 May 2024. Under ECCTA 2023 the scope of activities which can be funded through Companies House fees has expanded to include the cost of investigation and enforcement activities. The increased fees will be used to fund those costs.

Some fees have increased significantly. For example, a digital incorporation will now cost £50 (previously £12); a digital same day change of name will be £83 (previously £30); and a digital reduction of share capital via the upload service will be £136 (previously £50). Paper filings will continue to be more expensive than using the digital equivalent.

Details of the new fees can be found here.

In addition, new regulations will give the Registrar of Companies the ability to impose a financial penalty on a person if satisfied that an offence has been committed under the Companies Act 2006. A penalty of up to £10,000 could be imposed directly as an alternative to a criminal prosecution. The regulations are likely to come into force on 2 May 2024.


Companies will see a raft of changes introduced throughout the year as a result of ECCTA 2023 and the Registrar’s increased role under that Act as a gatekeeper of accurate company information. With the exception of fines for late filing of accounts, the Registrar has historically taken a fairly light approach to other offences under the Companies Act 2006, such as the late filing of a form or a failure to maintain a required record. The increased fees and new financial penalties signal that a stricter approach is coming. Companies should prepare now by bringing all records up to date (both internal records and those at Companies House), and ensuring that they have appropriate procedures in place to ensure timely compliance in the future.

You can see our dedicated page on the implications for companies of the Economic Crime and Corporate Transparency Act 2023 here.

Limitation of liability clause did not apply to payment of a debt

In Costcutter Supermarkets Group Limited v Vaish and Vaish [2024] EWHC 152 (KB) the High Court held that a contractual limitation of liability clause did not apply to a party’s obligation to pay for goods supplied under the contract. This primary obligation to pay amounted to a debt and was separate from the party’s secondary obligation to pay damages arising out of its failure to pay for the goods. The limitation of liability provision applied to a claim for damages but was not sufficiently clear so as to limit liability for a debt.

Limitation of liability clauses

Commercial contracts will often include a limitation clause which attempts to limit the potential liability of one party in the event of a claim by a counterparty to the contract. Without a limitation clause, there is no financial limit on the damages a counterparty could recover and so a party wishing to reduce its potential exposure must include an express limitation of liability.

A well-drafted limitation of liability provision will clearly detail the claims that it is intended to cover (for example, breach of contract and negligence). The question for a court will be whether the clause, on its true construction, extends to cover the obligation or liability that it seeks to restrict. The party relying on the provision will want it to be as unambiguous as possible, whilst ensuring that it is not so widely drafted as to be unenforceable.

The facts

The dispute arose out of non-payment by the defendants for goods supplied to them by the claimant, Costcutter.

The supply agreements contained a clause which restricted the “total liability of either party … in respect of all acts, omissions, events and occurrences whether arising out of any tortious act, breach of contract or statutory duty or otherwise…” (the Limitation Clause).

When Costcutter sued for payment for the goods, the defendants argued that the Limitation Clause – and, in particular, the words “breach of contract…or otherwise” – limited their liability to pay for any goods supplied to them.

The Court’s decision

The Court disagreed with the defendants and held that the Limitation Clause was not effective to limit the liability of the defendants to pay for the goods supplied to them by Costcutter.

As a matter of construction, the Limitation Clause only applied where there had been a tortious act, breach of contract or statutory duty. But the amount owed by the defendants for the supplied goods was a debt – a primary obligation under the contract. Enforcement of the debt had to be distinguished from any claim for damages arising out of the fact that non-payment of the debt was also a breach of contract.

Although the Limitation Clause may have been effective to limit contractual damages arising from the breach, it was not effective to limit a claim in debt for the price of the supplied goods. To do so would have required very clear wording, and the words “or otherwise” was not sufficiently clear to exclude a claim relating to the enforcement of a primary obligation.


The case illustrates the importance of setting out as clearly as possible, exactly what “liabilities” are intended to be caught by a limitation of liability provision.

The High Court in this case took a commercial approach to the interpretation of the Limitation Clause and held that it did not apply to the obligation to pay for the supplied goods. However, “liability” is a very wide concept, and a limitation provision could arguably be drafted so as to expressly restrict a primary liability such as an obligation to pay the price for goods, or to pay interest on a debt.

Such a widely drafted limitation clause would be unusual, but even if the interpretation of a clause leads to an unexpected or commercially unusual outcome, a Court will be bound by its express wording (unless it is unlawful.) As such, the parties would be well advised to ensure that they understand the full consequences of any contractual limitation provisions and that those provisions reflect the agreed intentions of the parties.

Fiduciary relationship existed between parties involved in merger talks

In Motoring Organisation Limited v Spectrum Insurance Services Limited [2024] EWHC 261 (Comm), the High Court held that the defendant had breached the fiduciary duties it owed to the claimant as a result of its wrongful exploitation of certain business opportunities that had been disclosed to it during merger negotiations.

The case is of interest as it is unusual for fiduciary duties to arise in purely commercial relationships outside of established categories (such as agency or partnership).

Fiduciary duties

A fiduciary will owe strict fiduciary duties to the other person in the fiduciary relationship – for example, the beneficiaries of a trustee or, in the case of a director, the company.

The scope of the duties owed in any given case will ultimately depend on the nature of the relationship. Essentially, however, a fiduciary will owe a duty of loyalty which involves being guided solely by the interests of the other person and not by any consideration of the fiduciary’s own interests.

In a commercial setting (except for established categories such as agency or partnership) it is normally inappropriate to expect one commercial party to subordinate its own interests to those of the other commercial party. However, as seen in this case, contractual and fiduciary relationships may co-exist between the same parties and, indeed, the existence of a contractual relationship may provide a foundation for the establishment of a fiduciary one.

The facts

The claimant (MOL) and the defendant (Spectrum) had engaged in discussions relating to a potential merger of their respective businesses. Although a formal agreement was never entered into, MOL contended that the parties had reached an oral agreement on the terms of the merger. Spectrum disagreed, arguing that no final agreement had ever been reached.

During the merger discussions, MOL informed Spectrum of a business opportunity with an insurance customer (the Opportunity). According to MOL, the parties had agreed that the Opportunity belonged exclusively to MOL, and that Spectrum would only benefit from it if a merger was concluded.

Despite the merger not taking place, and Spectrum not paying MOL anything in respect of it, Spectrum went on to exploit the Opportunity for its own benefit and earned revenue from it.

MOL brought a claim against Spectrum for breach of contract (based on the alleged oral agreement), and breach of fiduciary duty (amongst others).

Court’s decision

The Court found on the evidence that the parties had made an oral agreement along the lines alleged by MOL. On that basis, Spectrum had been in breach of the contract when it pursued the Opportunity for its own benefit.

As regards the claim for breach of duty, the Court held that there had been a fiduciary relationship between MOL and Spectrum in relation to the Opportunity. The fiduciary relationship was based on the oral agreement that had been reached between the parties whereby practical control of the Opportunity had been passed to Spectrum, to be exploited exclusively for MOL’s benefit (in the absence of any formal merger taking place). Spectrum had undertaken to act on behalf of MOL in circumstances which gave rise to a relationship of trust and confidence.

The Judge acknowledged that fiduciary duties are not readily found in commercial settings due to the fact that each party is usually entitled to primarily look after its own in commercial interests. In this case, however, the terms of the agreement between the parties in relation to the Opportunity did not allow Spectrum to prefer its own interests.

The fact that the parties trusted each other was not determinative of a fiduciary relationship – parties can trust each other without creating fiduciary duties. More is required to establish a fiduciary relationship – one party must be in the position where they trust and confide that the other party will act exclusively in the first party’s interests. That was the position here. As a result of the agreement between them, MLO trusted that Spectrum would act exclusively in MLO’s interests in relation to the Opportunity (and that Spectrum would not benefit from it unless a merger was successfully concluded).


In a perfect world, parties involved in pre-contractual negotiations will have agreed binding restrictions on the use of confidential business information (including potential opportunities) disclosed during the negotiations. Those restrictions should relate not only to the period whilst negotiations are ongoing, but also for a specified period after they end.

Even if contractual restrictions are not in place, parties should be wary of exploiting confidential information that has been disclosed to them. As seen in this case, it is possible for commercial parties to owe fiduciary duties to each other, and those fiduciary duties will be breached if one party exploits that confidential information at the expense of the party to whom the duties were owed.

Remedies that a court can impose for breach of fiduciary duty include compensation, injunctive relief and an order for account of profits where the party in breach must account to the Court for any profits gained from their wrongdoing.

First published in Accountancy Daily.

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