Background

The UK government has made it a priority to counter the use of corporate structures for fraud and money laundering with the introduction of The Economic Crime and Corporate Transparency Act (ECCTA), which received Royal Assent on 26 October 2023. Companies House (the UK’s Registrar of Companies) faces huge changes due to this legislation. Louise Smyth (Chief Executive of Companies House) even said “this is one of the most significant moments for Companies House in our long history”.

The details of the ECCTA and the upcoming changes were generally covered in our previous articles “How will Companies house Reforms affect Private Companies and their Directors?” and “The Economic Crime and Corporate Transparency Act (ECCTA) and the Companies House Reforms“.

The focus of this article is specifically around the changes to a small, but crucial piece of information – the registered office address (ROA) of a company and the new requirement for a company to register their email address at Companies House.

Current Legal Requirements

Every UK company, even those who carry out business from abroad, must have a ROA in the UK. This address must be a reliable address which official bodies (such as Companies House or HMRC) may serve correspondence, notices and reminders to the company. The ROA is shown on the public register, available for everyone to see. Unless a company has a Single Alternative Inspection Location (SAIL) address, it must keep its records and statutory registers available at the ROA. Any member of the public may request in writing to inspect these records (subject to a ‘proper purpose’ under the Companies Act 2006) at the company’s ROA or SAIL address.

The ROA must be a physical location in the country of incorporation. For example, a Scottish company must have a ROA in Scotland. The address used must also be displayed clearly on all letters, invoices and websites of the company as well as those of the company’s offices. Failure to comply with these requirements constitutes an offence committed both by the company and every officer of the company (including shadow directors) who is in default.

New Rules regarding the Registered Office Address and Email Address of a Company

The first set of changes introduced by the ECCTA will come into effect from 4 March 2024 (subject to secondary legislation being passed). There will be new rules for a company’s ROA which means that a company must, at all times, have an ‘appropriate address’ as their ROA.  An appropriate address is one where:

• any documents sent to the ROA should be expected to come to the attention of a person acting on behalf of the company; or
• any documents sent to that address can be recorded by an acknowledgement of delivery.

These changes mean you will not be able to use a PO Box as your ROA in the future.  Additionally, if your company is using an address of a service provider (such as accountants, law firms or company formation agents), now is a good time to review or assess your arrangements with them to ensure that your company has continuing authority to use such address and that there is an appropriate system in place for you to receive and acknowledge communications sent to the company in an efficient manner.

Another change concerns the introduction of a requirement for all companies to register an email address at Companies House, which will also come into effect from 4 March 2024 (subject to secondary legislation being passed). Before the ECCTA, there was no need to register an email address of a company at Companies House. Section 29 of the ECCTA will ensure that all companies must (at the point of providing registration documents) provide ‘a statement of the intended registered email address of the company, which must be an appropriate email address within the meaning given in section 88a(2)’. Section 88a(2) of the ECCTA provides that an email address is ‘appropriate’ if, in the ordinary course of events, any email sent ‘would be expected to come to the attention of a person acting on behalf of the company’.

Therefore, companies will need to confirm their appropriate email address on their annual confirmation statement together with a statement that their future activities will be lawful; this will apply to all confirmation statements with a statement date from 5 March 2024. When incorporating new companies, a company’s email address will need to be supplied and a confirmation that the company is being formed for a lawful purpose will also be required.

It is important to note that providing a registered email address will become as important as providing a ROA. A breach of these requirements will result in an offence being committed by both the company as well as every officer of the company who is in default.  Companies House will take action against companies that do not have an appropriate ROA or email address.

How To Change or Update a Company’s Registered Office Address

Below are the simple steps needed to change a company’s ROA:

1. Review your company’s articles of association to check for the procedure needed to change the ROA.

2. The company’s board of directors must approve this change. Any changes to ROA must be actioned within 14 days of the board’s approval.

3. File the form AD01 with Companies House either:

3.1. electronically via Webfiling; or

3.2. in paper form via post.

4. The ROA change will be effective from the date the notice is registered and accepted by Companies House.

Conclusion

In summary the above changes, albeit small, are critical. Transparency is a key theme to the wider changes in legislation. The ECCTA will go some way to protecting our economy against unlawful or fraudulent activities via corporate structures. Most companies will be able to adapt to these changes very easily but for some, company law changes can be quite daunting. Michelmores has a dedicated Corporate Services team led by experts in the field of Company Law Compliance and Corporate Governance who will be happy to speak with you if you want to know more about the changes introduced by the ECCTA and how this will affect your business. Our Corporate Services include the provision of company secretarial, registered office address and email address services to companies which are fully compliant with the ECCTA rules. Please contact any member of the Corporate Services team or email cosec@michelmores.com.

Andrew Oldland KC, a Partner in the Firm’s Commercial & Regulatory Disputes team, has been appointed the Chairman of a UK/Vietnamese working group advising the Vietnamese government on establishing an International  Centre (IFC).

The UK Foreign & Common Office (FCO) approached TheCityUK to access the expertise of its members to support the Vietnamese government in this initiative. The UK Government values its long-term partnership with Vietnam and Financein recognition of the diplomatic relations between the two countries, responded to the request of the Vietnamese government requesting assistance in the IFC’s establishment.

TheCityUK is the industry-led body representing UK-based financial and related professional services.

In March 2023 an ad hoc Working Group was established by TheCityUK to produce an initial scoping report. Given his experience in advising the Astana International Financial Centre (AIFC) in Kazakhstan, ARO KC was invited to chair the Working Group. Since 2017, ARO KC has been a member of the Legal Advisory Council to the AIFC, reviewing legislation and providing strategic legal advice, as well as leading the team which drafted many of the financial regulations for the AIFC.

Other members of TheCityUK’s Working Group include HSBC, Standard Chartered, Dragon Capital, Prudential, KPMG, Clifford Chance, Freshfields, ACCA, London Stock Exchange, CISI and Simmon & Simmons.

The Scoping Report was launched in June 2023, following which funding was provided by the FCO for further phases, including the formal establishment of Working Group under a Memorandum of Understanding between TheCityUK and the Ministry of Planning & Investment of the Vietnamese government.

In November 2023, ARO KC, together with senior figures from TheCityUK, led a delegation to Hanoi and Ho Chi Minh City, during which the Memorandum of Understanding (MoU) was signed, a number of high-level meetings with relevant ministries and the State Bank of Vietnam took place, and the Working Group held the first of a series of meetings scheduled for the next 12 months.

The Working Group is aiming to produce a set of recommendations for the IFC project by September 2024.

As a Partner in Michelmores’ Commercial & Regulatory Disputes team, ARO KC specialises in contentious regulatory work, focusing on international financial regulation and white collar crime.

He is barrister, King’s Counsel and a part-time judge sitting in both civil and commercial and criminal cases, having joined Michelmores from the independent bar in 2011 and acting as the Firm’s Senior Partner between 2017 and 2021.

For more information or to contact Andrew Oldland KC, visit our website.

Michelmores is pleased to announce that it has advised the UK’s largest independent processing dairy, Freshways, on the acquisition of Milk & More’s doorstep delivery service from Muller.

Since its beginnings in 1990 as a small wholesaler, Freshways has grown into one of the largest independent and family-run dairy suppliers in the UK. All of the milk Freshways processes comes from cows farmed in the UK. Milk & More is one of the market leaders for home grocery deliveries with about 1,100 employees and 31 depots. It was first purchased by Muller in 2016.

The deal will see Freshways acquire all 31 of Milk & More’s sites, plus its sophisticated back-office e-commerce operation, with all 1,100 staff transferring over to Freshways Group.

The Michelmores team advising on the deal was led by Partner from the Firm’s Corporate team, Alexandra Watson, alongside Partners Adam Corbin, Paul Beanlands, Chloe Howard-Smith, Tom Torkar, Noel Beale and Ian Holyoak.

Adam Corbin, Freshways Client Partner comments: “We are pleased to have advised Freshways on this milestone transaction, in line with their strategic growth plans. Freshways is now entering an exciting marketplace aimed at buyer’s convenience, which is growing alongside other delivery brands around the UK.”

Freshways Director, Bali Nijjar said: “We committed to this transaction with a very short timescale, safe in the knowledge that Adam, Alex, and the Michelmores Team would make sure we achieved our objectives. Having a Team of lawyers who know us and know our business makes a real difference in transactions like this, and Michelmores have really invested in our relationship to ensure they deliver that.”

Michelmores’ consumer and commercial specialists help UK and international brands to break into new markets, connect with customers and close deals. From food and drink to luxury goods, brands with big ambitions and sustainable visions trust our extensive legal expertise. Read more on our website.

Michelmores is pleased to have welcomed Employment specialist Robert Forsyth as a Partner in its Employment team. Robert joins from Shoosmiths.

Having been a Legal 500 listed lawyer, Robert guides clients on all aspects of employment law, both contentious and non-contentious, and has particular experience in the banking, manufacturing, retail, hospitality and leisure sectors.

Robert has specialised in employment law for over 18 years, delivering pragmatic solutions to complex issues. He also has a strong tech sector focus and a particular expertise and interest in the effect of Artificial Intelligence on workforces and the role of HR teams.

Having spent six months working in Palo Alto advising U.S. Tech clients on U.K. employment law and co-ordinating cross border employment advice, as well as 3 months on secondment at the Qatar Financial Centre Regulatory Authority in Doha advising and training the General Counsel and HR teams on employment laws, Robert’s experience means that he is well placed to advise companies on global employment issues.

James Baker, Partner and Head of Michelmores’ Employment team, comments on Robert’s appointment: “Robert’s arrival at Michelmores will add further strength to our Employment team and we’re really pleased to welcome a lawyer of his calibre to the Firm.”

Robert Forsyth adds: “I am delighted to have joined the excellent employment team at Michelmores as our London office continues to expand rapidly and look forward to working with colleagues to support our clients.”

Michelmores supports employers across all sectors, as they face their greatest challenges – especially in cases involving media scrutiny in highly unionised and litigious environments, where legislative uncertainty and organisational change compound pressures.

With a focus on lasting relationships and innovative solutions, the Firm works as an expert extension to in-house HR functions, providing reassurance and guidance in difficult, time-sensitive cases involving issues such as complex discrimination claims and whistleblowing investigations.

For more information, visit our website.

Michelmores is pleased to have appointed four new lawyers into its South West offices as it continues to strengthen its growing national Corporate team.

The new hires include Partner Adam Kean, Associate Ben Adams, Solicitor Harry Jones and Paralegal Philippa Kean, continuing the expansion of the Firm’s Corporate capability across its Bristol and Cheltenham offices.

These appointments build on last year’s arrivals to the Firm’s Corporate team, which included Cathy Bryant as a Partner.

Adam, former Head of Corporate at BPE Solicitors, brings with him extensive experience in M&A and corporate finance with specialisms in private equity and venture capital investments and clean energy.

Adam Kean comments: “I am excited to have joined the highly regarded Corporate team at Michelmores and I look forward to working alongside a team of experts and to continuing the exciting and impressive growth of the Corporate team.”

Henry Taylor, Partner in the Corporate team at Michelmores, adds:

“We are very pleased to welcome Adam, Ben, Harry and Philippa into the Corporate team here at Michelmores. Each new recruit brings with them a wealth of experience and their expertise in corporate matters will play a pivotal role in our continued growth and in enabling us consistently to meet and exceed the needs of our clients.

“As our exciting new hires in the South West show, we continue to strengthen our first-rate corporate offering to the Bristol and Cheltenham markets, based on our integrated approach that has worked so well for us in London and Exeter.”

Michelmores’ award-winning Corporate team of 25 specialist lawyers advises clients across the UK, US, EMEA and beyond – on capital markets, mergers and acquisitions, management buyouts, impact investing, energy projects, microfinance initiatives and more.

Read more on our website.

Non-disclosure agreements (‘NDAs’) or confidentiality clauses are often legitimately used in a genuine attempt to protect the interests and reputation of a business, as well as its trade secrets/confidential information. In an employment context, NDAs/confidentiality clauses are commonly contained in an employment contract, entered into at the outset of an employment relationship, to protect the confidential information of the employer (such as trade secrets, client information, financial statistics etc.), to which the employee will have access during their employment. However, it’s the use of NDAs at the end of the employment relationship – often included in a settlement agreement or COT3 agreement to settle a dispute – that is more controversial and has been the subject of increased scrutiny over recent years. While NDAs in a settlement agreement can be mutually beneficial to both parties, by allowing them to draw a line under an issue and move on without litigation, various concerns have been raised about them being improperly used to silence employees and intimidate them from reporting concerns externally.

Initially an issue highlighted by the #MeToo campaign, the inappropriate use of NDAs – particularly in cases of sexual harassment – has been the subject of a number of inquiries and reports. Indeed, in 2019, in its response to a consultation on appropriate measures to prevent the misuse of NDAs in situations of workplace harassment or discrimination, the Government committed to introducing legislation to govern the use of NDAs/confidentiality clauses in settlement agreements. However, a timeframe for such legislation still remains unclear.

For organisations negotiating settlement agreements, it is best practice to consider at the outset whether a confidentiality clause is actually needed and you should discuss this with your legal adviser.[1] The ACAS guidance states that confidentiality clauses should not be used as a matter of routine, and it’s certainly sensible to consider on a case by case basis whether an NDA is required. This should include identifying the specific reasons why an NDA may be needed and weighing up the benefits to the employer vs the impact on the employee in question, as well as the impact on the wider culture of the organisation.  This is particularly the case for allegations of sexual harassment. It’s relevant to note that The Higher Education (Freedom of Speech) Act 2023 received Royal Assent on 11 May 2023, and when it comes into force (on a date to be specified in regulations), it will prevent English higher education providers from entering into NDAs with staff, students, visiting speakers etc. in relation to sexual abuse/harassment/misconduct and other types of bullying or harassment. Other organisations and sectors also seem to be taking note and are moving away from blanket NDAs in settlement agreements. For example, since 2015, the Department for Work and Pensions has not used NDAs in its settlement agreements and, in 2019, a city worker making accusations of sexual harassment and victimisation settled her claim for circa £270,000, without being required to enter into confidentiality provisions.

If and when an organisation decides an NDA is appropriate, careful thought should be given to how wide such a clause should be. For example, in some cases, the NDA may need to cover the settlement sum only, rather than the entire agreement. In terms of the breadth and content of the confidentiality obligations, businesses will usually wish to engage lawyers to assist with the drafting. It is worth noting that there are certain clauses in a settlement agreement which will be void and unenforceable if included. For example, an NDA cannot be used to: prevent an employee making a protected disclosure; stop an employer making necessary legal and regulatory disclosures; or prevent an employee reporting criminal offences or becoming involved in criminal investigations. Further, if an NDA is used in a settlement agreement, an employer should use plain English to set out the confidentiality obligations and should not put pressure on an employee to sign it, nor impose arbitrary or oppressive time limits on getting it signed.

In terms of wider considerations, organisations may want to consider introducing an approval process for confidentiality clauses – for example, prescribing that the use and terms of an NDA must be signed off by a director not involved in the matter. From a wider cultural perspective, businesses should consider monitoring their usage of NDAs on an organisation-wide basis to gain a better understanding of when, why and how often they are used, as well as helping identify particular areas of concern or patterns of behaviour.

As with most things, being proactive in managing risks and behaviours is better than having to be reactive in dealing with the fallout later down the line. Fostering an open and transparent culture, which takes allegations seriously and investigates fairly and transparently, can help prevent disputes (and ultimately, settlement agreements) arising. Again, having (genuine) zero tolerance policies in place for bullying and harassment, and providing relevant training on those policies, should reduce the risk of such behaviour, which should in turn have a knock-on impact on the use of settlement agreements and NDAs.

Ultimately, careful consideration as to the inclusion, and scope, of NDAs should take place at the outset of any settlement negotiations. They should only be used to protect information which genuinely requires protection: not as a way to cover up inappropriate behaviour. Given that many now deem NDAs as unethical and unacceptable in harassment and discrimination cases, businesses would be well advised to give proper thought to their approach to NDAs and what practices best reflect their company’s ethos.

For advice on the use of NDAs/confidentiality agreements, please contact Rachael Lloyd or another member of our Employment Team, who have a wealth of experience in this area and would be happy to help.

This article is for general information only and does not, and is not intended to, amount to legal advice and should not be relied upon as such. If you have any questions relating to your particular circumstances, you should seek independent legal advice.

[1] Solicitors and firms regulated by the Solicitors Regulation Authority (SRA) and Law Society are subject to specific regulatory requirements regarding the use of NDAs, which is outside the scope of this article.

The government has published its updated National Planning Policy Framework (NPPF). The purpose of the updates is to address obstacles to development in the planning system, with an emphasis on growth and regeneration. In this article, we set out the key changes for the planning industry with reference to the latest version of the NPPF published on 20 December 2023.

The revised NPPF provides clarification for local planning authorities (LPAs) seeking to argue for divergence from objectively assessed housing need in specific circumstances. Importantly, authorities with an up-to-date local plan will no longer need to continually show a deliverable five-year housing land supply.

In a U-turn move, the government’s changes to the NPPF allow LPAs to set local plans with fewer homes when they can demonstrate to the Planning Inspectorate that such targets would damage the character of an existing area or require building on the green belt. Therefore, local councils will no longer be forced to set aside greenfield land and other land of environmental importance or aesthetic significance to meet their future housing needs. In addition, councils are given an exemption from building new homes on prime agricultural land.

The government insists that these changes do not allow LPAs to evade their responsibilities in addressing housing shortages, as LPAs must provide rigorous evidence of any divergence from targets. The Planning Inspectorate will not accept any departure from targets if the reasoning is not strongly rooted in environmental or aesthetic concerns.

By contrast, the document sets out the government’s aim to prioritise brownfield and higher-density development in inner-city areas. The NPPF also ensures greater promotion of small sites for community-led development for housing and self-build, custom build housing and upward extensions including mansard roof extensions on suitable properties.

The new NPPF contains revised guidance on the legal duty to cooperate, which requires cooperation between local planning authorities and other public bodies to maximise the effectiveness of policies for strategic matters in local plans. This is due to be replaced by the ‘alignment policy’, details of which remain subject to further consultation. In addition, the NPPF retains the controversial policy obligation for councils in the largest urban areas to increase their homes requirement by 35%. The NPPF requires local authorities in urban areas to ensure the uplift occurs within their own area, unless there are voluntary cross boundary redistribution agreements in place.

The government’s update also covers changes to the Housing Delivery Test based on LPA’s previous 3 years of delivery, with enforcement consequences continuing and a new action plan for improvement where LPAs are hitting below percentages of target requirement. The new NPPF confirms that the statistical model based on population growth remains the basis of assessment. These updates are set to incentivise LPAs to deliver.

The government highlights the need for LPAs to have up to date plans in place. In a statement on 19 December, the Secretary of State for Levelling Up, Housing and Communities Michael Gove announced new measures to hold LPAs to account for delays and failure to rollout increased homes, with robust league tables revealing the real performance of LPAs, showing the speed and level of approvals against targets. Further, Gove announced measures to restrict planning committees’ ability to block developments that have been approved in principle by officers.

In his speech, Gove also referred to changes brought about by the Levelling Up and Regeneration Act which will allow statutory consultees such as Natural England and Historic England to charge for pre-application advice to incentivise timely responses.

With severe under resourcing of LPAs being a major cause of underperformance, Gove pointed to extra funding announced in the Autumn statement and the upcoming raised planning fees and indexing arrangement which should add extra resource to LPAs.

Finally, the government’s development of proposed National Development Management Policies (NDMPs) remains subject to further consultation. NDMPs are set to standardise development management rules across a series of policy areas to avoid duplication in council’s local plans. Gove states that NDMPs will provide guidance to LPAs formulate local plans and criteria to apply on determining planning applications.

The long-awaited updates to the NPPF provide much-needed clarity to LPAs who have paused or delayed their local plan process due to a lack of certainty over planning policy over the past year. Gove has stated that plans already implemented, that include policies in anticipation of the NPPF, will be given “significant weight” by the Department for Levelling Up, Housing and Communities (DLUHC).

While the government claims that updates to the NPPF have been put in place to address chronic housing shortages in the UK, some industry sources claim that the revised NPPF will have the opposite effect. We can help clients navigate these changes to NPPF when approaching planning matters.

Michelmores has advised Kew Green Hotels on the acquisition of two prominent new hotels, located in Manchester and Leicester. Under a franchise agreement with IHG Hotels & Resorts, both properties will be transformed into voco branded hotels by mid-2024.

Kew Green Hotels is an international hotel management company offering a range of services with a wide portfolio of properties around the world. Formed in 2001, the company now has over 55 hotels in their portfolio.

This latest acquisition reflects Kew Green’s ambitious growth strategy to deliver outstanding hotel services and exceptional returns for hotel owners and partners. The newly acquired properties both feature decor inspired by the history of New York’s Brooklyn neighbourhood.

The Hotel Brooklyn, located in the heart of Manchester, boasts 189 stylish bedrooms, the chic Runyon’s Bar & Restaurant, and versatile event spaces. Blending edgy decor and unique design, the hotel caters to both business and leisure guests.

Leicester’s Hotel Brooklyn is an urban sanctuary in the city’s heart, featuring 191 contemporary bedrooms, The Lair restaurant and bar plus flexible meeting spaces. This hotel is recognised for its commitment to accessibility and inclusivity, making it an ideal destination for all travellers.

The Michelmores team advising on the deal was led by Senior Associate Lucy Tucker, from the Firm’s Transactional Real Estate team, alongside Jess Hopkins (real estate), Anna Wood (construction) and Harriet Grimes (planning).

Lucy Tucker comments:

“It was a pleasure to partner with Kew Green and bring the deal to a successful close with our expert advice and ability to assist in executing these strategic transactions. Kew Green’s decision to acquire the two hotels reflects its ambitious growth strategy and we are proud to have been a part of that, helping to advise the Kew Green group on the legal aspects of the acquisition.”

Real Estate forms a core part of our work at Michelmores. The Firm advises organisations and individuals doing business in the real estate sector, to help them stay at the forefront of progress and innovation.

The Firm’s in-depth understanding of the issues and practicalities involved around transactional real estate issues enables us to undertake complex work for a diverse client base that includes developers, entrepreneurs, landowners, listed companies, government bodies and major institutions.

For more information, visit our website.

Introduction

In this case, the court considered whether one of two directors of a company could apply to appoint an administrator without the agreement of the other director and a validly passed board resolution.

The court found that in order for a director to bring an application for an administration order, they would need authority from a valid board resolution, passed by a majority of the board of directors.

Background

Abigal Boura (the “Applicant“) was one of two directors and shareholders of LYHFL Limited (the “Company“).

The Applicant considered that the Company was in financial distress. Accordingly, the Applicant decided that the Company ought to be placed into administration. The Applicant did not obtain approval of the other director. Nor did the Applicant obtain approval through a board resolution.

Despite this, the Applicant applied to the court for an administration order (the “Application“). Her application was made under paragraph 12(1)(b) of schedule B1 of the Insolvency Act 1986. This provision allows “the directors of the company” to apply for an administration order.

Issues

Leigh Harmer (the “Respondent“) was the other director of the Company. He disagreed with the Applicant that the Company should be placed into administration. He opposed the Application, on two grounds.

• That the Applicant as one of the directors alone did not fall within the scope of paragraph 12(1)(b). As the Applicant had acted alone, she was not, and did not represent, “the directors of the company”. Accordingly, she was not entitled to apply for an administration order.
• That the Company was not insolvent – it could pay its debts as they fell due.

The Judge only considered the first ground on the basis that if the Respondent succeeded on that ground, then the Application would be disposed of.

The issue was whether the Applicant, as one of two directors, had standing to apply for an administration order without the agreement of the board of directors and without a valid board resolution.

Decision

The Judge reviewed case law on the meaning of “the directors of the company” and made the following observations.

First, a unanimous decision of the directors was not required. However, a majority was needed.

Second, a formal decision of the directors was required. Before a decision to place a company into administration, a valid board resolution compliant with the company’s constitution was needed.

Third, there was authority that where a company only has one director, that single director could apply to the court in urgent circumstances for an administration order, even where the articles of association required more than one director to be quorate. However, in the present case, that authority could be distinguished as the Company had two directors.

Accordingly, as the Applicant was only one out of the two directors (and so did not have the requisite majority) and a valid board resolution had not been passed, the Applicant did not have standing to bring the Application. Therefore, the Judge refused to make an administration order in respect of the Company.

Conclusion

This case illustrates the importance of taking all necessary steps to ensure that the applicant is actually able to initiate the appointment of administrators. In particular, consideration should be given as to whether a director has the requisite authority in accordance with the company’s Articles. It is key to check the company’s constitution to identify any limits on director decision making and also ensure a sufficient proportion of the board are in agreement as the court has no power to initiate an appointment in the absence of such agreement.

Taking the appropriate steps to ensure that board decisions are validly made, and documenting them appropriately, are vital as they court will assess this when making a decision on an application for an administration order or when considering the validity of an appointment made using the out of court process.

Advice should always be sought before making an appointment, in order to determine whether all relevant requirements have been met, or alternatively what additional steps can and should be taken.

The long awaited secondary legislation on Biodiversity Net Gain (“BNG”) is finally here fleshing out the bones of the Environment Act 2021 (“EA 2021”). These new statutory instruments will deliver mandatory BNG for all new planning applications made post 1 February 2024.

There are 6 Statutory Instruments in total and whilst we have seen the draft wording they will all require formal Parliamentary approval early next week.

Accompanying guidance has also been published, but, for now, this is an initial review of the draft legislation that is available.

The Draft Biodiversity Gain Site Register Regulations 2024 (“Register Regulations”)

This is the nuts and bolts of the BNG regime building on what the EA 2021 told us which is that BNG sites will have to be registered in the biodiversity gain site register (“BNG Register”) in order to be eligible. What remains unclear is to what extent any onsite BNG provision supplied by developers will need to be on the BNG Register.

Clause 10 of Schedule 14 to the EA 2021 provides that “Registered Offsite Biodiversity Gain” relates to enhancement of habitat recorded in the BNG Register. This neatly omits onsite provision from the requirements and scrutiny of the BNG Register and nothing in the Register Regulations remedies that.

Any such onsite provision may well be delivered through the mechanism of a section 106 agreement or conservation covenant and generally meet the eligibility criteria for site registration set out in Regulation 6.

Onsite BNG provision supplied by developers does not need to be registered on the BNG Register nor allocated, but significant onsite gains must still be secured legally for at least 30 years after the development is completed. The government has said it is exploring how onsite information can be extracted from planning permission and published on the BNG Register so that all BNG information, whether onsite or offsite, is accessible in one place

How to Register Land – Regulation 5

The Register Regulations provide for the mechanism of either a section 106 agreement or a conservation covenant to ensure the establishment and maintenance of habitat. They also, at regulation 5(2) ensure no double counting by permitting only one registration against any section 106 agreement or conservation covenant.

It is possible for the same land to be registered more than once (see below in terms of initial registration of a wider area of land and then subsequent allocation to a development) on the register but you cannot register the same agreement more than once.

What is permitted is the initial registration of a larger area of land and then subsequent secondary registration of tranches of that initial registration block using different section 106 agreements or conservation covenants.

This would allow the phasing of habitat production to meet developer led demand over a period of time. It also facilitates the habitat banking model.

Land can also be registered initially under a section 106 and later under a conservation covenant and vice versa. This seems to be aimed at permitting a later transition of agreements from section 106 to conservation covenants if desired.

Land eligible to be registered – Regulation 6

There is nothing particularly surprising in the new eligibility criteria for land registration set out in regulation 6. There must be a section 106 agreement or conservation covenant requiring works for habitat enhancement and then their subsequent maintenance over a 30 year period. That habitat enhancement must then be linked to a particular development. We have been careful to distinguish, when drafting agreements, between the initial works of habitat establishment/enhancement and their subsequent maintenance for at least 30 years. These two distinct requirements have been included in the Registration Regulations.

What is of some interest is the requirement via the section 106 agreement or conservation covenant that a person monitor the habitat enhancement to ensure delivery of the required outcome in terms of enhancing and maintaining habitat.

The question of who monitors the delivery of the habitat enhancement works and who pays for that has been the subject of negotiation on some deals. That issue is now decided (although already surely inherent in the landowner’s overall obligation to enhance the habitat successfully) in that a person must be obliged to do so by the section 106 agreement or conservation covenant. The question of monitoring costs is one for commercial negotiation between the landowner and developer.

Applications to Register – Regulation 7

An application to register land under a conservation covenant may only be made by the person required to carry out or maintain works of habitat enhancement or, pursuant to regulation 7 (2) (c), a person who can enforce a requirement to deliver or maintain those works.

This, broadly, places the application responsibilities on the landowner and regulation 7(3) expressly forbids a responsible body under a conservation covenant from making such an application.

If section 106 agreements are not being used then an application to register land under a conservation covenant may only be made by the person required to carry out or maintain works of habitat enhancement.

Content of application

The detail required here is, unsurprisingly, all about the works of habitat enhancement. A timeline will need to be supplied of works which have already started through to completion works yet to be started.

Where the work has not started details must be supplied of the type, size and condition of each proposed habitat on the land and the projected performance as a result of those works.

Where the work has already commenced details must be supplied of the type, size and condition of each proposed habitat on the land immediately before the commencement of works and the projected performance as a result of those works.

If a person other than a party to the section 106 agreement or conservation covenant has the ability to enforce performance of any such habitat enhancement or maintenance works then their details must be supplied.

Details of the development to which the relevant habitat enhancement works have been allocated must be supplied. In turn, the biodiversity value of the allocated habitat must be demonstrated as must the projected performance of the same.

The applicant must declare that all relevant licences and permissions required to deliver the habitat enhancement works have been obtained and a copy of the relevant section 106 agreement or conservation covenant must be supplied.

As ever, a fee must be paid and the details of that are set out below.

Applications to record allocation of habitat enhancement to a development after registration of the land.

Regulation 12 deals with the situation where an area of land (say 100 acres for example) has been initially registered and then an area (say 10 acres) is allocated to a particular development.

Amendment of an entry in the BNG Register

Regulation 17 allows for the correction of details on the BNG Register due to a relevant modification of a section 106 agreement/conservation covenant or for amendment in relation to allocated development.

Changes can also be made to the BNG Register by the operator – Natural England – where it considers that the information in the entry is inaccurate or incomplete. Notice of intent to amend must be given to the relevant parties who may make representations as appropriate.

Removal of land from the BNG Register

Land may be removed from the BNG Register where it has not been allocated to a particular development. An application must be made which will be determined by Natural England who may also remove land from the BNG Register on its own initiative. The grounds for such removal are that false or misleading information has been supplied, the land eligibility criteria are no longer satisfied or that the section 106 agreement or conservation covenant has been fully complied with/is no longer in force. Again, notice of intent to amend must be given to the relevant parties who may make representations as appropriate.

Part 9 of the Register Regulations make provision for a right of appeal against Natural England’s decisions in respect of application rejection, register amendment or land removal. The appeal must be made to the First Tier Tribunal.

The Draft Biodiversity Gain Requirements (Exemptions) Regulations 2024

These regulations confirm that the BNG requirement will not apply to planning permissions made or granted before 1 April 2024 which relate to “small development.” Small development is defined as development which is not major development which is:

• Working of minerals;
• Waste development;
• 10 or more dwelling houses or a site greater than 0.5 hectares;
• Buildings with floor space of 1000m2 or more; and
• Development on a site of 1.0 hectare or more.

The BNG requirement will also not apply to those planning permissions granted under section 73 of the Town and Country Planning Act 1990 where the original planning application was made before the commencement date of these regulations. This is where an application is made for permission to develop land which has already had planning permission given subject to conditions which have not been complied with.

A de minimis exception is also introduced where the development:

• does not impact a priority habitat; and
• it impacts less than 25 square metres of habitat with biodiversity value greater than zero; and
• less than 5 metres of linear habitat.

The BNG requirement will also not apply to householder applications which mean development to an existing dwelling-house or within its curtilage for any purpose incidental to its enjoyment. The definition does not extend to change of use applications or the alteration of the number of dwellings provided.

Any development linked to the HS2 project will not be caught by the BNG requirement and we know that in general terms any Nationally Significant Infrastructure Projects will not be part of the BNG regime until November 2025.

Confirmation has been supplied that the BNG requirement will not apply if you need to obtain planning permission to create a biodiversity gain site for another development.

Good news for the self-building community as well in that development of 9 or fewer dwellings will not be subject to these new BNG requirements providing the site is 0.5 hectares or less.

The Draft Biodiversity Gain Requirements (Irreplaceable Habitat) Regulations 2024

These regulations define irreplaceable habitat which is essentially ancient trees and woodland, saltmarsh, blanket bog, lowland fens, limestone pavements and coastal sand dunes.

The effect of the regulations is to modify the BNG principles in terms of these important habitat types. There is no requirement to increase the biodiversity of such habitats by 10% and instead alternative arrangements must be made to minimise the effect of the development on the irreplaceable habitat. This requirement does not apply to phased development as Schedule 14 to the EA 2021 already provides for regulations to be drafted dealing with this scenario.

The Draft Biodiversity Gain (Town and Country Planning) (Modifications and Amendments) (England) Regulations 2024

These regulations provide for the necessary amendments to be made to the Town and Country Planning regime.

The Biodiversity Gain (Town and Country Planning) (Consequential Amendments) Regulations 2024

These regulations amend section 73 of the Town and Country Planning Act 1990 which deals with permission to develop land without complying with conditions previously attached. The new regulations state that if the conditions attached to a section 73 permission do not change the effect of the development on onsite habitat which is irreplaceable habitat a biodiversity gain plan previously approved as part of the original planning consent will suffice for the subsequent section 73 application. If the section 73 conditions result in the same post-development biodiversity as specified in the original planning application then the earlier biodiversity gain plan will not be regarded as approved for the section 73 application.

The Biodiversity Gain Site Register (Financial Penalties and Fees) Regulations 2024

These regulations will come into force when the Register Regulations do and provide for a fine of £5,000 imposed by Natural England if false or misleading information is supplied to it. There will be a right to object to a fine imposition and a right of appeal if the process is completed.

• The cost of registering a site on the BNG Register will be £639; and
• Each subsequent allocation  of part or all of that land to a development will be £45;
• Amending the BNG Register because of modifications made to a section 106 agreement or conservation covenant will cost £639;
• Removing an allocation of habitat to a development will cost £45;
• Amending the BNG Register because of incomplete or inaccurate information will cost £639; and
• An application to remove an entry will cost £89.

For more information, please get in touch with Head of Natural Capital at Michelmores, Ben Sharples.

Michelmores’ prestigious Property Awards competition is returning in 2024, marking 21 years of celebrating the best property, development and construction projects in the South West with a new category that champions regeneration projects in the region. Entries to the Awards are now open.

The Awards, which have long-championed sustainability and innovation, place social, environmental, sustainable and economic values at the heart of it’s judging criteria. These attributes are considered to be just as important as a project’s aesthetics and purpose.

This year, the Awards continue to highlight progression in the industry with their new Regeneration Project of the Year category. This award showcases projects that involved work of significant refurbishment, retrofitting, regeneration or transformation value on an existing property or brownfield site, to give it a new lease of life and an environmentally efficient future.

The competition recognises a wide range of commercial and residential projects, with shortlisted and winning schemes placed firmly in the industry’s spotlight. Last year the winners included Bristol-based Brabazon, which secured the award for Residential Project of the Year (36 homes and over); The Education Project of the Year category was awarded to The High School Leckhampton, located in Cheltenham; and St. Sidwell’s Point Leisure Centre in Exeter took home the prestigious Building of the Year, to name but a few.

Applicants are invited to submit projects from across the South West, that were largely completed during 2023, before the submission deadline of Friday 19 January 2024.

Of the launch of the Property Awards 2024, Emma Honey, head of Property at Michelmores said:

“The Michelmores Property Awards are making a return for 2024 and I am excited to see who will make the shortlist in our 11 categories. It is clear that the South West continues to be a heavy weight when it comes to innovation and ambition and we have seen exceptional projects that lead the way in sustainably in the real estate sector. I look forward to seeing these elements reflected in this year’s event. We will shortly be announcing our esteemed panel of judges for 2024 and introducing some new faces.”

Chris Massey, head of the Firm’s Private Wealth team and Cheltenham office, adds:

“Michelmores’ reputable and inspiring Property Awards continues to go from strength-to-strength across the South West. The Awards is all about finding out what’s happening on the ground and celebrating property, real estate and construction in our regions. Our judges look for those who are engaged in making these projects truly remarkable and I am eager to see some of this years’ most impressive submissions come in.”

The deadline for submission for this year’s Michelmores Property Awards is Friday 19 January. The Awards ceremony will take place on Thursday 27 June at Sandy Park Conference Centre in Exeter and, as always, promises to be a celebratory evening that brings together all those who contribute to the region’s exciting property, real estate and construction sector.

Find out more about the event, including sponsorship opportunities and how to apply at www.michelmores.com/property-awards.

Michelmores has been recognised in the second edition of The Legal 500’s UK Green Guide, which acknowledges the top UK law firms leading the way on climate change, governance, and sustainability.

The Firm is amongst the UK law firms listed for spearheading the ‘green change’ and ESG agendas whether this is through Firmwide commitments and initiatives or in the work the Firm does for clients advising on clean and renewable energy projects and energy transition.

Michelmores’ recognition in the Green Guide is in respect of its specific expertise in areas of practice including natural capital, biodiversity net gain, sustainable agriculture, impact investing, sustainable energy, regulatory advice, project finance, sustainable infrastructure and the built environment.

The last 12 months has seen a significant increase in the focus and profile of Michelmores’ practices that align their clients to a sustainable future. The Firm is advising clients including, The Forestry Commission, Triple Point Investment Management, Urbaser, Clinton Devon Estates, Riverford Organic, Octopus Renewables, SOROS Economic Development Fund, Phatisa, Global Medical Investments, and various Local Authorities and NHS Trusts, and many more.

More recently, the Firm consolidated its prestigious UK-leading Natural Capital team – bolstered by its strong agriculture and energy expertise – to assist landowners, farmers and developers looking to achieve their sustainability ambitions incorporating carbon net zero ambitions, biodiversity, nutrient neutrality, rewilding, and more.

Michelmores has a strong legacy of trying to reduce its impact on our environment and its work is now led through our partnership with Planet Mark, supported by wider community outreach programmes and initiatives.

Michelmores’ ground-breaking partnership with B Corp impact investor, Oxygen House, sees the Firm commit a proportion of this client’s legal spend towards measurable environmental initiatives. The Firm is also a founding member of the Chancery Lane Project, a pro-bono initiative whereby every contract/law should help provide climate crisis solutions and advises Avon Needs Trees, a registered charity creating new, permanent woodland throughout the Bristol-Avon catchment, among others.

Read more about The Legal 500’s Green Guide here.

Michelmores has long been at the forefront of advisory and transactional legal work for investors, lenders, developers and corporates, supporting these goals with our personalised, partner-led service. Read more on our website.