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M&A Views

Corporates and Dealmakers Must Prepare for Increased UK Class Action Claims

May 29, 2024
As collective redress actions rise, companies’ statements are under high scrutiny, with an industry developing to take advantage.

While class actions are well established in the US, they are increasingly common in the UK, driven by market volatility, availability of litigation funding, legal reforms, regulatory settlements, and growing scrutiny of companies by consumers, investors, and activists. The versatility of available procedures in England make it an attractive jurisdiction for litigation and we foresee more, and larger claims, whether instead of or in parallel to US proceedings.

Our expert cross-border teams have significant class action experience and are currently acting in a number of the largest cases in this area in the English courts. In this article, we share our insights from such cases — with a focus on the growing threat of claims under Section 90A of the Financial Services and Markets Act 2000 (FSMA).

Whatever the grounds for a claim, it is clear that class actions can be very costly. Corporates and M&A deal teams therefore need to engage meaningfully and early by leveraging expert outside legal counsel.  

Spotlight: Section 90A FSMA

While the UK offers multiple routes to bringing a class action, including common law and a range of competition, data, and ESG claims (see “Common Grounds for UK Class Action” box), UK shareholder claims are in the spotlight. The number of Section 90A FSMA cases is currently still relatively modest and the availability of class action shareholder claims in the UK — when compared with the US — is somewhat more limited (and can only — so far at least — be pursued on an “opt-in” basis, i.e., requiring shareholders to actively sign up to the litigation). However, we are seeing more of such actions being pursued, with numbers ever-increasing.

Several factors are driving this growth. Following a US Supreme Court decision which effectively barred US securities actions without a US nexus and necessitated investors to pursue such claims in other jurisdictions, potential claimants are looking beyond the US, particularly in relation to securities claims. Further, the extension of legislation in recent years to cover corporate disclosures other than in financial statements, and to include liability for dishonest delays in publishing information, has created a valuable right for shareholders to claim against UK listed companies under Section 90A FSMA. Section 90A FSMA claims are of specific relevance to listed companies, but deal teams contemplating a take-private transaction also need to consider carefully the possibility of shareholder action in the UK as against the previously publicly listed company.

When actions are progressing, they are complex, costly, and need to be closely managed. The first Section 90A FSMA claim to go to trial in the UK was heard in 2022, providing some limited guidance for the progress of future claims. However, outstanding questions remain regarding the nature of disclosures necessary, and the resulting liability regime in respect of any failures. In particular, questions remain around the materiality thresholds for disclosures in companies’ public statements and the extent that investors bringing claims will be required to prove reliance on the companies’ statements (or failure to make statements). Care also needs to be taken around matters that companies might consider to be privileged, but which might potentially be disclosable to shareholders in any subsequent action. Companies should be careful not to create unnecessary, potentially disclosable, documents and should engage early with external counsel to consider how to best record (and preserve) decision-making and other information.

Other UK Class Action Developments to Watch

Another of the key trends we expect is for class actions to come to the forefront in areas including environmental, social, and governance (ESG) (where mandatory climate-related financial disclosures potentially heighten the risk of shareholder claims), competition law (where “opt-out” class actions are more common), and data-intensive sectors (where increased regulation has led to an uptick in efforts to obtain compensation on behalf of data subjects, the number of which can reach into thousands, or even millions, of people). We have also seen a growing trend of investors, activists, or, indeed, litigation funders shoe-horning complaints into either Section 90A FSMA or the competition opt-out regimes, including complaints that are not really about misleading investors or typical anti-competitive behaviour. Instead, if activists consider that a company has not met certain ESG standards, claims, or adopted goals, they are looking to pursue class actions either through the Section 90A FSMA regime (claiming that the company has misled the market around its ESG compliance) or through the competition regime (claiming that the ESG non-compliant behaviour only arose because of an abuse of a dominant position). A cross-practice approach to responding to such claims is essential.

In terms of the market more generally, the UK Financial Conduct Authority (FCA) wants to attract and retain more listed companies in the UK. One of the FCA’s proposed regulatory changes is the removal of the requirement to publish a circular or receive shareholder approval for significant M&A transactions. Instead, Class 1 transactions will only trigger a requirement on the company to release a detailed transaction announcement. This reform would make more UK listed companies competitive in M&A auction processes by reducing the regulatory burden. However, while it is currently anticipated that less information has to be disclosed, the provided information will be more heavily scrutinised, and so companies should remain alive to increased litigation risk around such statements.

Mitigate Risk by Engaging Early

Companies need to ensure that all disclosures and announcements are accurate, defensible, and supported by good internal record-keeping and governance to audit and evidence the basis for making the statements in the first place. This is the case even in respect of seemingly anodyne statements (for example, statements around having good corporate governance structures in place). Expert outside counsel can help to review the accuracy, scope, and framing of disclosures and other announcements, mindful of the potential for future claims.

In the context of M&A transactions specifically, deal teams need to be alive to the risk that shareholders may push an agenda to challenge the direction of a deal. Beyond that, corporates seeking to stem class action risks should leverage experienced legal counsel and work to manage communications internally (e.g., with the board, so they can validly sign off on disclosures and help to assuage the concerns of senior individuals, such as directors, who could find themselves targeted with personal liability for certain statements being made) and externally (e.g., with the market, target investors, and insurers). Particular care needs to be taken in take-private transactions, as historic claims could be raised against the company in future years (and typically they are not pursued in the UK until right at the cusp of the expiration of limitation periods). Careful diligence regarding the risks of any such claims needs to be undertaken and should be discussed with experienced counsel teams.


Although we are still in the relatively early stages of usage and management of class action processes in the UK, the UK is moving closer to the US system through the introduction of opt-out class actions in competition law and developing jurisprudence regarding other ways of the courts managing group litigation, which removes some of the burden of forming a claimant class.

Class actions remain viable, potentially highly lucrative, and increasingly attractive. As claimants continue to push boundaries in seeking paths to redress, companies need to get ahead of the curve.


  • Section 90A FSMA allows investors to bring claims against listed companies that publish information containing misleading statements or omissions. This provision targets misinformation disseminated to the market as a whole, such as in annual reports or press releases, rather than misrepresentations communicated to specific investors. There are similar claims available pursuant to Section 90 FSMA regarding misleading statements or omissions in listing particulars (with lower thresholds).
  • Common law claims have, to date, focused on alleged breaches of a tortious duty owed by directors of a company to shareholders to use reasonable skill and care when communicating with shareholders (i.e., a duty to ensure the communications contained no material misrepresentations and omissions). Such a claim may also allege that directors owe an equitable duty to provide shareholders with sufficient information to enable them to make informed decisions in respect of matters on which shareholders are voting (e.g., at an Extraordinary General Meeting).
  • Competition claims often arise from allegations that a company has breached competition law or engaged in anti-competitive behaviour, such as price-fixing, market sharing, or abuse of a dominant position. Claimants seek to recover overcharges and other losses caused by such infringements.
  • Data claims typically arise from a failure to protect personal data, leading to unauthorised access, loss, or misuse of data, in violation of the Data Protection Act 2018 (which is the UK’s implementation of the General Data Protection Regulation). However, various other causes of action can form the basis of these claims, including misuse of private information, breach of confidence, or negligence. The most significant compensation claims often stem from cyber-attacks.
  • ESG claims can cover a broad spectrum of litigation, including disputes relating to human rights, climate change, securities, and the sustainability of products and services. Various types of actions, including breach of directors’ statutory duties and breach of environmental or securities regulations, could be brought by a range of claimants (including investors, non-governmental organisations, individuals, and regulators). 


Funding can be a threshold issue for claimants, resulting in material impact on risk. The UK has an increasingly mature litigation funding market combined with a large number of boutique claimant-side law firms and US law firms with experience in pursuing claims. Shareholder class actions are particularly attractive to litigation funders as the returns can be significant. We are even seeing non-traditional funds looking for avenues to fund litigation and gain a share of this ever-increasing market.

Enforceability of litigation funding agreements (LFAs) faced a serious threat following a UK Supreme Court ruling that the most common type of LFAs, which entitle funders to a portion of the damages of a claim, would be unenforceable. However, we are not seeing reduced appetite for these sorts of agreements as litigation funders are well-established and have seemingly amended the way in which they recover a portion of the damages to ensure arrangements are compliant. In any event, in March 2024, the UK government announced plans to introduce new primary legislation to ameliorate the impact of the Supreme Court decision. In short, litigation funders are not going away.


Opt-in Class Action

Potential claimants elect to join a class of similarly affected individuals. These claimants are identified in the proceedings, and authorise the claim to be brought on their behalf. Group litigation orders fall into this type of class action.

Opt-out Class Action

A claim is brought on behalf of all individuals within a specified class (i.e., sharing a similar characteristic). They are party to the claim unless they choose to opt-out. Representative actions and collective proceedings orders fall into this type of class action.

This post was prepared with the assistance of Emma Bunting in the Hong Kong office of Latham & Watkins.


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