FCA Proposes to Unify the Listing Regime for Commercial Companies Under a Single Listing Segment

Posted in Finance and Capital Markets

The regulator continues its Primary Markets Effectiveness Review to promote the competitiveness of a UK listing.

By Chris Horton, James Inness, Anna Ngo, and Johannes Poon

On 26 May 2022, the FCA published a discussion paper (DP22/2) to seek further views on how to make the UK listing regime more effective, easier to understand, and more competitive. This paper contains suggested reforms from the FCA to elicit feedback, rather than a formal consultation on proposed rule changes. Continue Reading

Law Commission Proposes Reforms to Corporate Criminal Liability in the UK

Posted in Litigation

The proposal outlines 10 possible ways to strengthen corporate liability by both criminal and civil law reforms.

By Stuart Alford QC, Clare Nida, and Mair Williams

On 10 June 2022 the Law Commission published an eagerly anticipated set of proposals (the Options Paper) to overhaul criminal law as it applies to companies in the UK (see the summary here and full text here). The Law Commission is an independent commission created by Parliament to keep UK law under review and to recommend reforms. While the Options Paper holds back from making recommendations, it outlines 10 possible ways to strengthen corporate liability by both criminal and civil law reforms. Continue Reading

UK Court: Procedural Failures Not Fatal to Service Out of Jurisdiction

Posted in Dispute Resolution, Litigation

Procedural omissions for service out of the jurisdiction will not impact issuance of a claim for the purposes of limitation.

By Robert Price and Duncan Graves

In Chelfat v. Hutchinson 3G UK Limited [2022] EWCA Civ 455, the UK Court of Appeal recently determined the effect of a procedural failure in relation to service of a claim outside of the jurisdiction without permission, including whether such failure entitled the court to refuse to issue a claim form, and the consequences for potential limitation defences.

Service out of the jurisdiction without permission is increasingly prevalent in practice following amendments to the Civil Procedure Rules (CPR) post-Brexit on 6 April 2021 to allow such service when the underlying contract has an English jurisdiction clause. If the court’s permission is not required for service out of the jurisdiction, as set out under CPR 6.32 (Northern Ireland or Scotland) and 6.33 (outside of the UK), CPR 6.34(1) provides that a party must file and serve with the claim form a notice containing a statement of the grounds on which the claimant is entitled to serve the claim form out of the jurisdiction. Practice Direction 6, paragraph 2.1 provides that the notice should be on Practice Form N510 (Form N510). CPR 6.34(2) sets out that unless the claimant has filed the claim form with a copy of Form N510, the claim form cannot be served without permission from the court.

The decision in Chelfat clarifies that failure to comply with the procedural requirements for service out of the jurisdiction should not prevent the claim form from being issued. As a result, failure to file Form N510 will not displace the general rule that time ceases to run for the purposes of a limitation period upon the issue of the claim form. Continue Reading

National Security & Investment Act: Cold Comfort for Officeholders

Posted in Restructuring

Insolvency officeholders may need clearance upon appointment to entity in an affected sector.

The National Security & Investment Act (NSI Act) came into force in early January, and market participants might reasonably have expected a common approach to the practice of mandatory and voluntary notifications to have bedded down by now. However, due to the breadth of the provisions, the lack of clarity in their application to ordinary course secured financing transactions, and the ramifications for a transaction of failing to notify, significant concerns remain in the market that transaction timetables and enforcement strategies will be adversely affected in situations in which there may be little obvious threat to national security. Continue Reading

UK and European Restructuring Tools: Choosing the Optimal Forum for Creditor and Shareholder Cramdown

Posted in Restructuring

Debtors and investors have an enhanced choice of restructuring venues as the EU Restructuring Directive is rolled out in Member States

A number of key European jurisdictions have now implemented the EU Preventive Restructuring Directive, the broad thrust of which is to introduce harmonised out-of-court restructuring procedures across Member States to address financial difficulties at an early stage of distress. These measures include the introduction of cross-class cramdown (including of shareholders) and a moratorium to provide a debtor with breathing space to propose a restructuring. Germany (StaRUG) and the Netherlands (WHOA) were first movers, with each procedure coming into force in early 2021. The French revised conciliation and accelerated safeguard process became law in October 2021. Italy and Spain are expected to implement and/or consolidate their equivalent procedures to meet the extended deadline of July 2022, but other Member States may need further extensions. Although no longer bound to do so, the UK enacted its own cross-class cramdown and standalone moratorium tools in 2020. Therefore, there are now genuine choices for debtors, and a healthy competition is emerging between the different regimes. Continue Reading

Restructuring With Regulators: Where Law and Policy Collide

Posted in Restructuring

Balancing the urgency of delivering a restructuring with regulatory requirements in a regulated sector.

Restructuring a company in a regulated sector is always challenging. Navigating directors’ duties is difficult enough in an unregulated sector, but the additional layer of oversight and statutory compliance required in regulated sectors often places directors proposing a restructuring in the invidious position of balancing the interests of the company’s creditors with their wider regulatory duties. Continue Reading

Schemes and Restructuring Plans: Where Are We Now?

Posted in Restructuring

The forecast for the English scheme and plan looks set fair despite concerns around Brexit turbulence.

The restructuring market’s appetite for Part 26 schemes of arrangement and Part 26A restructuring plans shows no signs of diminishing, with some debtors (Smile Telecoms and ED&F Man) even taking a second bite of the cherry. In this article, we explore recurring themes identified in the market throughout the past 18 months. Continue Reading

Report Identifies Weaknesses in UK Companies’ Modern Slavery Act Statements

Posted in ESG

A recent report concluded that modern slavery considerations are still not a mainstream concern for many companies.

By Clare Nida

In April 2022, the Financial Reporting Council, the Independent Anti-Slavery Commissioner, and Lancaster University published a report on Modern Slavery Reporting Practices in the UK (FRC Report), which concluded that reporting on modern slavery in both modern slavery statements and annual reports lacks the information needed for shareholders and wider stakeholders to make informed decisions as to the adequacy of companies’ anti-modern slavery practices. Continue Reading

PE Goes to Hollywood

Posted in M&A and Private Equity

The film, television, and digital content production industries are ripe for PE investment, thanks to shifting revenue structures and European quotas.

By Tom D. Evans, Farah O’Brien, Libby Savill, David J. Walker, Rachael Astin, Jon Fox, and Catherine Campbell

Camera lensThe extraordinary growth of entertainment streaming platforms over the last decade has made investments in the film, television, and digital content production industries more attractive than ever. Large-cap buyout firms have competed with strategic acquirers to invest heavily across the sector, with Amazon’s US$8.45 billion acquisition of MGM underscoring the level of interest. Unlike many industries that were adversely affected by COVID-19, the film, television, and digital content production industries have grown. This growth is driven not only by the “streaming wars”, with more and more platforms vying for eyeballs and subscriptions, but also by a now truly-global sector, leveraging online platforms to reach a worldwide audience. Continue Reading

Rising Regulation of Fintech Innovation — Implications for PE Investments

Posted in M&A and Private Equity

Assertive regulators are bringing greater clarity and new challenges as they step up oversight of fintech innovation.

By Stuart Davis, Tom D. Evans, Nicola Higgs, Christian F. McDermott, David J. Walker, Brett Carr, Catherine Campbell, and Charlotte Collins

As the fast-growing fintech industry thrives, the sector has begun to attract greater regulatory scrutiny. We expect new legal and regulatory focus and oversight of those players operating on the unregulated perimeter of financial services.

While the level of supervision is set to increase and pose challenges for industry participants, a more robust regulatory environment could play into the hands of PE buyers and create opportunities for portfolio companies best able to navigate this rising regulation. In our view, PE firms must pay heed to the tone of more assertive regulators, but that approach coupled with new regulation will create a space in which firms in nascent fintech verticals can legitimately pursue their aims with greater certainty, no longer looking over their shoulders.

While the UK government is keen to stress that the new regulation will be applied proportionately, proposals are likely to result in the redirection of resources and attention of firms, and buyout firms should remain alert to changes that may impact a range of fintech investments. Continue Reading