Why Green Bond Issuers and Underwriters Should Not be Deterred by US Securities Law

Posted in Environment, Finance and Capital Markets

By Aaron Franklin

The United States has the deepest, most liquid capital markets in the world, attracting issuers from across the globe. To sell to US investors, these issuers must comply with US securities laws, entailing a more rigorous diligence and disclosure process. Issuers must weigh the benefits of increased demand against the additional costs, but the outcome should not depend on whether the bonds will be green or otherwise have sustainability credentials.

The US securities laws that apply to bond deals include a variety of rules on who can issue and purchase bonds, such as the registration requirements in the Securities Act of 1933, the Trust Indenture Act of 1939, and the Investment Company Act of 1940. But the real concern for bond issuers and underwriters is the threat of investors claiming securities fraud under the Securities Exchange Act of 1934, using “Rule 10b-5.” In general, a plaintiff is entitled to damages under Rule 10b-5 if a bond issuer or underwriter misrepresented or omitted a material fact in connection with the purchase or sale of the bond, with the intent to deceive or with recklessness, and the plaintiff lost money by relying on that misrepresentation or omission. This right to litigate for “material omissions” does not exist in most other jurisdictions, even where contractual fraud claims are possible. To avoid lawsuits under Rule 10b-5, issuers and underwriters (and their legal counsel) typically spend more time and effort (relative to deals not sold to US investors) investigating the affairs of the issuer and ensuring the offering disclosure is sufficiently robust.

Continue Reading

Swiss Regulator Publishes ICO Guidelines

Posted in Finance and Capital Markets

Swiss regulator offers assistance in navigating the regulatory framework.

By Andrew Moyle, Stuart Davis and Charlotte Collins

The Swiss Financial Market Supervisory Authority (FINMA) has published a set of guidelines, setting out how it intends to apply its financial markets legislation in the context of initial coin offerings (ICOs).

Despite the growing trend for ICOs globally, FINMA is the first national regulator to provide such helpful clarity for ICO participants, who are typically left to work out for themselves whether and how their structure fits into existing regulatory frameworks. ICOs, in which investors receive blockchain-based coins or tokens in exchange for funds, were not envisaged when many existing frameworks were developed. Further, the increasing deployment of ICOs has not given rise to ICO-specific rules and regulations in most jurisdictions, although a minority of regulators such as the Gibraltar Financial Services Commission have announced that they are creating regulatory regimes specifically targeting ICOs. Consequently, the application of current regulation and legislation to ICOs is in many cases unclear, with the legal analysis depending very much upon the way in which a particular ICO is structured. Continue Reading

Jukes: English Appellate Decision on Litigation Privilege in Internal Investigations

Posted in Dispute Resolution

By Stuart Alford QC, Daniel Smith and Clare Nida

The English Court of Appeal provides further guidance, approving ENRC, on when litigation privilege will not apply to information gathering materials.

The English Court of Appeal (Criminal Division) has ruled that litigation privilege does not apply to a statement an employee makes to his employer’s solicitors as part of their investigation into a death in the workplace. The court’s ruling in R (for and on behalf of the Health and Safety Executive) v Paul Jukes [2018] EWCA Crim 176 is the third judgment on litigation privilege in just nine months. Continue Reading

Global Ambitions for the FCA’s Sandbox

Posted in Finance and Capital Markets

The FCA seeks industry feedback to capitalise on global regulatory sandbox trend.

By Stuart Davis and Charlotte Collins

The regulatory sandbox was pioneered by the Financial Conduct Authority (FCA) back in November 2015 — a “safe space” in which businesses can test innovative products, services, business models, and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question.

The sandbox has been a success to date, helping both existing and new businesses to develop and launch innovative products and business models (see Latham’s previous blog post on the success of the first round of sandbox participants, and Client Alert that tracks the use of the sandbox model across the globe). Continue Reading

UK Restructuring Scheme Case Study: Guiding Bibby Offshore Into Safe Waters

Posted in Finance and Capital Markets

UK-based offshore and subsea oil & gas services company solidifies its position and completes ownership transfer to noteholders in major company milestone.

By John Houghton and Marc Hecht

The recent Bibby Offshore recapitalisation[1] is as fair and equitable a restructuring as the media has seen, offering creditors an example of what an effective restructuring requires. This case study exemplifies the key points that companies facing unpredictable market conditions must consider:

  • The correct restructuring solution
  • Deft management of shareholder dynamics
  • Careful handling of stakeholder expectations Continue Reading

Bilta v. RBS: When Will Litigation Privilege Apply to Information Gathering in Internal Investigations

Posted in Dispute Resolution

High Court decision provides practical lessons for companies conducting investigations.

By Stuart Alford QCDaniel Smith and Clare Nida

The English High Court has reconfirmed that litigation privilege can apply to information gathering in internal investigations. Specifically, lawyers must have engaged in the information gathering for the dominant purpose of conducting litigation, and this can include prospective claims by tax authorities.

Case Background and previous decisions

Bilta UK Ltd. is an English company that was compulsorily wound up in November 2009 pursuant to a petition presented by HM Revenue and Customs (HMRC). In Bilta (UK) Ltd v Royal Bank Of Scotland Plc & Anor [2017] EWHC 3535 (Ch), the liquidators of Bilta sought disclosure and inspection of documents, including interview transcripts that the Royal Bank of Scotland (RBS) had created during an HMRC tax investigation. Continue Reading

The Recent Resurgence of Special Purpose Acquisition Companies

Posted in M&A and Private Equity

By James Inness and Anna Ngo

Special purpose acquisition companies, or SPACs, are companies that are incorporated for the purpose of making one or more strategic acquisitions. SPACs are also referred to as “blank check” companies or “cash shells”, which seek to raise capital by listing shares on a stock exchange. Each SPAC has its own investment criteria and focus, such as a specific industry. Alternatively, it may operate under the banner of a more generic acquisition mandate, which guides its potential acquisition strategy.

At the time of IPO, the SPAC is empty – it has no business operations or tangible assets. However, it will have an experienced management team, which usually includes the sponsors or founders, and an investment criteria, which the management team will seek to meet by identifying attractive targets for acquisition by, or merger with, the SPAC within 18-24 months from IPO. A failure to execute an acquisition within the timeframe will generally lead to the liquidation of the SPAC and a return of investment to the public shareholders.

Continue Reading

Gas to Power Innovation Drives Global Opportunities

Posted in Finance and Capital Markets

By John Balsdon and Matthew Brown

By Way of Background

Gas to power (G2P) projects provide an effective solution to power shortages around the globe. As the global demand for power continues to rise, outstripping supply in many nations across the world, existing power generation facilities cannot meet the needs of fast-growing economies and available domestic fuel sources are in many of those economies declining.  G2P has the potential to deliver cleaner, more accessible energy to power the engine of global growth, and the next generation of G2P projects will likely underpin a new era in energy production.

G2P projects span the full energy value chain — covering gas production, treatment, transport and power generation. More than 50 G2P projects have been announced across the globe, and countries continue to announce new innovative programmes. Ghana and Chile are among the countries that have recently implemented G2P projects. And the Philippines, Indonesia, and Vietnam are among those likely to turn to G2P to satisfy their future energy needs. Continue Reading

FCA to Take a Closer Look at ICOs

Posted in Emerging Companies and Technology, Finance and Capital Markets

By Stuart Davis and Charlotte Collins

Following on from the Financial Conduct Authority’s (FCA’s) consumer warning on Initial Coin Offerings (ICOs) in September, the FCA has announced a deeper examination of this area in its Feedback Statement on Distributed Ledger Technology (DLT) and related press release. The FCA stated that it will consider whether regulatory action beyond the consumer warning is required.

The earlier Discussion Paper on DLT had asked for feedback on the legal and regulatory risks associated with ICOs (see Latham’s related Client Alert). According to the FCA, many respondents considered ICOs as having the potential to “dynamise innovation”, although others raised concerns about potential risks and possible investor harm.

Continue Reading