Private Bank Briefing – March 2021

Posted in Brexit, Finance and Capital Markets

By Rob Moulton, Nicola Higgs, Anne Mainwaring, Becky Critchley, and Anna Lewis-Martinez

The latest edition of our Private Bank Briefing provides a roundup of legal and compliance issues impacting private banks and their clients from Q1 2021.

In this edition, we cover some of the key regulatory announcements relating to MiFID II and the impact of COVID-19, the latest on Brexit, the FCA’s announcement on the dates for cessation of LIBOR benchmark settings, and the FCA’s guidance for firms on the fair treatment of vulnerable customers. We feature an update on the UK and EU’s sustainable finance agendas, and the FCA’s aims regarding diversity, as well as other key updates for private banks from the last three months.

We also include our regular features — TechTrends, Lessons from Enforcement, and Global Insights. This edition’s TechTrends provides a useful overview of the Woolard Review and the regulation of buy-now-pay-later products.

View the full briefing.

Previous editions of Private Bank Briefing are also available.

Remote Evidence in English Courts: Some Timely Reminders

Posted in Dispute Resolution

Parties seeking to rely on video-link evidence should plan ahead and, where necessary, obtain local and foreign court approval.

By Dan Smith

The COVID-19 pandemic has (albeit by necessity) ushered in a move towards remote justice. The vaccine rollout continues, and as lockdown restrictions begin to ease, English courts are now considering to what extent that move towards remote justice should continue. Most likely, remote hearings will continue in appropriate cases.

Against this background, the High Court has, in a number of recent decisions, provided some timely reminders for practitioners as to (i) proper arrangements for giving video-link evidence, and (ii) the need, in some cases, to obtain foreign court permission in respect of giving video-link evidence abroad. Continue Reading

Proposal for the Digital Services Act

Posted in Data Protection, Emerging Companies and Technology

The long-awaited update to the e-Commerce Directive proposes new obligations for online platforms and changes to the ‘safe harbours’ from liability for infringing content.

By Jean-Luc Juhan, Deborah J. Kirk, Elisabetta Righini, Thies Deike, Grace E. Erskine, Alain Traill, and Amy Smyth

On 15 December 2020, the European Commission released a set of long-awaited proposals to create a safer and fairer digital space, including the Digital Services Act (DSA) and the Digital Markets Act (DMA). The DSA would amend parts of Directive 2000/31/EC (the e-Commerce Directive) while maintaining its core principles, with the aim of addressing new risks that have emerged since the introduction of the e-Commerce Directive.

The DMA proposal targets providers of core platform services who are designated as gatekeepers, with the aim of ensuring that markets are contestable and fair in the digital sector across the EU. Both proposals will now need to go through the EU legislative process, which is likely to be protracted, and could lead to amendments to the draft legislation.

This briefing summarises the key international, European, and UK regulatory developments applicable to providers of digital platform services, which will form the basis for the significant changes expected to continue throughout 2021.

Rising Regulation Requires Agility from M&A Deal Teams

Posted in M&A and Private Equity

In the 2021 edition of IFLR’s M&A Report, Latham & Watkins considers key developments likely to impact M&A in 2021, and how dealmaking is likely to progress in light of these developments.

By Nick Cline, Robbie McLaren, Douglas Abernethy, Richard Butterwick, and Catherine Campbell

If 2020 was the year that COVID-19 precipitated extraordinary government intervention and regulation of our lives, 2021 looks set to be the year that regulatory interventions in M&A precipitate changes to the way that dealmakers approach transactions.

After a disrupted first half of 2020 and a respectable rebound later in the year, M&A market sentiment for 2021 is generally positive. Absent unanticipated shocks, factors including the resolution of Brexit, a new US administration, and the widespread rollout of COVID-19 vaccines bring expectations of a busy year ahead for deals.

As regulators and governments push to introduce or enhance a wide range of rules impacting investments in multiple sectors, dealmakers should expect that the hand of government will still be felt, even for businesses not traditionally viewed as ‘regulated’. Successfully executing an acquisition in 2021 will require skilful navigation of a complex and evolving legal and regulatory landscape — and deal teams must remain agile to successfully clear hurdles.

Read the full article

PE Goes Gaming

Posted in M&A and Private Equity

Despite certain regulatory and challenges, PE buyers will likely see more investment opportunities in the gaming industry.

By Neil Campbell, Greg Roussel, Mike Turner, Adam Czernikiewicz, David Walker, Tom Evans, and Catherine Campbell

The global gaming market reached a valuation of US$135.8 billion in 2020, accounting for a staggering 53.3% of the digital media industry. Further, global video game revenue in 2020 jumped by 20% to US$179.7 billion, making the sector larger than the film and North American sports industries combined. Continue Reading

Exploring IPOs with Dual Class Shares — Emerging Possibilities for PE

Posted in M&A and Private Equity

Dual class share structures could help lure Europe’s best founder-driven businesses to the London market, but challenges remain.

By Sarah Axtell, Tad Freese, Chris Horton, Rick Kline, Anna Ngo, Koushik Prasad, David Walker, Tom Evans, and Catherine Campbell

Listing of dual class share structures, which give certain owners (usually founders, employees, and pre-IPO investors) enhanced voting rights over other public shareholders, are increasingly common in the US markets as a strong pipeline of founder-driven tech companies goes public. The UK has now seen several dual class share structures, including most recently the £5.4 billion IPO of The Hut Group, which had a “special” share for the founder. With the UK government keen to increase the marketability of UK listings following Brexit, we anticipate that US dual class deal architecture is likely to be featured on a growing number of London listings — a development that could benefit PE firms and founder managers seeking to retain a greater governance role post-IPO. Continue Reading

Pandemic Underlines Whistleblowing Risks for PE

Posted in M&A and Private Equity

In a changing social landscape, PE firms should conduct corporate culture due diligence while also ensuring the implementation of robust complaints procedures.

By David Berman, Sarah Gadd, Joe Farrell, Nell Perks, David Walker, Tom Evans, and Catherine Campbell

As global businesses react to the pandemic and social movements, PE firms should remain watchful for whistleblowing issues involving both portfolio and target companies. We anticipate a significant increase in the number of employees asserting whistleblower status — a development that may prove costly to address, even if claims are without merit.

There is now more to blow the whistle about, including new workplace health and safety issues arising from COVID-19, misuse of government furlough schemes, and events highlighted by movements like #BLM and #MeToo. This is in addition to long-standing whistleblower issues, such as accounting irregularities, anticompetitive behaviour, and bribery and corruption. Further, in an economic environment where redundancies are increasing and the new jobs market is depressed, employees are more likely to resist termination. Continue Reading

Creative Uses of Collateral Present New Financing Opportunities for PE

Posted in M&A and Private Equity

Innovative asset-based lending is on the rise as a means of attracting new lenders while maintaining the strategic support of existing creditors.

By Francesco Lione, David Walker, Tom Evans, and Catherine Campbell

Raising fresh capital for portfolio companies in times of financial stress is always a delicate balancing act between attracting new lenders and maintaining the strategic support of existing creditors. The almost instantaneous halt in cash flows and scramble for new capital injections precipitated by the COVID-19 pandemic has significantly changed traditional approaches to collateral — giving rise to new financing opportunities for sponsor-backed deals and businesses. Regardless of debt market buoyancy, these new financing techniques are here to stay, having demonstrated value in overcoming creditor scepticism during times of economic uncertainty and bringing a new way to increase leverage. Continue Reading

Commercial Court: Compliance With Arbitral Preconditions a Question of Admissibility

Posted in Dispute Resolution

The decision clarifies the circumstances under which an arbitral award might be challenged.

By Philip Clifford QC

A recent decision by the English Commercial Court indicates that failure to comply with a precondition to arbitration (such as an obligation to negotiate) calls into question the admissibility of a claim, rather than calling into question the jurisdiction of the arbitrators to hear such a claim. As parties to arbitration can only challenge an award through the English courts under s. 67 of the Arbitration Act 1996 (the Act) for lack of jurisdiction, and not in relation to the admissibility of a claim, the decision suggests that s. 67 may not be available to bring challenges concerned with a failure to comply with such preconditions to arbitration.

In Republic of Sierra Leone v SL Mining Ltd [2021] EWHC 286 (Comm), the court dismissed the Republic of Sierra Leone’s challenge made under s. 67 of the Act, finding that the challenge related to questions of admissibility to be determined by the arbitrators, rather than relating to a question of jurisdiction falling under s. 67 of the Act. Continue Reading

Independent Review Provides Recommendations for Improving UK Listing Regime

Posted in Finance and Capital Markets

The recommended reforms aim to make the UK’s listing regime more competitive while maintaining high standards of corporate governance, shareholder rights, and transparency.

By Chris Horton, James Inness, and Anna Ngo

A new independent review (the Review), led by Lord Hill, has been released that provides recommendations on how the UK can improve its listings regime. Published on 3 March 2021, the Review aims to impart recommendations that will improve the process of raising equity capital on the UK public markets, whilst also maintaining high standards of corporate governance, shareholder rights, and transparency. Continue Reading