Monthly Highlights: July 2016

Welcome to this month’s highlights from the Lexis®PSL Banking & Finance team which cover the key news updates from July 2016.

Brexit

The following Brexit news analysis has been published on our blog during July 2016:

  • Paul Holland, partner at Dentons examines the implications of the UK's decision to leave the EU on the aviation finance market and considers the impact it could have on existing deals and cross-border arrangements in Implications for aviation finance post-Brexit
  • In Brexit and Material Adverse Change clauses, David Campbell, a partner in Allen & Overy's banking department, considers whether the result of the referendum means that Material Adverse Change clauses (MACs) will now be triggered in loan agreements and mandate letters

Lending

The use of electronic signatures in commercial contracts

A joint working party of the Law Society Company Law Committee and the City of London Law Society Company Law and Financial Law Committees has issued a practice note designed to help parties (and their legal advisers) who wish to execute commercial contracts using an electronic signature or enter into a commercial contract with one or more other parties intending to execute the contract using an electronic signature.

Although the practice note does not focus on any one signature method, electronic signatures can take a number of forms, including:

  • a person typing their name into a contract or into an email containing the terms of a contract
  • a person electronically pasting their signature into an electronic version of the contract in the appropriate place
  • a person accessing a contract through a web-based e-signature platform and clicking to have their name in a typed or handwritten font automatically inserted into the contract in the appropriate place, and
  • a person using a finger, light pen or stylus and a touchscreen to write their name electronically in the appropriate place in the contract

The practice note sets out the principles for determining whether any particular document signed with an electronic signature has been validly executed. It is limited in scope to commercial contracts entered into in a business context, rather than those in which consumers or other individuals are a party. The note is also limited to the position under English law. The note points out that each transaction should be approached according to its own facts and should take into account the wider implications of the transaction, including any relevant regulatory or tax implications.

In particular, the note considers:

  • the legislative framework, including Regulation (EU) No 910/2014 (the eIDAS Regulation) which has had direct effect in EU member states from 1 July 2016

  • using electronic signatures to execute different types of English law governed documents:

    • simple contracts
    • documents subject to a statutory requirement to be in writing and/or signed and/or under hand
    • deeds, and
    • minutes and resolutions for companies incorporated under the Companies Act 2006

  • the evidential weight of electronic signatures
  • how to deal with originals and counterparts
  • potential conflict of law issues that may arise, and
  • other issues that will need to be considered such as corporate capacity and authority to execute contracts using an electronic signature and certainty that the person purporting to sign using an electronic signature is in fact that person or acting under the authority of that person

A copy of the practice note is available here.

PSC register goes live

From 30 June 2016, companies and limited liability partnerships (LLPs) have to declare to Companies House who owns or controls them, marking the introduction of the People with Significant Control (PSC) register. This declaration will be made when the relevant entity submits their annual confirmation statement to Companies House.

The PSC register includes information about the individuals who own or control companies such as their name, date of birth, nationality and details of their interest in the relevant company or LLP. A PSC is someone who:

  • holds more than 25% of shares or voting rights in a company
  • has the right to appoint or remove the majority of the board of directors, and
  • otherwise exercises significant influence or control

Real estate finance

LMA launches revised form of real estate finance investment facility agreement

A revised recommended form of facility agreement for real estate finance multi-property investment transactions (REF Investment FA) has been launched by the Loan Market Association (LMA). The revisions were compiled by an experienced working party consisting of bank representatives, finance providers and major law firms.

The revisions made to the REF Investment FA include amendments to the insurance undertaking, to bring it into line with current practice and risk allocation on the REF insurance market, and the addition of an undertaking in respect of asset managers to reflect the emergence on the REF market of the figure of strategic management portfolio advisors.

The revised form of agreement is available to members on the LMA website. For more information, see our news analysis: Analysing the latest form of LMA real estate finance investment facility agreement.

Derivatives

Latest issue of ISDA quarterly published

The July issue of ISDA Quarterly has been published and focuses on the challenges that lie ahead for the Basel Committee on Banking Supervision (BCBS). The articles included cover the efforts to increase the comparability of risk-weighted assets and how they have progressed in 2016. It also considers:

  • how the BCBS will complete a review of the leverage ratio and credit valuation adjustment rules
  • how regulators expect to make capital calculations more transparent by limiting internal modelling, and
  • market risks

The full report can be viewed here.

ESMA publishes opinion and launches consultation on EMIR

ESMA has launched a consultation in which it proposes prolonging the phase-in period by two years for central clearing of OTC derivatives applicable to financial counterparties with a limited volume of derivatives activity under EMIR. The consultation closes on 5 September 2016

Bank Recovery and Resolution Directive

Commission Implementing Regulation in relation to BRRD published

Commission Implementing Regulation (EU) 2016/1066 laying down implementing technical standards with regard to procedures, standard forms and templates for the provision of information for the purpose of resolution plans for credit institutions and investment firms pursuant to the Bank Recovery and Resolution Directive 2014/59/EU (BRRD), has been published in the Official Journal.

In accordance with BRRD, art 11(1)(a), institutions have a duty to cooperate as much as necessary with the resolution authorities for the purposes of drawing up resolution plans. BRRD envisages a duty of cooperation of the competent authorities with the resolution authorities. This cooperation entails that the competent authority and the resolution authority jointly verify whether some or all of the necessary information is already available to the competent authority, by virtue of it exercising its supervisory tasks. Where that information is available, it is appropriate that the competent authority transmits it.

Commission Implementing Regulation (EU) 2016/1066 is based on the implementing technical standards submitted to the European Commission and will enter into force on 26 July 2016.

The full text of the Regulation can be viewed here.

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