Corporate weekly highlights—1 March 2018

This week’s edition of Corporate highlights includes Market Tracker’s latest trend report ‘Trends in UK public M&A deals in 2017’, proposed guidance from IOSCO to address conflicts of interest in the equity capital raising process and amended rules aimed at making it easier to remove residential addresses from the companies register.

Public company takeovers

Market Tracker trend report—Trends in UK public M&A deals in 2017

Market Tracker’s latest trend report, Trends in UK public M&A deals in 2017, provides in-depth analysis of the 90 firm and possible offer announcements made for companies subject to the Takeover Code in 2017.  It includes insight into public M&A trends and what we might expect to see in 2018 and beyond.

Among other things, the report considers:

  • transaction structure
  • deal value and volume
  • public-to-private transactions
  • forms of consideration
  • bid financing
  • UK and foreign bidder activity
  • possible offers (including formal sale processes)
  • offer-related arrangements and non-director shareholder irrevocable undertakings, and
  • regulatory and political issues (including enforcement action by the Takeover Panel and reforms to takeover rules)

The report contains expert commentary from Selina Sagayam, Head of UK Transactional Practice Development at Gibson Dunn, and Adam Cain, Senior Associate at Pinsent Masons LLP.

To access the report, see Market Tracker trend report—Trends in UK public M&A deals in 2017.

You can also access all our Market Tracker Trends Reports from our Trend Reports subtopic in our Market Tracker topic area (see Trend Reports—overview) and from our blog.

Equity capital markets

IOSCO issues guidance to address conflicts of interest in the equity capital raising process

The board of the International Organization of Securities Commissions (IOSCO) has proposed guidance to address conflicts of interest and associated misconduct risks that may arise during the equity capital raising process. The deadline for comments on the consultation paper on equity capital finance is 4 April 2018.

IOSCO has issued a consultation report setting out the key stages of the equity raising process where the role of intermediaries might give rise to conflicts of interest.

The guidance comprises eight measures that are grouped according to the various stages in the capital raising process. Each group of measures addresses the following specific conflicts of interest: guidance to address conflicts of interest and pressure on analysts during the formative, pre-offering phase of a capital raising, guidance to address conflicts of interest during the allocation of securities, guidance to address conflicts of interest in the pricing of securities offerings and guidance to address conflicts of interest and conduct risks stemming from personal transactions by staff employed within firms managing a securities offering.

See news story, LNB News 22/02/2018 140.

Company disclosures, records and registers

Companies (Disclosure of Address) (Amendment) Regulations 2018

SI 2018/Draft: Restrictions on making information about individuals’ residential addresses unavailable to the public by the Registrar of Companies are removed.

The Companies (Disclosure of Address) Regulations 2009 (SI 2009/214) (the 2009 Regulations) are to be amended by The Companies (Disclosure of Address) (Amendment) Regulations 2018. The amended regulation 9 of the 2009 Regulations will provide that an individual whose usual residential address is on the register in accordance with the listed provisions (including as a director, company secretary or registrable person with significant control), can simply apply to the registrar under section 1088 of the Companies Act 2006 (CA 2006) to make that address unavailable for public inspection on the companies register, without having to demonstrate (as previously) that they have met any of the specified criteria. The amendments also remove the restriction preventing individuals from applying under CA 2006, s 1088where a usual residential address was placed on the register before 1 January 2003, but require certain details to be provided with such an application.

Regulation 13 (as amended) will provide for the registrar to make residential address information unavailable for public inspection pursuant to applications made under regulation 9. Where there remains a requirement for an applicant’s current address to remain on the register, the new rules provide that the usual residential address will be replaced with a service address. Where there is no longer any such requirement, the amendments provide that the registrar will make the address unavailable for public inspection by way of partial suppression.

Consequential amendments will be made to the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 and the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 in order to effect the new provisions.

For further information, see LNB News 26/02/2018 143 (and also LNB News 22/02/2018 169).

Additional Corporate updates this week

BoE paper on pension deficits and expenditure decisions of UK firms

A Bank of England (BoE) staff working paper has examined the reasons behind the large deficits which have opened up on defined benefit pension schemes in the UK since 2007, along with lower investment expenditure. The paper investigates the effects of deficits and deficit recovery plans on UK companies’ dividends, investment, wages and cash holdings.

The paper’s authors use privileged access to a unique new data set from the Pensions Regulator to consider whether UK firms have responded to deficits and having to make recovery contributions by cutting investment, dividend payout, or wages, and whether they held more cash in anticipation of having to make higher future recovery contributions.

The paper explores the relationship between growing deficits and the expenditure decisions of firms, then evaluates the macroeconomic consequences of these decisions.

For further information, see LNB News 26/02/2018 146.

Contract (Third Party Rights) (Scotland) Act 2017 enters into force

The Contract (Third Party Rights) (Scotland) Act 2017 (C(TPR)(S)A 2017) has come into force. From 26 February 2018, C(TPR)(S)A 2017 provides for the enforcement of contractual terms by third parties. It reforms and replaces the Scottish common law rule of jus quaesitum tertio, and applies to contracts entered into on or after 26 February 2018.

See LNB News 26/02/2018 152.

Additional news—daily and weekly news alerts

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New and updated content

New and updated content

We have updated the following practice note in our Private M&A (share purchase) topic area:

  1. Accounting issues on mergers and acquisitions—business combinations under IFRS and new UK GAAP (FRS 102)

Coming up

We intend to publish the following updated precedent in our Equity capital markets topic area:

  1. Memorandum on the responsibilities, duties and liabilities of a director of a premium listed company

Dates for your diary

Date Subjects covered
9 March 2018 ESMA consults on Prospectus Regulation RTS
The European Securities and Markets Authority (ESMA) has opened a consultation on draft regulatory technical standards (RTS) under the new Prospectus Regulation (Regulation (EU) 2017/1129). Feedback is sought by 9 March 2018.
For further information, see LNB News 15/12/2017 74.
March 2018 The government intends to lay before Parliament draft secondary legislation implementing some of its proposed corporate governance reforms before March 2018.
For further information, see Corporate governance reforms aim to enhance public trust in business, LNB News 29/08/2017 122, and Corporate governance reforms to force companies to reveal pay gap, LNB News 29/08/2017 118.
April 2018 LIBOR: The LIBOR benchmark in the UK will be replaced by a reformed version of SONIA. SONIA is anticipated to move to a new basis by April 2018.
The Sterling Overnight Index Average (SONIA) reflects bank and building societies’ overnight funding rates in the sterling unsecured market. The Bank of England announced its plans to reform the SONIA benchmark in July 2015 and is currently in the process of this reform. The Bank consulted on its high level proposals for SONIA reform, publishing its response to consultation feedback in November 2015. Further consultations were issued in October 2016 and February 2017, seeking views on the detailed proposals for the reform of SONIA.
In March 2017 the Bank provided a summary of feedback from the consultations as well as setting out the specification of reformed SONIA which will be implemented in March or April 2018.
At a roundtable on sterling risk-free reference rates in London on 6 July 2017, the need for a transition away from sterling LIBOR towards SONIA was outlined. The reasoning was to build a safer financial system and to better match the risks that firms are hedging.
Bank of England executive director discusses the transition to SONIA, LNB News 17/07/2017 134.
FMLC comments on SONIA as risk-free reference, LNB News 12/10/2017 60.
FSB progress report on interest rate benchmark reforms, LNB News 10/10/2017 79.

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