Corporate weekly highlights—17 May 2018

This week’s edition of Corporate highlights includes details of our Market Tracker Trend Report on Trends in UK Equity Capital Markets and news on the amendment of merger thresholds for certain transactions impacting national security and the adoption of MLD5 by the Council of the EU. We have also published a new Practice Note in our Accounts and reports topic area.

Equity capital markets

Market Tracker Trend Report—Trends in UK Equity Capital Markets

The Market Tracker Trend Report—Trends in UK Equity Capital Markets report examines the current dynamics of ECM activity in respect of IPOs and secondary fundraisings on both the Main Market and AIM. The report reviews data from 2015 through to 2017 and market activity in the first quarter of 2018. It also includes a review of Q1 2018 and a forecast for the rest of the year.

Highlights of the report include:

  1. analysis and comparison of ECM activity on the Main Market and AIM
  2. a spotlight on the headline IPO and secondary offering transactions over the past three years
  3. a three-year comparative overview of transaction volume, gross proceeds and market capitalisation in both IPOs and secondary offers
  4. consideration of geographical trends in new listings and a comparison of country of incorporation and country of operation
  5. an industry sector review, with a comparative three-year breakdown of industry sector activity in respect of secondary fundraising deal volume and funds raised
  6. a review of secondary fundraisings by type, and
  7. a forecast and update on key developments to look out for in 2018

The report includes expert commentary from Jonathan Beastall, Senior Adviser—Corporate Finance at Pinsent Masons LLP; Rosalie Chadwick, Head of Corporate Finance at Pinsent Masons LLP; Clive Hopewell, Partner in the International Corporate Group at Bird & Bird LLP; Alexander Keepin, Corporate Finance Partner and Head of Mining at Bryan Cave Leighton Paisner LLP; Julian Stanier, Corporate Finance Partner at Pinsent Masons LLP and Marcus Stuttard, Head of AIM & UK Primary Markets at the London Stock Exchange Group.

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

Private M&A; Public company takeovers

UK mergers: Merger thresholds amended for certain transactions impacting national security

Two statutory instruments have been made that will change the UK merger control regime’s notification thresholds for certain sectors impacting national security, through amendments to the Enterprise Act 2002(EA 2002). Those sectors are:

  1. military or dual-use goods which are subject to export control
  2. quantum technology, and
  3. computing processing units

For these sectors only, the share of supply threshold will be amended so that it can be met solely by the activities of the target and the turnover threshold will be reduced to £1m. The revised thresholds will enter into force on 11 June 2018 when The Enterprise Act (Turnover Test) (Amendment) Order 2018, SI 2018/593 and The Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018, SI 2018/578 will amend EA 2002, s 23 and insert a new EA 2002, s 23A.

The purpose of these changes is to enable the Secretary of State to intervene in smaller mergers in these sectors which might give rise to national security implications. This is the first change to the notification thresholds in the UK merger regime since the EA 2002 came into force. It remains to be seen whether further changes may be proposed to deal with any issues raised by the possibility of Brexit and the expected significant increase in merger control work for the Competition and Markets Authority that this will entail.

For further information, see LNB News 15/05/2018 69.

Financial services regulation for corporate lawyers; Company disclosures, records and registers

Council of the EU adopts MLD5

The Council of the EU has announced that it has formally adopted the proposed Fifth Money Laundering Directive (MLD5), amending the Fourth Anti—Money Laundering Directive (Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and Directives 2009/138/EC and 2013/36/EU).

The text of MLD5 was adopted by the European Parliament on 19 April 2018 and reflects the December 2017 agreement between the Council and the European Parliament.

The final text will be published in the Official Journal of the EU. Member states will then have 18 months to transpose the new rules into national law.

MLD5 is intended to increase transparency and respond to the latest technological developments.

For further information, see LNB News 14/05/2018 71.

Members

Joint company law working group responds to European Commission consultation on minimum requirements in Shareholder Rights Directive

On 12 April 2018, the European Commission launched a public consultation on the minimum requirements it is proposing in relation to shareholder identification, the transmission of information and the facilitation of the exercise of shareholder rights under the Shareholder Rights Directive (Directive 2007/36/EC) (SRD), as amended by Directive (EU) 2017/828Directive (EU) 2017/828 amended the SRD with regard to the encouragement of long-term shareholder engagement and gave the Commission the power to adopt implementing acts that specify these minimum requirements by 10 September 2018.

The consultation from the Commission included a draft regulation and annex, which would implement the minimum requirements under the SRD with direct effect in every EU country.

A joint working group (the Joint Working Group) of the Company Law Committee of the City of London Law Society and the Law Society Company Law Committee has published its response to the consultation.

For further information, see LNB News 14/05/2018 61.

AGMs; Audit

Shareholders reject resolution to appoint auditor

In a rare move, over 75% of shareholders voted against the reappointment of Deloitte LLP as auditors at the annual general meeting of SIG plc (SIG). The development follows an announcement by SIG in February that the company had identified historical overstatements of profit in previous financial years. SIG has announced that it will be undertaking an audit tender for the role of external auditor as soon as practicable and will be consulting with shareholders on this process over the coming weeks.

For further information, see LNB News 14/05/2018 41.

Public company takeovers

Commons briefing paper on contested mergers and takeovers

The House of Commons has published a briefing paper on the law on mergers and takeovers and describes the role and powers of bodies that are involved in the process. The paper also covers recent regulatory developments (including the national security and infrastructure investment review) and transactions of interest (including Softbank’s acquisition of ARM Holdings and Melrose’s hostile takeover of GKN).

For further information, see LNB News 11/05/2018 61.

Additional news—daily and weekly news alerts

This document contains the highlights from the past week’s news. To receive all our news stories, whether on a daily or a weekly basis, amend your personal settings within your ‘News’ tab on the homepage by clicking on either ‘Email’ or ‘RSS’ (depending on how you prefer to receive them) on the right hand side of the blue banner.

New and updated content

New Practice Note

We have published a Practice Note in our Accounts and reports topic (produced in partnership with Tessa Park of Kingston Smith LLP): Introduction to company accounts for lawyers.

Coming up

We are preparing a substantial review and update of a Precedent in our Equity capital markets topic:Memorandum on continuing obligations of a director of an AIM company.

Dates for your diary

Date Development
25 May 2018 Data protection: the General Data Protection Regulation (EU) 2016/679 (GDPR) shall be directly applicable and fully enforceable in all Member States.
On 15 December 2015, the EU institutions reached agreement on the GDPR, which will replace the Data Protection Directive (Directive 95/46/EC), upon which the Data Protection Act 1998 is based. The GDPR was published in the Official Journal of the European Union on 4 May 2016. It came into force on 24 May 2016.
The General Data Protection Regulation (GDPR)
The GDPR—preparing for implementation
25 May 2018 AIM: deadline for responses to consultation on proposed changes to the AIM Rules for Nominated Advisers.
Following on from issues raised in its AIM Rules Review Discussion Paper published in July 2017, the London Stock Exchange (LSE) issued AIM Notice 51 on 26 April 2018 under which it is proposing changes to the AIM Rules for Nominated Advisers. The proposed changes cover eligibility and continued eligibility of nominated adviser firms and clarity in relation to the LSE’s supervisory powers.
AIM Notice 51
Mark-up of Nomad Rules
1 June 2018 Financial Reporting Council: updated sanctions guidance for auditors, accountants and actuaries takes effect.
The updated guidance has been produced in response to the October 2017 report of an independent panel, led by Sir Christopher Clarke, which reviewed the nature and appropriateness of sanctions for auditors, accountants and actuaries.
See LNB News 09/04/2018 6.

Relevant Articles
Area of Interest