Corporate weekly highlights—28 February 2019

Corporate weekly highlights—28 February 2019

This week’s edition of Corporate highlights includes the publication of our Market Tracker trend report on trends in UK public M&A deals in 2018 and the latest updates on Brexit.

In this issue:

Public company takeovers

Market Tracker trend report—Trends in UK Public M&A deals in 2018

Corporate analysis: What are the current trends in the UK public mergers and acquisitions (M&A) market? This Market Tracker trend report includes in-depth analysis of the 42 firm offers and 49 possible offers announced in 2018 and provides insight into what to expect to see in 2019 and beyond.

Visit our Corporate law blog where you can download this and other trend reports.

The report includes expert commentary from:

Simon Wood, Addleshaw Goddard

Benjamin Lee, Bryan Cave Leighton Paisner

Alison Smith, Freshfields Bruckhaus Deringer

Selina Sagayam, Gibson Dunn

Rob Hutchings and Adam Cain, Pinsent Masons

Gillian Fairfield, Slaughter and May

Jeremy Kutner, Sullivan & Cromwell

Patrick Sarch, Tom Matthews, Allan Taylor, Phillip Broke, Guy Potel and Dominic Ross, White & Case

See News Analysis: Market Tracker trend report—trends in UK public M&A deals in 2018.

Brexit

Companies, Limited Liability Partnerships and Partnerships (Amendment etc) (EU Exit) Regulations 2019

SI 2019/348: These regulations (which were made on 19 February 2019) are made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. This enactment amends primary and subordinate legislation and revoke subordinate legislation and retained direct EU legislation in the field of company law in order to address deficiencies in retained EU law which arise from the withdrawal of the UK from the EU. This enactment also ensures that the UK’s company law framework will be able to function effectively, providing clarity and a smooth transition for business on and after exit day. It comes into force on exit day. (Updated from draft on 26 February 2019.)

For further information, see: LNB News 15/01/2019 76.

Alternative Investment Fund Managers (Amendment etc) (EU Exit) Regulations 2019

SI 2019/328: These regulations (which were made on 19 February 2019) are made in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This enactment amends UK subordinate legislation and EU delegated legislation and revokes EU delegated legislation in the field of financial services, relating to the regulation of alternative investment fund managers (AIFMs), in order to address deficiencies in retained EU law arising from the withdrawal of the UK from the EU. This is to ensure the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day. (Updated from draft on 21 February 2019.)

For further information, see: LNB News 30/11/2018 107.

Financial Services (Miscellaneous) (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: These draft regulations replaces the previous draft SI published on 21 February 2019. This draft enactment is laid in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This enactment addresses deficiencies in UK domestic law and retained EU law arising from the UK’s withdrawal from the EU, in line with the approach taken in other financial services EU exit instruments under the 2018 Act and revokes a number of pieces of retained EU law and UK domestic law. This draft enactment was re-laid with correction on the substituted date in the Credit Institutions and Insurance Undertakings Reorganisation and Winding Up (Amendment) (EU Exit) Regulations 2019, SI 2019/38. Regulations 1 and 13–24 come into force immediately before exit day. The remaining provisions come into force on exit day.

For further information, see: LNB News 27/02/2019 29.

Venture Capital Funds (Amendment) (EU Exit) Regulations 2019

SI 2019/333: These regulations (which were made on 20 February 2019) are laid in exercise of legislative powers under EU(W)A 2018 in preparation for Brexit. This enactment is being laid in order to address the deficiencies in retained EU law in relation to European Venture Capital Funds, arising from the withdrawal of the UK from the EU, ensuring the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day. (Updated from draft 21 February 2019.)

For further information, see: LNB News 14/11/2018 137.

FCA says market makers and issuers should prepare for no deal Brexit

The Financial Conduct Authority (FCA) has published Primary Bulletin No 21 (PMB 21), which advises market makers and issuers of new regulatory obligations that they will need to implement the Short Selling Regulation (SSR) and Market Abuse Regulation (MAR), should a ‘no deal’ Brexit occur. PMB 21 highlights that such advice is particularly important for firms using the market maker exemption under the SSR, since they may need to take action prior to the 29 March 2019 (exit day).

For further information, see: LNB News 22/02/2019 81.

Letters to the sectors on accounting and audit in a no deal Brexit published

The government and the Financial Reporting Council have published letters to the accounting and audit sectors setting out the implications for them if the UK leaves the EU without a deal in place. The two letters explain (among other things) that, while the UK’s corporate reporting regime will remain largely unchanged after the UK exits the EU, there are some changes that impact a small number of companies.

For further information, see: LNB News 22/02/2019 79.

Brexit SI Bulletin—Cabinet Secretary outlines plan to defer commencement of Brexit SIs in the event of a deal

In correspondence recently published by the Lords Constitution Committee, the Cabinet Secretary David Lidington has outlined the government's approach for Brexit SIs in the event that the UK exits the EU with a deal and transitional arrangements in place. He states that the planned EU (Withdrawal Agreement) Bill will need to defer most SIs so that they come into force at the end of the implementation period.

For further information, see: LNB News 27/02/2019 95.

Retained EU law—a practical guide

Public Law analysis: Retained EU law is a legal term introduced into UK law under EU(W)A 2018. It captures EU-derived rights and legislation the government intends to retain and preserve in UK law for legal continuity after Brexit. There is no specific list of retained EU law for lawyers to refer to. It is a matter of statutory interpretation. A must-read for lawyers looking to understand this new legal concept, in this analysis Kieran Laird, director and head of constitutional affairs at Gowling WLG, examines its meaning, scope and status, and provides essential tips for navigating and interpreting retained EU law.

See News Analysis: Retained EU law―a practical guide.

Re UBS Ltd [2019]

In response to Brexit, the applicants, UBS Ltd and UBS Europe SE, purposed to transfer some of UBS Ltd's business to UBS SE under section 106 of the Financial Services and Markets Act 2000. The Commercial Court, in allowing the application, considered, among other things, that the design of the scheme was one which struck an appropriate balance between the desirability of certainty to clients and business, on the one hand, and to the exigencies of transferring to a different jurisdiction, on the other.

Re UBS Ltd [2019] All ER (D) 133 (Feb)

AGMs; Corporate governance

Investment Association to target companies with poor diversity and unfair pension perks at 2019 AGMs

The Investment Association has announced that in the 2019 AGM season it will focus on companies who are behind on diversity or pay pension contributions to executive directors at rates above the majority of the workforce. The IA’s Institutional Voting Information Service (IVIS), which provides corporate governance research to shareholders to aid their voting decisions, will ‘red-top’ companies that have only one, or no, women on their board as well as companies who pay newly appointed directors pension contributions that are not in line with the majority of their employees. A red top is the highest level of warning that the IVIS issues.

For further information, see: LNB News 25/02/2019 25.

Directors

Challenging lawful dividend payment as a transaction defrauding creditors and for breach of directors’ duties (BTI 2014 LLC v Sequana SA; BAT Industries plc v Sequana SA

Restructuring & Insolvency analysis: Ciaran Keller, barrister at Essex Court Chambers, discusses the practical implications of the judgment in BTI 2014 LLC v Sequana SA; BAT Industries plc v Sequana SA[2019] All ER (D) 36 (Feb), which clarifies, with respect to a lawful dividend payment, when remedial relief under section 423 of the Insolvency Act 1986 may be granted and when directors’ duties to have regard to the interests of creditors (the creditors’ interests duty) may apply.

See News Analysis: Challenging lawful dividend payment as a transaction defrauding creditors and for breach of directors’ duties (BTI 2014 LLC v Sequana SA and others; BAT Industries plc v Sequana SA).

Members

Re Westshield Ltd Waldron v Waldron

In this case concerning unfair prejudice to members’ interests, the petitioners and the first respondent were siblings and all shareholders in the second respondent company. Although there had been unfairly prejudicial conduct on the part of the first respondent to the interests of the petitioners, the petitioners' longstanding acquiescence to that conduct precluded relief. Accordingly, the Chancery Division dismissed the petitioners' petition seeking an order for the purchase of the petitioners' shares by the first respondent.

Re Westshield Ltd Waldron v Waldron [2019] All ER (D) 108 (Feb)

Financial services regulation for corporate lawyers

Capital Markets Union: EU Council agrees to position on easier access to financial markets for SMEs

On 27 February 2019, EU ambassadors endorsed the Council's position on a proposal to give easier access to small and medium enterprises (SMEs) trying to list and issue securities on financial markets, while safeguarding investor protection and market integrity. The proposal includes amendments to the market abuse and prospectus regimes for SME growth market issuers.

For further information, see: LNB News 27/02/2019 72.

Additional Corporate updates this week

First FCA decision under competition powers—Three asset managers in breach of competition law, fining two

On 21 February 2019, the FCA announced it has found three asset management firms breached competition law by sharing sensitive information in relation to prices for initial public offerings (IPOs). This is the FCA’s first formal decision under its competition enforcement powers. The FCA fined Hargreave Hale Ltd (Hargreave Hale) £306,300 and River & Mercantile Asset Management LLP (River & Mercantile) £108,600. Newton Investment Management Limited was given immunity under the competition leniency programme and was therefore not fined.

For further information, see: LNB News 21/02/2019 40.

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 Notes—Brexit

We have published the following new Practice Notes concerning the impact of Brexit:

  1. Brexit—UK listing and prospectus regime

  2. Brexit—accounts and reports

Dates for your diary

DateDevelopment
27 March 2019Deadline for comments on CP 19/7: Consultation on proposals to improve shareholder engagement.
On 30 January 2019, the FCA issued CP 19/7 which proposed regulatory measures to implement parts of the revised Directive 2017/828, Shareholder Rights Directive (SRD II). The SRD II aims to promote effective stewardship and long-term investment decision-making primarily through better transparency of engagement policies and investment strategies across the institutional investment community. The proposed measures implement the provisions of SRD II for FCA-regulated life insurers and asset managers, and for issuers of shares in respect of related party transactions.
LNB News 30/01/2019 105.
28 March 2019Deadline for comments on CP 19/6: Changes to align the FCA Handbook with the EU Prospectus Regulation.
On 29 January 2019, the FCA published CP 19/6. The majority of the changes proposed involve reproducing text from the Prospectus Regulation directly into the new sourcebook. The FCA assumes that an implementation period will be agreed on the UK leaving the EU and that EU law will continue to apply in the UK until the end of the implementation period.
LNB News 29/01/2019 71.
29 March 2019At 11 pm on 29 March 2019 UK time (which will be 00.00 am CET on 30 March 2019), the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) shall cease to apply to the UK, along with all other EU primary and secondary law and the UK's withdrawal from the EU (Brexit) will be achieved.
On 29 March 2017, the UK Prime Minister gave formal notification of the UK's intention to withdraw from the EU, commencing the withdrawal process under Article 50 TEU. Article 50 TEU prescribes a two-year period for the UK and the EU to negotiate the terms of Brexit, which may be extended by agreement.
Brexit: UK Article 50 TEU notification starts the clock—what happens now?
29 March 2019Deadline for comments on the FRC’s proposed revision to the UK Stewardship Code.
In January 2019, the FRC announced intention to overhaul the UK Stewardship Code (the Code). On 30 January 2019, the FRC issued a consultation paper setting out its proposed new Code along with a summary of the changes from the existing Code.
LNB News 30/01/2019 105.

Trackers

To track key legislative and regulatory developments, see our Trackers:

Brexit legislation tracker

Brexit timeline

Markets in Financial Instruments Directive II (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) timeline

Market Abuse Regulation timeline

Prospectus Regulation tracker

Transparency Directive tracker

Listing Rules tracker

Disclosure Guidance and Transparency Rules Sourcebook tracker

Prospectus Rules tracker

Useful information

To view analysis of the latest deals in the market and the underlying transaction documents, use our Market Tracker deal analysis tool.

To read about the latest corporate announcements, see our Market Tracker weekly round-up—22 February 2019.

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