The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:
The role of credit rating agents (CRAs) is to provide an objective and analytical opinion on the risk of payment defaults by looking at various factors that help investors decide whether to invest in particular securities. Investors in capital markets are very sensitive to risk and some investors are prevented by their internal constitutional documents from investing in low grade securities. Generally the higher the investment risk, the greater the return (interest/coupon) the investor will seek.
Both (i) the company issuing the security instruments and (ii) the security instruments themselves can be rated, meaning that all of the following can be rated:
senior debt/syndicated loans
medium term notes (MTNs)
commercial paper (CP)
fixed income securities
residential mortgage backed securities (RMBS)
commercial mortgage backed securities (CMBS)
CRAs typically look at qualitative, quantitative and legal issues to decide on a credit rating, including:
current financial statements plus profitability
projected performance (including cashflow projections and cash flow adequacy)
strength of existing management, governance, risk tolerance, financial policy
market position plus peer group comparison
The CRAs then apply stress tests to the structures to assess the impact of various negative events or harsh trading conditions. From 1 January 2016, certain banks must share information on their small and medium-sized business (SME)
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Form of transfer of sharesThere are a number of circumstances in which shares in a company may be transferred, eg upon a sale of the shares, through the transmission of the shares by operation of law (eg upon the death or bankruptcy of a shareholder), by gift or upon the enforcement of a charge. For
Directors’ remunerationCompany directors are not, by virtue only of their office as director, automatically entitled under company law to remuneration for services as a director or to reimbursement of expenses incurred in rendering such services. Power to pay directors remuneration for their
Fraud by false representationFraud by false representationFraud by false representation applies to a broader range of conduct than the offences under the preceding legislation (the Theft Act 1968 (TA 1968)). No gain or loss need actually be made, and no deception need operate on the mind of the
Indemnity costs orders—principlesThis Practice Note considers orders for costs determined on an indemnity basis (indemnity costs orders). A court may order that costs are assessed on an indemnity basis so that any doubt as to the costs claimed are resolved in favour of the receiving party. Compare
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