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Chain principle meaning

What does Chain principle mean?
In takeover practice, the chain principle explains when an indirect acquisition of control can trigger a Rule 9 mandatory offer for a second company. Where a person, or persons acting in concert, acquire shares carrying over 50% of the voting rights in a company (the first company) which is itself interested—directly or through subsidiaries—in a controlling block of shares in another company (the second company), or in shares which, when aggregated with the acquirer’s existing interests, secure or consolidate control of the second company, the Takeover Panel may require a Rule 9 offer for the second company. The first company need not be subject to the Code; the second must be. A Rule 9 bid is not normally required unless either: (a) the second company’s interest is significant in relation to the first (commonly assessed by relative values of 50% or more); or (b) obtaining or consolidating control of the second company can reasonably be regarded as a significant purpose of acquiring control of the first. This principle is set out in Note 8 on Rule 9.1 of the City Code on Takeovers and Mergers and applied by the UK Takeover Panel. The Irish Takeover Rules adopt an equivalent approach; application across...
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CHECKLISTS
Freehold positive covenants: enforceability and protection mechanisms—indemnity chains, direct covenants with restrictions, estate rentcharges, rights of re-entry, benefit-and-burden, and drafting points—checklist (England and Wales)

What is a positive covenant? A covenant operates as a contractual promise. Common examples of positive covenants found in land transfers impose duties to: carry out repairs or upkeep (for example, access ways), or contribute towards repair and maintenance expenses incurred by another put up buildings or boundary fencing (for example, on a transfer of part) pay additional sums (i.e. overage) where, for instance, planning permission is obtained, or on a sale following development of the land What is the issue with positive covenants? At common law, it is firmly settled that the burden of a positive covenant affecting freehold land does not pass with the estate. Accordingly, if one party to a freehold transfer (Party B) gives a positive covenant in favour of the other (Party A), that obligation will not bind Party B's successors in title, despite section 79 of the Law of Property Act 1925...

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NEWS
Death of last surviving executor after probate: who continues the estate administration? Chain of representation, reserved powers, double grants and letters of administration with will annexed (England and Wales)

See Q&A: If a last surviving executor dies after probate has been granted, but there are executors who reserved power to apply for a double grant of probate, who will continue the administration of the estate? Under section 7(1) of the Administration of Estates Act 1925 (AEA 1925), the person who is executor to a sole, or to the final surviving, executor of a testator is treated as the testator’s executor. This principle is known as the chain of representation...

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NEWS
UK and EU environmental law update: COP30, net zero and energy, asbestos reforms, ESG and sustainable finance, nature recovery, waste and EPR—13 November 2025

In this issue: COP30 Air emissions and climate change Energy for environmental lawyers Hazardous substances and chemicals ESG and sustainability Nature, biodiversity and habitat conservation Waste Waste producer responsibility regimes Daily and weekly news alerts New and updated content COP30 Council of EU approves updated NDC ahead of COP30 The Council of the EU has endorsed a refreshed nationally determined contribution (NDC) on behalf of the EU and its Member States, to be lodged with the United Nations Framework Convention on Climate Change (UNFCCC) in advance of COP30 in Belém, Brazil. Spanning to 2035, this revision builds upon the EU’s 2020 filing and its 2023 revision. It restates the current aim of cutting net greenhouse gas emissions by 55% by 2030 relative to 1990. It further notes the Council’s backing for a 90% net cut by 2040 and sets out an indicative 2035 contribution of 66.25% to 72.5%, designed to keep the EU on...

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NEWS
EU DORA: contractual mandates, repapering and supply chain flow-downs for financial entities and ICT providers by 17 January 2025

The main impact of DORA DORA DORA is reshaping the financial services landscape, altering how organisations manage operational risk and keep critical operations going during disruption. The regulatory focus has shifted from protection to resilience — a broader idea that spans preventing disruption, mitigating incidents, addressing consequences and recovering from disruptive events. For financial entities, DORA introduces a structured set of requirements that will compel organisations to re‑evaluate: data, cyber and contractual governance risk management policies and processes technology estates and testing methods incident management framework technology and data contracts These organisations already operate under extensive regulation, but DORA’s fresh requirements will bring further scrutiny and operational adjustment, adding another layer of rigour and cost. DORA also has wide reach, applying to both intra‑group and external information and communication technology (ICT) service providers and creating a dual‑compliance requirement. The principle of proportionality, central to DORA, allows financial entities to adapt their compliance programmes according to the criticality and...

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PRACTICE NOTES
UK industrial and automotive battery producer obligations: take-back/collection, treatment, reporting, registration and enforcement under WBAR 2009 and BAPMR 2008, plus EPR policy direction and EU Batteries Regulation context

UK battery strategy In December 2023, the UK government set out its battery strategy, created by and delivered through the UK Battery Strategy Taskforce. Its core pillars are: Design Build Sustain The principal aim to 2030 is to establish a robust UK battery supply chain. Regulation is expected to evolve to incorporate extended producer responsibility (EPR) obligations, shifting the full cost of managing household waste to producers, in line with the ‘polluter pays principle’. Under EPR, producers are anticipated to: Achieve updated recycling targets Provide clear recyclability labelling Commitments by the UK government and the devolved administrations to implement EPR appeared in the 2018 Resource and Waste Strategy for England and the Welsh Government’s Beyond Recycling. Alongside outlining Defra’s future commitments and actions, the strategy set a long-term policy trajectory, reflected in the Environment Improvement Plan 2023 for England. For further detail, see Practice Note: Waste management plan and policies—England. Part 3 of the...

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PRACTICE NOTES
Connected persons, associates and control in pensions: Insolvency Act 1986 definitions and practical applications (moral hazard, employer-related investments, notifiable events, TUPE, DC governance, LLPs)

Use of terms ‘connected’ and ‘associate’ in pensions Although initially coined within the insolvency/bankruptcy regime set out in the Insolvency Act 1986 and underlying regulations, the notions of ‘association’ and ‘connection’—together with the allied idea of ‘control’—have, over time, been adopted and applied across various parts of the UK’s pensions legislation framework for practical purposes in appropriate cases. Examples include: Moral hazard powers — the terms are employed in the moral hazard provisions of the Pensions Act 2004, in practice to assess the degree of distance or proximity of entities from sponsoring employers of occupational pension schemes, and whether such entities might be susceptible to the Pensions Regulator’s moral hazard powers, for example the issue of financial support directions and contribution notices — for further information, see Practice Notes: Contribution notices and Financial support directions Employer-related investments — the terms are used in the employer-related investment framework in relation to the capacity of trustees of occupational pension schemes to enter into dealings with the schemes’...

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PRACTICE NOTES
Without prejudice privilege: admissibility, scope, exceptions, waiver, pre-action correspondence, mediation and Calderbank offers (England and Wales)

This Practice Note sets out the scope of the 'without prejudice rule' governing the admissibility of material generated by bona fide settlement discussions. It clarifies when spoken and written communications are protected by, or fall outside, this head of privilege. It considers if pre-action exchanges may attract 'without prejudice' status, the significance of explicitly marking correspondence 'without prejudice', and how the principle applies across a chain of documents. It outlines the recognised exceptions that can render 'without prejudice' material admissible, including circumstances where extracts are deployed to cherry-pick the narrative, illustrated by examples, together with the notion of waiving 'without prejudice' privilege. The treatment of 'without prejudice' communications in the context of mediations is addressed, as are Calderbank offers marked 'without prejudice save as to costs'. Without prejudice rule The policy is that communications between disputing parties containing admissions or statements made on a 'without prejudice' basis will not be received as evidence in civil proceedings, and is commonly described as the 'without prejudice rule'. It is not...

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Q&As
Legality of requiring bidders to use a named third‑party supplier

This Q&A focuses on public procurement under the Public Contracts Regulations 2015 (PCR 2015), SI 2015/102 As a general principle, the PCR 2015, SI 2015/102 affords bidders considerable latitude to shape bid partnerships and supply chain models to suit their approach. Under PCR 2015, SI 2015/102, reg 63(1), tenderers can draw upon the resources of other organisations to satisfy selection requirements covering economic and financial standing, along with technical and professional capability. A limited carve-out appears at PCR 2015, SI 2015/102, reg 63(7), which permits contracting authorities to stipulate that specified ‘critical tasks’ in a public services or public works contract must be carried out by the prime contractor, or by one from a consortium of primes. Put differently, suppliers are, in most cases, free to deploy their chosen subcontractors when delivering a public contract. That said, this is subject to any express exclusion within the tender documents that rules out the use of third parties for particular functions...

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