Legal Practice Notes

The European leveraged finance loans market is renowned for its inventiveness and its capacity to pivot rapidly, shaping products that suit prevailing economic circumstances. Within this landscape, unitranche facilities have cemented themselves as a mainstay of the leveraged loans mid‑market. Their momentum has stemmed partly from the wave of private debt funds that have entered since the last financial crisis, and partly from today’s restrictions on the levels of leverage that regulated banks can support on individual deals. This adaptability sits at the heart of the market’s appeal. Typically, a single lender provides a unitranche; for larger transactions, a compact club may do so, and such facilities are not structured for syndication. In recent years a clear pattern has emerged, with a growing cohort of debt funds both willing and equipped to deliver jumbo‑sized unitranche...

Background to, and application of, CASS 9 Before 1 December 2014, the bulk of client information and reporting obligations relating to client assets held by investment firms were set out in the Conduct of Business sourcebook ( COBS). A key exception covered disclosure and reporting requirements specific to prime brokerage, which were contained in CASS 9. In consultation paper CP13/5, Review of the client assets regime for investment business, the Financial Conduct Authority ( FCA) sought views on a major re-write of CASS, introducing a package that addressed: the frequency with which firms report to clients; the information to be provided to clients before investment services are undertaken; and the creation of a standalone disclosure document summarising key provisions within client agreements that may affect rights or protections under CASS These elements formed part of the proposed re-write of CASS......

Loan market and developments The corporate finance landscape in Germany has shifted markedly, with clear trends and challenges compared to earlier years: Interest rate environment and financing costs: In contrast to the era of zero rates once seen across Europe, borrowing costs remain relatively elevated, even though the European Central Bank has cut policy rates multiple times. Reflecting the wider macro backdrop and sector‑specific demand, financing margins climbed sharply in recent years but have now begun to ease. That said, in some segments—such as software, technology and business services—pricing has largely normalised again amid intense competition. Across the market as a whole, the macroeconomic setting has pushed up companies’ financing costs significantly when set against the near‑zero interest years that persisted until 2021. Despite some margin compression, the overall cost of debt remains materially higher than during that period....

What is biomass combined heat and power? A biomass combined heat and power ( CHP) system uses an engine to produce energy from biomass. In essence, CHP functions as a compact power plant that recovers heat, with very small distribution losses thanks to its closeness to the demand. As a result, it can deliver markedly higher generation efficiency, with inherent carbon reductions and cost savings. Total efficiencies of 80–90% are attainable, whereas conventional condensing power stations achieve around 40% in electricity output. Figure 1 shows a schematic of a biomass CHP system (source: WSP). Choosing biomass rather than natural gas—the fuel most commonly used in conventional CHP—elevates the output from simply sustainable to truly renewable energy. Key conditions for development When assessing the feasibility of biomass CHP, each technology option warrants careful review: Precisely specify systems to suit the ratio and scale of heat and power...

Loan market and developments Offer a succinct summary of the current position of the loan markets in your jurisdiction and any notable recent developments. Lending by Guernsey banks is generally confined to deals concerning local real estate or other Guernsey assets held by Guernsey businesses. In practice, Guernsey financing is chiefly provided by UK and other European banks to Guernsey vehicles that own both Guernsey and non- Guernsey situs assets, including UK property. Provide a short outline of any impending legal changes or other factors that may influence the loan markets or the answers below. No relevant changes are anticipated. Lending Must any consents or licences be obtained to lend in your jurisdiction or to enforce rights under a loan agreement, and if so, what is the procedure for securing such consent or licence? Are there any additional lending restrictions that foreign lenders should note?......

This Practice Note outlines the functions and obligations of the facility agent in a syndicated loan, identified in the Loan Market Association ( LMA) documentation simply as the ‘ Agent’, with reference to provisions contained in the LMA’s investment grade and leveraged facilities agreements. It also reviews the rights of the facility agent and the measures it may adopt to protect itself and exclude liability whilst carrying out its role. In addition, it considers the procedures for appointing a facility agent and the process for its resignation... What is a facility agent? A facility agent is a central party in a syndicated loan transaction. In essence, it represents the lenders under the facility agreement and functions as a ‘post box’ between the various participants. Its responsibilities are administrative, overseeing communication and the movement of funds between the lenders and the borrower. Given the...

Debt securities, including bonds, medium-term notes and commercial paper, are financial instruments that evidence indebtedness. For further information, see Practice Notes: Key features of the debt capital markets and Types of debt securities. This Practice Note reviews some of the forms that debt securities may take and sets out the meanings of, and distinctions between: a definitive security and a global security, and a global security in bearer form and a global security in registered form The emphasis of this Practice Note is on the principal features of global debt securities and the structures used for global notes. It should be read together with Practice Note: Form of debt securities—definitive securities, which explains the key features of definitive securities. What are the differences between global securities and definitive securities? In principle, debt securities can be issued in either definitive form or global form. In practice, all debt...

This Practice Note outlines the purpose and functions of sea carriage documents in relation to the delivery of cargo, with particular attention to bills of lading and sea waybills. It explains that a bill of lading may be issued as a charterers’ bill or an owner’s bill, and that such documents operate both as evidence of the contract of carriage and as security for finance. Sea carriage documents A sea carriage document is produced to obtain release of goods, either at the port of discharge or at the nominated place of delivery, depending on the form issued by the carrier to the shipper. That document will be either: a bill of lading a sea waybill For more detail on bills of lading and sea waybills, see the Practice Note: Bills of lading and sea waybills. Bill of lading A bill of lading may be: bearer bill of...

This Practice Note offers practical guidance on executing simple contracts and deeds by third-party individuals or bodies corporate (chiefly companies formed under the Companies Act 2006 ( CA 2006)) acting pursuant to a power of attorney, and outlines how such parties should sign in this context. It considers the following: who can grant a power of attorney, who can act as an attorney, the formalities for executing simple contracts or deeds under a power of attorney. It does not cover: the execution of powers of attorney themselves (see Precedent: Power of attorney for commercial transactions); the execution of documents by other authorised signatories of organisations (see Practice Note: Executing documents—deeds and simple contracts). We have created a comprehensive, interactive collection to help users identify and work through the concepts and common issues when executing documents. Each section or phase contains practical guidance, precedent clauses and Q& As relevant to that section, helping users work...

When transferring an interest in land (whether freehold or leasehold) On a transfer of a land interest, and unless the contract states otherwise: fixtures are treated as part of the land and pass with the property; and fittings (also called chattels) are not part of the land and are excluded. It is not always straightforward to decide if a given item is a fixture or a fitting. That uncertainty can trigger disagreements over whether the item is included in the sale. It can also create difficulties when splitting the purchase price between the property and any chattels comprised in the sale for stamp duty land tax ( SDLT)/land transaction tax ( LTT) purposes (see: Tax—fixtures and fittings below). Under a lease, as between landlord and tenant, the drafting may mean an item is classed as a landlord’s fixture, a tenant’s fixture, or a...

Introduction This Practice Note examines the policing and enforcement of the UK listing framework by the FCA. It outlines the FCA’s powers over an issuer for contraventions of the UK Listing Rules ( UKLR), the Prospectus Rules: Admission to Trading on a Regulated Market ( PRM), the transparency regime set out in the Disclosure Guidance and Transparency Rules ( DTR), and the obligations to disclose under Articles 17, 18 and 19 of the UK Market Abuse Regulation (disclosure requirements). The role of the FCA The Financial Conduct Authority ( FCA) supervises financial services firms and financial markets in the UK. Its remit, aims, powers and duties are defined in the Financial Services and Markets Act 2000 ( FSMA 2000). FSMA 2000, s 1B provides that the FCA’s overarching strategic objective is to ensure that financial markets function well. The FCA also serves as the UK’s...

This Practice Note concentrates on the admission requirements for equity shares within the commercial companies category of the Financial Conduct Authority’s ( FCA) Official List. It sets out the core listing standards that apply to all securities, alongside the additional obligations for the commercial companies category, as provided for in the UK Listing Rules ( UKLR). Structure of the UK listing regime The UK listing regime comprises 11 distinct categories, each designed for different issuer types and the securities seeking admission. An issuer must adhere to the specific provisions of the UK Listing Rules ( UKLR) that correspond to the category under which it is seeking a listing......

Certain companies are barred from giving financial assistance, whether directly or indirectly, to fund the purchase of their own shares or those of their holding company. These restrictions sit in Chapter 2 of section 677 of the Companies Act 2006 ( CA 2006). This Practice Note sets out: the circumstances in which the bans on financial assistance arise, and additional legal rules that must be assessed where assistance is offered to a buyer of shares in the company providing it The regime on financial assistance under the Companies Act 1985 ( CA 1985) differed in material respects from the position now in force. This Practice Note addresses the current regime. For details of the pre‑ CA 2006 position, see Practice Note: —fundamentals— How does the CA 2006 prohibition on the giving of financial assistance differ from that which existed under CA...

Security and quasi-security are expressions commonly encountered in the context of financing arrangements and transactions. In this Practice Note, security denotes security interests (eg mortgages and charges) that are granted as collateral in support of a finance transaction. Those security interests should not be mistaken for a 'security' or 'securities' as used within the capital markets, whether equity or debt. Within capital markets transactions, the term 'securities' denotes documents or instruments which evidence either a debt obligation or an investment. Securities in the capital markets sense are outside the scope of this Practice Note. For information on the debt capital markets, see Practice Note: Key features of the debt capital markets. Under English law, four categories of security are recognised, namely mortgages, charges, pledges and liens. A much wider set of arrangements can fall under the umbrella of...

Collateral warranties rank among the key documents in real estate development finance facilities. Issued by the principal members of the project team to both lender and borrower, they forge a contractual connection that would otherwise be absent and often grant significant step-in rights to the relevant party. This Practice Note covers: what collateral warranties are how collateral warranties are used in real estate development facilities the rights conferred by collateral warranties What is a collateral warranty? A collateral warranty is a contract that is collateral to, or runs alongside, an underlying agreement. In the context of real estate development facilities, these warranties typically sit next to the key development documents (see Practice Note: Real estate development finance—introduction to the development documentation). The effect is to create a direct contractual link where one would not usually exist, enabling a third party to have a...

ARCHIVED: This Practice Note was archived and is not maintained. Enforcement is a key area governed by the intercreditor agreement. This note covers: the circumstances in which mezzanine lenders are typically able or unable to commence enforcement action matters concerning any mezzanine option to purchase provision, and when each class of creditor generally holds control over the enforcement strategy The note also flags the issues most frequently negotiated in each of these areas. For an overview of the various provisions included in intercreditor agreements, see Practice Note: Introductory guide to Intercreditor Agreements, and for an introduction focused on senior/mezzanine intercreditor arrangements, see Practice Note: Senior/mezzanine creditor intercreditor issues—introduction [ Archived]. For a simple-form intercreditor agreement with accompanying drafting notes, see Precedent: Intercreditor deed—single company borrower—single secured senior lender—single secured junior lender—single unsecured subordinated lender. Further detail on payment controls and...

Instructing and managing local counsel On financing transactions, it is typical for group entities in another jurisdiction, or owning assets situated abroad, to provide security in support of the funding arrangements. In these circumstances, local counsel will usually be retained to advise on the applicable local legal requirements. See Practice Note: Instructing and managing local counsel for guidance on appointing local counsel. Security documents (other than those governed by English law) are commonly prepared by local counsel for the lenders and then reviewed by the lenders’ lead counsel before lawyers for the borrower group consider them. Guarantees from a group company based in another jurisdiction are often incorporated within the facilities agreement itself, though they can also be delivered as stand-alone documents. In both scenarios, local lawyers should be instructed to examine the drafting and advise on any legal issues arising......

It is usual for parties to a facility agreement to seek changes to its provisions, often more than once, over the term of the facilities. They might, for instance, look to push back the repayment date or raise the amounts available so the borrower can finance another scheme or acquisition. The lender may take the opportunity of an increase to the facilities to implement other amendments to the papers, such as a higher interest rate or further undertakings. These adjustments can be recorded by an amendment letter, an amendment and restatement agreement, or at times by issuing a fresh facility letter or agreement intended to supersede the earlier version. For guidance on the process of amending a facility agreement, see Practice Note: Amending a facility agreement. Where the lender is to benefit from guarantees or third party security (see Practice Note: Third party...

Guarantees Guarantees are contractual arrangements under which one party (the guarantor) undertakes responsibility for the liabilities of another (the principal) to a further party (the guaranteed party). Guarantors hold rights in equity against the principal, the guaranteed party and any co‑guarantors. Those rights may disadvantage a lender’s position in practice, and it is standard practice for lenders to require their postponement within the guarantee terms. This Practice Note sets out the principal rights of guarantors that arise as a matter of law and how they are commonly managed in guarantee documentation. In most typical finance transactions: the guaranteed party will be the lender or the security agent, and the principal will be: the borrower, or another company within the borrower’s group—for example, in a group borrowing structure or a...

What is a derivative? A derivative is a financial contract whose value is linked to an underlying asset, index, rate, or other reference measure. Settlement may involve the physical delivery of the underlying from one party to another, or a cash amount computed by reference to the relevant asset, index, rate, or benchmark. Derivatives can be used either to curb exposure to a chosen variable or to obtain exposure to that variable. Put simply, a derivative has its own legal form and price, yet that price is separate from, and derived from, the value of the applicable underlying asset, index, rate, or reference point. Participants commonly include: Banks and investment firms Corporates Governments and local authorities Supranational authorities High net worth individuals and retail investors These instruments are mainly traded in wholesale markets, although certain derivative products are also entered into by high net...