Legal Practice Notes

STOP PRESS: A major overhaul of the UK listings regime took effect on 29 July 2024, scrapping both the premium and the standard listing segments and replacing them with a single category for equity shares in commercial companies. That commercial companies category is heavily disclosure-led and sits alongside other listing categories, including the shell companies category, the secondary listing category and the closed ended investment fund category, among others. A new UK Listing Rules sourcebook came into force to deliver these changes, and the previous Listing Rules sourcebook was revoked. For further information and detail, see Practice Note: Reform of the UK listing regime—fundamentals. This Practice Note reflects the regime as it existed prior to 29 July 2024. A limited company may buy back shares in itself, provided conditions set out in the Companies Act 2006 ( CA 2006) are satisfied, where...

Corporate The architecture of the people with significant control ( PSC) regime, first in force on 6 April 2016, appears in Part 21A of the Companies Act 2006 ( CA 2006) and has been updated by sections 81–83 and Schedule 3 of the Small Business, Enterprise and Employment Act 2015, together with sections 44, 51 and Schedule 2 of the Economic Crime and Transparency Act 2023 ( ECCTA 2023). It aims to tackle opacity around corporate ownership; historically, in many cases, registers recorded only the legal holder of an entity’s shares in question, and not necessarily the beneficial owner ultimately behind them either. The PSC register supplies clearer, current details about who ultimately owns and directs companies and other bodies, and this data is freely available to the public via the central register at Companies House. This Practice Note reviews the rules and...

A well-maintained register of people with significant control ( PSC) should make publicly available who ultimately owns and controls companies and other entities. The PSC framework applies to UK-incorporated companies limited by shares or by guarantee (including unlimited companies, unregistered companies, community interest companies and dormant companies), limited liability partnerships ( LLPs), and eligible Scottish partnerships, namely Scottish limited partnerships and Scottish qualifying general partnerships ( ESPs). For clarity, this guide chiefly refers to companies. For information on the regime’s scope, including how a company might most effectively obtain relevant beneficial ownership details, see Practice Note: PSC register—the people with significant control regime. Corporate transparency reform—changes to the PSC regime The Economic Crime and Corporate Transparency Act 2023 ( ECCTA 2023) received Royal Assent on 26 October 2023 and is being introduced in phases across multiple commencement dates. Many provisions will only commence once detailed secondary...

ARCHIVED: This Practice Note is archived and not being maintained at present or updated further. STOP PRESS: The UK’s prospectus framework, formerly grounded in the EU Prospectus Regulation, has been superseded by the Public Offers and Admission to Trading Regulations 2024 (the POATRs), with granular admission-to-trading requirements now set out in the Financial Conduct Authority ( FCA) admission rules. The FCA issued its final rules on 15 July 2025. Those final rules took legal effect on 19 January 2026. In October 2025, the FCA released Primary Market Bulletin 58 which, among other matters, provided guidance on both the timing and approval of prospectuses (and supplementary prospectuses) and confirmed the removal of Listing Particulars as an admission document under the new framework. For more on the principal features of the new POATRs framework relevant to the debt capital markets, see Practice Note: The UK...

ARCHIVED: This Practice Note is archived and no longer maintained. STOP PRESS: The UK’s prospectus regime, previously derived from the EU Prospectus Regulation, has been superseded by the Public Offers and Admission to Trading Regulations 2024 ( POATRs), with all detailed admission to trading requirements now contained in the Financial Conduct Authority ( FCA) admission rules. The FCA published its final rules on 15 July 2025, which took effect on 19 January 2026. In October 2025, the FCA issued Primary Market Bulletin 58 which, among other matters, offered guidance on the timetable and approval of prospectuses (and supplementary prospectuses) and confirmed the removal of Listing Particulars as an admission document under the new framework. For more on the key aspects of the POATRs relevant to debt capital markets, see Practice Note: The UK Prospectus...

This Practice Note provides an overview of the aims, character and breadth of the structured due diligence process that a potential buyer customarily undertakes in connection with the acquisition of shares in a private limited company, or the purchase of a business together with its assets (the target)... Purpose and initial considerations for the buyer Purpose of due diligence For any share or asset deal, the buyer begins, at the outset, from the long‑standing principle of caveat emptor (let the buyer beware)... As the seller is not obliged to reveal defects in, or liabilities attaching to, the target, the buyer must carry out its own independent enquiries and verification... Accordingly, it will appoint advisers to perform thorough commercial, legal, tax, financial or other due diligence and to produce reports identifying material issues arising from their review... From the buyer’s standpoint, the core purpose of due diligence is the...

Private M& A (share sale and asset sale)—glossary of terms A Term Description Accounts date deal On a transaction priced by reference to an accounts date in a share acquisition, the purchaser sets the consideration by looking at the last audited accounts (together with any other information uncovered through due diligence), and the SPA contains no built‑in price adjustment mechanism (save to the extent of warranty or covenant claims). A straightforward accounts‑date model is now rarely adopted, as it affords the buyer no safeguard (other than the specific protections within the tax covenant) in respect of the conduct of the target (or its group) after the accounts date. For more detail, see Practice Note: Completion accounts, accounts date and locked box and tax, under the heading ‘ Accounts...

Brexit— IP completion day impact on private M& A sale and purchase agreements [ Archived] ARCHIVED: This Practice Note has been archived and is not maintained. At 11pm ( UK time) on 31 January 2020 (exit day), the United Kingdom departed the European Union pursuant to a ratified Withdrawal Agreement between the UK and the EU. From that moment, the EU has classified the UK as a ‘third country’, neither an EU Member State nor part of the European Free Trade Association ( EFTA). Throughout the Brexit implementation period, spanning exit day to 11pm UK time on 31 December 2020 ( IP completion day), the main EU regulations largely continued to apply for corporate lawyers (see Practice Note: The effect of Brexit on UK company law [ Archived]); however, on IP completion day, elements of this framework were altered. A series of...

Heads of terms Heads of terms (sometimes called an offer letter, term sheet, letter of intent or memorandum of understanding) summarise, in a succinct document, a broad outline of the parties’ expectations, understanding and accord regarding the key terms of the proposed transaction that they have agreed in principle. Where used, heads are signed at the very outset of the deal as soon as the parties settle the headline terms and before the buyer incurs expense on due diligence and the negotiation of the transaction documents. Although the heads will not oblige the parties to complete the transaction on the stated terms, or even at all, they aim to capture, in principle, the principal commercial terms of the arrangement being contemplated. There is no uniform format for heads of terms and they may take the shape of a letter (as is typical) or an...

Auction processes Auctions are central in certain sectors, notably private equity, government privatisations and other high‑value deals. Selling through an auction is structured to draw out competing offers for the company from interested buyers, aiming for the highest price on the most advantageous terms. For a seller, this route offers strong confidence that completion will occur with a preferred bidder, ideally one aligned with the management team’s perspective. Auction processes may involve a wide field of bidders, or be narrowed to a carefully chosen few, depending on the business’s characteristics and the dynamics of its market. In essence, market conditions and the company’s profile determine whether a broad or focused process is pursued. Typically, the vendor directs the process and engages specialist advisers to represent its interests; for instance, an investment bank is often retained to market the sale of the business on the...

The key preliminaries to tackle before a contemplated private equity deal moves into the transaction execution phase are largely consistent across investment types, irrespective of whether the proposal concerns venture capital, a management buyout or buy-in, or development capital. Information about the business After deciding to sell or to pursue private equity funding, a comprehensive document must be produced that sets out, in detail, information about the business and articulates the wish and rationale for investment. In the context of a venture capital or development capital proposal, this document is most often presented as a business plan prepared by the management team; the same holds true for a buyout or buy-in where the investor or buyer has already been identified. In an auction process (that is, where the investor or buyer has not yet been identified), the equivalent document will typically take the form of an...

This Practice Note aims to: offer hands-on guidance to private equity ( PE) firms and other funds seeking to purchase a distressed or insolvent company set out practical pointers for PE firms in their capacity as shareholders of a distressed or insolvent business outline a PE firm’s standing across the main corporate insolvency and restructuring scenarios advise on steps a PE firm can take to maximise its position if a company becomes distressed In the wake of the 2007/08 credit crunch, when M& A activity was scarce, PE funds—special situations vehicles included—turned to buying distressed businesses, aiming to revive them and fold them into their portfolios. This form of distressed investing is counter-cyclical and can help diversify risk within a portfolio. Existing PE shareholders, however, should appreciate the dangers if a portfolio company moves into the ‘zone of insolvency’. In ordinary trading, creditors’ and...

This Practice Note summarises the principal characteristics of collective investment vehicles that target unlisted (including public‑to‑private) companies. It covers tax issues, fund structure and documentation, the fund life cycle, fee and carried interest arrangements, and the relevant UK regulatory framework. What is a private equity fund? A private equity fund ( PE fund) is a pooled investment arrangement focused mainly on unquoted securities. Chances to invest in these assets, commonly shares in private limited companies, are seldom publicised and are usually sourced and negotiated privately. Accordingly, investors outside the private equity market struggle to obtain direct access. By combining their capital in a professionally managed PE fund, investors can participate in these opportunities. Inward investment by a PE fund can appeal to investee businesses because PE funds: provide growth capital to portfolio businesses; support transactions that take securities from public markets into private...

A private equity fund is a collective investment arrangement. Created and overseen by private equity firms, these vehicles channel committed capital into privately owned companies—whose securities are not traded on public markets—by purchasing existing issued securities or subscribing for newly issued securities... Private equity firms What is a private equity firm? In essence, a private equity firm is a team of investment professionals that deploys and oversees money provided by external investors through funds the firm establishes for private equity transactions... Independent: Typically founded and owned by senior members of the firm, they manage multiple funds and raise capital from varied sources, including insurance companies, pension schemes and high net worth individuals... Captive: Usually housed within large institutions such as banks, insurers and pension funds, they invest capital supplied by the parent institution and may, at times, be allowed to secure funding from third...

A buyout typically refers to a management team acquiring an established business, with equity funding from a private equity investor, where revenues are proven and cash flow is positive Background to buyouts Why sell? A seller may choose to dispose of a company or business for several reasons, including: strategic motives, for example a corporate group selling: a non-core business, division or company to let the remainder focus on core activities, or part of its business as a pre-emptive or defensive step against a potential hostile takeover bid raising funds to ease financial pressures elsewhere in the seller’s organisation releasing capital for other investments, particularly for individual sellers or exiting venture capital investors the retirement or death of current owners ...

The key documents in a buyout include: a sale and purchase agreement articles of association for the investee company, or its parent, which will function as the buyout vehicle/group, i.e. the entity that will acquire the target group or business an investment agreement a facility agreement together with associated security documents For more detailed guidance, see Practice Note: Buyouts. Sale and purchase agreement The sale and purchase agreement records the transfer of ownership of the target business, whether structured as a share sale or an asset sale......

This Practice Note forms part of the Lexis+® UK Corporate private equity buyout transaction toolkit. Timing Due diligence is typically undertaken after heads of terms are signed and confidentiality arrangements are in place. It then proceeds in parallel with negotiation of the main sale documents (share purchase agreement and associated ancillary papers) and the equity documents (investment agreement, senior debt (loan facility) agreement and, if required, loan note instruments). Most diligence is carried out early in the deal to enable the parties to agree suitable warranty and/or indemnity protection in the formal papers, and to support the seller’s and target management’s disclosures against their respective warranties. Disclosure letters are drafted and negotiated alongside the share purchase agreement and the investment agreement, and executed at the same time as those instruments. A first draft disclosure letter is usually produced only once diligence is well...

This Practice Note forms part of the Lexis+® UK Corporate Private equity buyout transaction collection. Timing Work on an initial draft of the investment agreement ( IA) and the articles of association ( Articles) may commence once the key commercial terms are settled and the heads of terms for the equity element are signed. In practice, however, this often waits until the share purchase agreement ( SPA) is well progressed in drafting and negotiation, providing the private equity investor with sufficient confidence that the deal will proceed before incurring further documentation costs. In parallel, the due diligence and disclosure workstreams typically run alongside the drafting and negotiation of the IA and Articles. Although warranty and indemnity coverage in the IA is markedly lighter than under an SPA, the overall process is broadly comparable. Typically, the investor’s lawyers prepare the initial IA and Articles and send them to the...

This Practice Note sits within the Lexis+® UK Corporate Private equity buyout transaction collection. Drafting the articles In most cases, the private equity investor’s solicitors produce the initial draft of the articles of association ( Articles). Which precedent agreement to use When selecting a suitable Precedent, the key consideration is whether a single-investor or multiple-investors version is required, with the latter suited to an investor syndicate. For guidance on important issues to address when drafting or reviewing the Articles, see Practice Note: A guide to drafting articles of association for a buyout transaction. For a broader overview of likely equity terms and other related matters, see the following Practice Notes: Private equity financing—equity Understanding share capital Class rights and variation of class rights Allotment ......

This Practice Note forms part of the Lexis+® UK Corporate Private equity buyout transaction collection. Timing Preparation of an initial draft share purchase agreement ( SPA) can start at any point once the principal commercial terms are agreed and the heads of terms for the acquisition component have been signed. The due diligence and disclosure workstreams proceed in parallel with the drafting and negotiation of the SPA. The earlier the private equity investor undertakes substantive due diligence, the sooner its findings can guide negotiation of suitable warranty and indemnity protection for the buyer within the SPA. In the ordinary course—save where the sale is conducted by auction—the investor’s solicitors will produce the first SPA draft and send it to the seller’s solicitors for mark-up. Successive versions then move to and fro between the parties until exchange (the signing of the SPA), which will occur ahead of...