Legal Practice Notes

This Practice Note reviews duties relating to the disclosure and control of inside information under the UK Market Abuse Regulation ( Assimilated Regulation ( EU) 596/2014), alongside the Financial Conduct Authority’s guidance, as set out in Chapter 2 of the Disclosure Guidance and Transparency Rules ( DTR). It addresses both disclosure obligations and control measures, together with relevant FCA guidance. Regulatory framework The EU Market Abuse Regulation came into force across the EU on 3 July 2016. Its purpose was to create a harmonised regime addressing insider dealing, the unlawful disclosure of inside information and market manipulation (collectively, market abuse), together with preventative measures designed to uphold the integrity of EU financial markets and to bolster investor protection and confidence in those markets. At the close of the Brexit implementation period (11 pm UK time on 31 December 2020), the EU Market Abuse...

This Practice Note, prepared with input from Rebecca Cousin of Slaughter and May on market practice, outlines key defensive measures an offeree might consider when faced with, or anticipating, an unwelcome takeover offer, and explores the legal and regulatory limits on taking such steps. Where a company is, or expects it may become, the subject of a takeover proposal that is, or may turn, hostile, it will often seek to employ a variety of tactics designed either to deter the offeror entirely or to prompt the offeror to enhance its terms. These defensive measures, also known as frustrating actions, are constrained by both law and the provisions of the City Code on Takeovers and Mergers ( Code). Code restrictions on frustrating action The Code places limits on frustrating action, restricting how far an offeree can act in a way that may obstruct an offer without first...

A Word or phrase Definition Abbreviated accounts Where a small company that is not a micro-entity has financial years beginning before 1 January 2016 (see the Companies, Partnerships and Groups ( Accounts and Reports) Regulations 2015 ( SI 2015/980)), it may lodge abbreviated accounts at Companies House rather than its full accounts. For financial years starting on or after 1 January 2016, the same company may instead file abridged accounts at Companies House, but only if it elects to do so and every member has agreed to the abridgement; this election is available only with unanimous member consent. The level of disclosure required in abbreviated accounts is lower than that required in full accounts. A principal advantage of using abbreviated accounts is that a small company can preserve a degree of confidentiality about its activities. That reduced disclosure underpins the...

Scope of this Practice Note This Practice Note summarises the provisions set out in section 21, together with associated sections, of the Financial Services and Markets Act 2000 ( FSMA 2000); the Financial Services and Markets Act 2000 ( Financial Promotion) Order 2005, SI 2005/1529 ( FPO); and the Financial Services and Markets Act 2000 ( Promotion of Collective Investment Schemes) ( Exemptions) Order 2001, SI 2001/1060 (the Promotion of CIS Order). These instruments, as amended periodically and read collectively, comprise the UK’s financial promotion regime, and the Note also draws on relevant materials issued by the Financial Conduct Authority ( FCA). What is the financial promotion regime? The expression ‘financial promotion’ does not appear within the text of the Financial Services and Markets Act 2000 ( FSMA 2000) other than in the heading to section 21. Pursuant to FSMA 2000, s 21(1), a person ( A) must not, in...

Gratitude is extended to fellow contributors from Squire Patton Boggs’ offices across its worldwide network. Cross-border JVs Forming cross-border joint ventures ( JVs) defies a universal template; that is, when one or more JV parties is located outside the UK and the vehicle is intended to be established overseas, bespoke structuring is essential. Ultimately, the agreement must capture the parties’ commercial bargain. That said, the legal themes flagged in this note and in the Practice Notes— Cross-border joint ventures—initial considerations; Cross-border joint ventures—management and control; and Cross-border joint ventures—taxation and funding issues—can steer the selection of jurisdiction for the JV vehicle and shape the deal, so they should be weighed at the outset to maximise the JV’s prospects. Even where a joint venture agreement ( JVA) is governed by a familiar system, for example English law, setting up a cross-border JV can surface...

STOP PRESS The Economic Crime and Corporate Transparency Act 2023 ( ECCTA 2023) obtained Royal Assent on 26 October 2023. It is designed to improve corporate transparency in the UK, mainly through Companies House reform and changes to provisions of the Companies Act 2006. It also seeks to modernise the regime for limited partnerships and grant stronger powers to tackle economic crime. ECCTA 2023 will be brought in gradually. Some provisions commenced on 4 March 2024 and may affect this content. For more information, see Practice Notes: Implementation of the Economic Crime and Corporate Transparency Act 2023 and The Economic Crime and Corporate Transparency Act 2023—tracker, notably the legislation and consultation tracker. This Practice Note focuses on the requirement for a company to produce individual accounts and for a parent company to prepare group accounts. The Companies Act 2006 ( CA 2006) sets out...

Company directors oversee the everyday running of the company. They make decisions on the company’s behalf so it can continue operating, typically covering: securing funding entering contracts buying or leasing premises obtaining stock or equipment recruiting staff For details on directors’ decision-making, and the processes and procedures commonly involved, see the following Practice Notes: Directors’ decision-making—power, authority and duties Directors’ decision-making—convening board meetings Directors’ decision-making—conduct at board meetings Directors’ decision-making—post board meeting formalities Directors’ decision-making—written resolutions and decisions by sole directors Where do the directors’ powers come from? ......

When a purchase of a company’s shares is considered, it is essential to assess if the legal ban on providing financial assistance is engaged or indeed applicable. What is the prohibition on the giving of financial assistance?......

Background and current UK listing regime A major overhaul of the UK listing framework took effect on 29 July 2024, removing the premium and standard segments and introducing a single listing category for equity shares issued by commercial companies. This consolidates the regime, replacing dual segments with a unified route to listing. The commercial companies category is disclosure-led and sits alongside other listing categories, namely shell companies, secondary listing and closed‑ended investment funds. To implement the reforms, a new UK Listing Rules sourcebook came into force and the previous Listing Rules sourcebook was revoked. For details, see Practice Note: Reform of the UK listing regime—fundamentals. The updated regime made no substantive changes to the rules and guidance governing the adoption, approval, operation of and disclosure in respect of employee share incentive schemes, other than the removal of the premium and standard listing segments. However, all...

This concise overview outlines the steps and process for reinstating a company to the register by way of the court route under section 1029 of the Companies Act 2006 ( CA 2006). The court route is mandatory where a company has been removed following its own voluntary application for striking off under CA 2006, s 1003, and in the other situations identified in CA 2006, s 1029. This procedure may equally be pursued when the Registrar of Companies has caused the striking off pursuant to CA 2006, ss 1000 or 1001, although this is less usual because the business may instead qualify for the quicker, more straightforward administrative restoration; see Practice Note: How to restore a company to the register—administrative restoration. For a full analysis of the applicable legislation, case law and steps involved in restoration by court order, see Practice Note: Company...

ARCHIVED: This guidance is no longer updated and serves solely as contextual information. Questions have arisen about the phrasing of provision E.2.4 in the UK Corporate Governance Code (the Code); in particular, amended wording introduced......

Introduction A most favoured nation ( MFN) clause grants an investor visibility over the side letter rights secured by other investors in a private equity fund and, in certain cases, permits that investor to elect to benefit from those rights. MFN provisions are pivotal in the commercial negotiations surrounding an investment in today’s private equity funds. The way an MFN interacts with investor side letters and the fund documentation may require disclosure of other investors’ side letter terms and even confer the ability to adopt preferential provisions negotiated by others. Nevertheless, MFN clauses can generate problems, including reduced transparency for investors and potential detriment to the fund’s capacity to obtain subscription‑backed borrowing. They can also increase bureaucracy, heighten administrative effort and raise legal costs for the sponsor — typically the fund’s general partner or investment manager responsible for establishing and promoting the fund — as they...

This Practice Note offers hands-on guidance on correctly signing simple contracts and deeds for limited partnerships established under the Limited Partnerships Act 1907 ( LPA 1907). We have created a collection that serves as a thorough, interactive tool enabling users to pinpoint and navigate the concepts and recurring issues arising on document execution. Each stage or step contains practical guidance, model clauses and Q& As pertinent to that part. For further details, see: Execution collection. Background Limited partnerships are a distinct form of partnership regulated by LPA 1907, which expressly retains the provisions of the Partnership Act 1890 ( PA 1890) and the equitable and common law rules applicable to partnerships, save where they conflict with the express terms of LPA 1907. Limited partnerships are extensively used in private equity and venture funds as investment fund vehicles. For broader background on limited...

A company generally possesses an implied authority to distribute profits among its members, unless its articles of association state otherwise. A dividend is one form of distribution a company may make to its members; indeed, dividends are the distribution most commonly made. It is the usual method by which profits are allocated to members by a company. That said, a company has no legal duty to pay a dividend unless the rights attached to its shares require it. Any entitlement a member has to a dividend arises from the shares they hold—dividend rights attach to a class of a company’s shares. No dividend can be declared or paid unless it accords with the respective rights of a company’s shareholders. Distinct classes of share frequently carry different dividend rights. In ordinary usage, ‘dividend’ means a share of profits, whether at a fixed rate or...

The allotment and issue of shares Statutory provisions regulate how shares are allotted and issued, and these differ according to the nature of the company seeking to make the allotment (private or public, listed or unlisted) and whether that entity has a single class of share or multiple classes. This Practice Note addresses the allotment and issue of shares by a private company with one class of share that intends to allot further shares of that same class. For general guidance on allotments across all companies, see Practice Note: Allotment and issue of shares—introductory points. For details on the allotment and issue of shares for other categories of company, consult Practice Notes: Allotment and issue of shares—private companies with more than one class of share and public unlisted companies and Allotment and issue of shares—listed companies......

There are statutory rules governing a company’s auditor liability and the extent to which it can be curtailed. Before 6 April 2008, a company was prohibited from excusing or indemnifying its auditors for any negligence, default, breach of duty, or breach of trust connected with the company that arose in carrying out the audit of the accounts. That prohibition has since changed, and such protection is now allowed, so long as it is either an indemnity covering the costs of successfully defending proceedings or a liability limitation agreement. Furthermore, additional requirements concerning an auditor’s liability and its caps may apply to a listed company, an AIM company, or a company whose securities are listed on the AQSE Main Market, AQSE Growth Market, or AQSE Trading (previously the NEX Exchange Main Board, NEX Exchange Growth Market, and NEX Exchange Secondary Market), though those matters fall...

Heads of terms Acquiring a private company typically starts with settling the principal commercial points, including price, the deal structure, due diligence logistics, exclusivity obligations and the timetable agreed. Those commercial points are usually negotiated directly between the clients, or sometimes in conjunction with their accountants or other professional advisers, and captured in the detailed heads of terms, also referred to as a letter of intent or memorandum of understanding. See the Practice Note: Heads of terms—share and asset purchases. If environmental matters are known or suspected, the heads of terms might provide for: disclosure of any existing environmental report(s) to the purchaser a requirement for a reliance agreement or collateral warranty so the purchaser receives the benefit of the environmental report(s) a procedure enabling the purchaser to undertake a phase 1 environmental audit or phase 2 ground...

A private equity transaction A private equity deal — whether venture capital, buyout or development capital — typically comprises an investment by a private equity (or venture capital) fund (the investor) into the securities, such as shares and loan notes, of a private limited company incorporated in England and Wales ( Company). In a venture capital or development capital scenario, the investor subscribes directly for securities in the Company or its group, thereby becoming a shareholder alongside the business’s founders. In a management buyout ( MBO), the investor also commits capital to securities issued by a newly formed Company (or group) established to acquire a target company or business (target). In these structures, the investor will hold shares in the Company alongside the target’s management, who, following the acquisition, will likewise own securities in the Company or its group. After completion of the...

Key issues for a private equity investor The structure of a private equity deal, and its terms and conditions, will differ in character and complexity according to the investment’s type and scale. Common priorities for a private equity backer typically include: enabling management to run the company while the investor retains full access to the management team, company records and other relevant information holding the option to assume control of the business’s management if required planning for a profitable exit—measured by internal rate of return ( IRR) or investment multiple—usually within three to five years (see Practice Note: Private equity investment—firms and funds) In broad terms, these aims are delivered through thoughtful deal structuring and clear equity documentation setting out each party’s rights and obligations. From the outset, all parties should obtain tax advice on the proposed structure and...

A private equity transaction A private equity deal, whether a buyout, venture capital or development capital transaction, involves a private equity (or venture capital) fund (the investor) putting money into securities, such as shares and loan notes, of a private limited company incorporated in England and Wales ( Company). In a venture capital or development capital scenario, the investor invests directly in the securities of the Company/its group, becoming a shareholder in the Company alongside the founders. In a management buyout ( MBO), the investor also takes securities in a newly created Company (or group of companies) established to acquire a target company or business (target) pursuant to a share purchase agreement ( SPA) or asset purchase agreement ( APA). In these arrangements, the investor will hold shares in the Company alongside target management, who, following completion of the...