Legal Practice Notes

ARCHIVED: Released in 2013, this content is no longer updated. The Market Standards Trend Report reviews the issues that warrant detailed consideration......

Disclosure of interests and dealings The reporting of shareholdings and transactions both before and throughout a takeover offer sits within a dense, robust and intersecting framework of statutes and rules. The Panel on Takeovers and Mergers ( Panel) views these disclosures as essential to uphold the General Principle in the City Code on Takeovers and Mergers ( Code) that every participant in an offer should prevent the formation of false markets in the securities of the offeror or the offeree. Practically, the obligation to reveal interests and trades during a takeover bid chiefly aims to discourage stakebuilding, where an individual amasses and parks, without any public announcement, a material stake in another company......

This Resource Note summarises the principal provisions of Rule 3 of the City Code on Takeovers and Mergers (the Code), addressing the obligation on the offeree’s board (and, in certain situations, the offeror) to obtain suitably qualified, independent advice on the financial terms of an offer. It signposts pertinent materials, commentary and guidance from the Panel on Takeovers and Mergers (the Panel), alongside Lexis+® UK analysis and related resources, to provide practical direction on the interpretation and application of Rule 3. Materials addressed in this Resource Note include, among others: the detailed notes accompanying the Code ( Notes), which elaborate on how the Rules are intended to be implemented, together with relevant Appendices dealing with particular, specific issues where relevant Practice Statements from the Panel Executive (the body responsible for the day‑to‑day supervision and regulation of takeovers) ( Executive), offering informal guidance on how the...

Practice Note This Practice Note outlines the general SDLT treatment of partnerships, clarifying what qualifies as a partnership for SDLT and how such bodies sit within the wider SDLT framework. It also addresses transfers of interests in a partnership. It explains: which entities and arrangements are treated as partnerships for SDLT the SDLT treatment applicable to partnerships how SDLT operates where a partnership buys a chargeable interest in land from an unconnected party who must file returns and pay SDLT together with any associated liabilities Separate Practice Notes cover what the SDLT legislation terms: special transactions (that is, acquisitions from and disposals to connected persons or partners of a partnership), see Practice Notes: SDLT and partnerships—transfers to a partnership and SDLT and partnerships—transfers from a partnership anti-avoidance rules and reliefs, see Practice Note: SDLT and...

This Practice Note: provides a synopsis of the three principal forms of fund finance: capital call facilities (often referred to as equity bridge facilities) net asset value ( NAV) (or asset backed) facilities hybrid facilities examines green and sustainability-linked finance, together with some types of fund-related finance, GP/ Manager facilities and co-invest facilities sets out key security and documentary considerations, including financial covenants, representations, undertakings, events of default and prepayment events The capital call facility market is well-established and largely standardised, though approaches to assessing investor creditworthiness and differences driven by varied fund structures can diverge. By contrast, NAV facilities and hybrid facilities are highly flexible, taking multiple forms with differing security packages and covenant...

What is a company's constitution? This Practice Note sets out what is meant by a company’s constitution in detail. It focuses on the core element of that constitution: the articles of association. It reviews the statutory definition under the Companies Act 2006, outlines the character of the articles and distils the typical provisions found in a company’s articles. The Practice Note also addresses entrenched terms within the articles and the importance of the memorandum of association......

This overview considers confidentiality agreements in the setting of acquiring shares in a company (the target). A confidentiality, or ‘non-disclosure’, agreement is ordinarily entered into at an early phase of the transaction. Such obligations may sit in a standalone contract or be included within the heads of terms. Using a separate confidentiality agreement is more prevalent than embedding these provisions in the heads of terms. Purpose of a confidentiality agreement In a share purchase, the seller provides the buyer with confidential material about itself, the target, the target’s group entities and their respective operations so the buyer can perform due diligence. The seller’s principal objective is to ensure this information remains secret and safeguarded from unauthorised release or misuse by the buyer (who could be a competitor) or any other recipients of that information. The common law affords the seller a degree of...

Use of comfort letters in finance transactions Comfort letters are encountered in finance transactions relatively often. They take different forms, and it is important for both the lender and the comfort letter provider to understand their legal effect. They are often used where the lender is unable to obtain a guarantee (for information on guarantees, see: Guarantees—overview). They are generally issued by a parent or holding company to give 'comfort' to a lender regarding support for a subsidiary in the context of a finance transaction. Their effect can vary widely, so the parties should be clear from the outset about the type of letter being issued and whether it is intended to be legally binding on the provider. In general, they are not legally binding. It is unusual to encounter a comfort letter that is intended to be binding......

This Practice Note offers practical guidance on correct execution of simple contracts and deeds for unincorporated associations. Unincorporated associations arise from agreement between members who come together, typically for a non-profit purpose. Examples include sports clubs or voluntary groups. For more information, see Practice Note: Unincorporated associations. We have created a collection that serves as a comprehensive, interactive resource to help users identify and navigate the concepts and common issues involved in executing documents. Each section or phase provides practical guidance, precedent clauses and Q& As relevant to that stage. For more information, see: Execution collection. Capacity An unincorporated association has no separate legal identity, meaning it cannot enter into contracts in its own name. As a result, it has no rights, cannot assume duties and cannot own property. Property said to ‘belong’ to an unincorporated association will be vested in the leading members of the...

Introduction This overview considers confidentiality agreements in relation to acquiring the assets of a business (the business). Typically, a confidentiality or ‘non-disclosure’ agreement is put in place at an early stage of the transaction. The confidentiality terms may appear in a separate contract or be set out within heads of terms. It is more usual to use a standalone confidentiality agreement than to fold such terms into the heads of terms. Purpose of a confidentiality agreement On an asset purchase, the seller will provide the buyer with sensitive information about itself and the business so the buyer can perform due diligence. The seller’s key priority is that this information remains confidential and is safeguarded against unauthorised disclosure or misuse by the buyer (who might be a competitor) or by any other party to whom the information is...

This Practice Note provides an overview of the legal position relating to de facto and shadow directors of a company, pursuant to the Companies Act 2006 ( CA 2006) as well as the common law. Definition of 'director' CA 2006 provides a broad, inclusive description of a director as 'any person occupying the position of director, by whatever name called'. On that footing, and within that definition, the courts have recognised two classes of director: de jure directors, namely those directors properly and validly appointed in line with the company’s articles of association and CA 2006; and de facto directors A further category, described as 'shadow directors', is separately defined in CA 2006. A single individual may simultaneously fall into both shadow and de facto categories, for example where they perform a director’s role in one area of the business whilst directing the board in respect of...

Introduction The strand of domestic law that originally arose from EU obligations and was captured by the European Union ( Withdrawal) Act 2018 ( EU( W) A 2018) as retained EU law ( REUL) is, from 2024, referred to as ‘assimilated law’. This change follows the Retained EU Law ( Revocation and Reform) Act 2023 ( REUL( RR) A 2023). The new label signals notable shifts in the domestic standing and handling of assimilated law. Its objective is to advance the process of bringing former EU rules into the UK’s legal system and to support their reform... Reminder: what was retained EU law ( REUL)? To understand the move from REUL to assimilated law, it is useful to revisit REUL, which was established by EU( W) A 2018. For background on EU( W) A 2018, see Practice Note: Brexit—key legislation explained. After the Brexit...

This Practice Note offers a concise overview of the principal features of Regulation S and the practical considerations of relying on Regulation S for English and other non‑ US lawyers; it is not intended as an exhaustive discussion of Regulation S. Background and scope of Regulation S Adopted in 1990, Regulation S was introduced to clarify the extraterritorial reach of the registration and prospectus delivery obligations under the US Securities Act of 1933, as amended (the Securities Act). The rule rests on a straightforward principle: any offer or sale of securities conducted within the United States of America ( United States) is potentially subject to the registration and prospectus delivery requirements of Section 5 of the Securities Act ( Section 5), while any offer or sale made outside the United States is not. Putting that premise into practice for international offerings is more...

Part 14 of the Companies Act 2006 (the CA 2006) contains provisions which control: political gifts by companies to parties, other political bodies, and independent candidates in elections, and political spending undertaken by companies While only a small number of companies give money directly to politics or bear explicit political costs, the CA 2006 adopts broad definitions that can encompass forms of giving and spend that are not obviously or necessarily political. Accordingly, numerous companies table a standard resolution at each annual general meeting ( AGM) to authorise and confirm political donations and political expenditure. For an illustration of a shareholder resolution authorising such donations and spending, see Precedent: Notice of AGM of a listed public company......

Purpose A notices clause is frequently inserted into a contract to provide both sides with certainty and transparency around formal communications and the sending and receipt of notices between the parties to the agreement, including how they are given and received. Where no such clause appears, default statutory rules may step in (see Statutory provisions below). In the Court of Appeal in Khan v D’ Aubigny, Nugee LJ observed that a notice can be a document that imparts information as well as one that invokes or exercises a right. It is also commonly taken to mean a written notice bearing a degree of formality, though no fixed wording or prescribed format is demanded. Observing the requirements of a notices clause will often be critical across a variety of contractual contexts. By way of illustration, it typically matters when prolonging (or stopping the...

The Companies Act 2006 ( CA 2006) The Companies Act 2006 ( CA 2006) sets out provisions that restrict and regulate substantial property transactions entered into between a company and its directors (see Practice Note: Substantial property transactions—requirement to obtain members’ approval). This Practice Note provides a summary of the CA 2006 provisions concerning the consequences where a company enters into a substantial property transaction without securing the requisite approval of the members, or without making the arrangement expressly conditional upon such approval being obtained, as required. For the purposes of these statutory provisions, ‘director’ includes any person occupying the office of director, by whatever name described, and also includes a shadow director. If the company undertaking a substantial property transaction has equity shares listed within the equity shares (commercial companies) category, the UK Listing Rules ( UKLR), and notably UKLR 8 on related party...

The UK Corporate Governance Code ( UKCG Code) Issued by the Financial Reporting Council ( FRC), the UK Corporate Governance Code sets out benchmarks of good practice for board leadership and effectiveness, remuneration, accountability, and how companies engage with their shareholders. The Code applies to companies with a listing of equity shares in the equity shares (commercial companies) category, irrespective of whether they are incorporated in the UK or elsewhere, although other companies may choose, on a voluntary basis, to adopt some or all of its provisions. Under the Financial Conduct Authority’s UK Listing Rules ( UKLR), all companies with a listing of equity shares in the equity shares (commercial companies) category must either comply with the provisions of the UKCG Code or set out in their next annual report to shareholders the reasons for any departure from...

Published in September 2017, this guidance was jointly issued by The Chartered Governance Institute ( CGI) and the Investment Association ( IA). It aims to support a company’s board of directors in considering how they understand, and balance, the interests of their key stakeholders when making decisions. The CGI and the IA maintain that stakeholder engagement is essential for......

A hybrid meeting is a shareholder meeting format offering simultaneous physical and remote electronic participation. In the past few years, interest in running hybrid general meetings and annual general meetings has risen. Initially this shift came from improvements in remote communication tools, and was then accelerated by necessity during the coronavirus ( COVID-19) pandemic when limits on gatherings applied. During such mandated restrictions, virtual formats were used as a necessary substitute. Today, many companies enable members to join meetings using some form of remote technology. There is also curiosity about holding meetings that are entirely virtual, where shareholders may only attend and vote via an online platform. However, with time passed since the COVID-19 pandemic, mainstream sentiment has moved away from virtual-only meetings. This is due to concerns among institutional investors about formats that do not provide a physical option, save for...

ARCHIVED: This archived Practice Note summarises which elements of UK tax law were impacted by the UK’s departure from the European Union ( EU) during the period between exit day (31 January 2020) and IP completion day (31 December 2020), and also the period immediately after IP completion day. It is not maintained and is provided solely for background purposes. For more information, see: Brexit, assimilated law and tax—overview. From exit day (11 pm on 31 January 2020), the UK ceased to be an EU Member State and no longer took part in the EU’s political institutions or governance structures. However, under the transitional measures in Part 4 of the Withdrawal Agreement, exit day initiated an 11-month implementation period ( IP) during which, for many purposes, the EU continued to treat the UK as if it were a Member State. For broader...