Legal Practice Notes

General Throughout the duration of an agreement (and sometimes afterwards), one or more of the parties may wish to notify third parties about particular matters relating to the existence of the agreement, its subject matter, or developments arising from the operation of the agreement. The kind of information envisaged is that typically found in public announcements or press releases issued by one or more of the parties (eg to brief investors, prospective investors, the media, potential customers, or regulatory authorities). Such announcements are usually distinct from information generated through the performance of the agreement itself (eg in a consultancy arrangement, the consultant might produce routine reports on the tasks undertaken and supply that information to its client and, in some cases, to third parties). Nevertheless, the parties will not wish to permit each other to disclose information to third parties without restraint and will...

A company seeking admission to trading on AIM ( AIM admission) must satisfy the AIM Rules for Companies ( AIM Rules) and also comply with: the UK legal requirements for offers of securities restrictions on financial promotions any legal obligations in a jurisdiction where the securities are being offered if incorporated outside the UK, the corporate and securities laws of its country of incorporation This Practice Note explains how these obligations apply to a company incorporated in the UK that is not a ‘quoted applicant’. The London Stock Exchange provides a fast-track route to AIM for certain companies whose securities have been traded on an AIM Designated Market (including the Official List) for at least 18 months before applying to AIM (described as quoted applicants in the AIM Rules). For more detail, see Practice Note: Admission to AIM—fast track...

This Practice Note outlines the law on the steps for preparing, identifying recipients, and issuing a notice of an annual general meeting ( AGM). It covers the form and content requirements for notices and the statutory minimum notice periods. It is intended for practitioners and company secretaries in relation to private and unlisted public limited companies. A general meeting must comply with the Companies Act 2006 ( CA 2006) and the company’s articles of association. In particular, the organiser must: send a notice that satisfies the statutory content requirements, use the correct form and deliver it to everyone entitled to receive it, and ensure that adequate notice of the meeting is given. Who is entitled to receive notice of an AGM A notice of an AGM should be sent to all persons with the right to receive it. Failure to notify those...

ARCHIVED: Released in 2017, this content is no longer updated. The trend report distils current developments, updates and areas of interest for companies and their advisers as they get ready for the annual general meeting ( AGM)......

Why restore an LLP to the register? If a limited liability partnership ( LLP) has been removed from the register, an application can often be made to the Registrar of Companies to reinstate it through the administrative restoration process. Typical reasons for seeking administrative restoration are: the LLP was still trading or in operation when the Registrar struck it off, and the LLP still owned property at strike-off and dissolution, which has since vested as bona vacantia. Application of CA 2006 to LLPs An LLP is a corporate entity created under the Limited Liability Partnerships Act 2000 ( LLPA). In practice, most rules governing LLPs derive from modified company law rather than partnership law (see Practice Note: The nature of a limited liability partnership and its legal framework). The Limited Liability Partnerships ( Application of Companies Act 2006) Regulations 2009 set out which provisions of the...

Structure Reasons for the developer to form a JV There are several grounds on which a developer may choose to pursue a JV in connection with a development project, such as the following: spreading risk with another party and placing particular specialist risks with the JV participant most suited to manage them, combining specialist knowledge and expertise to marshal resources on a larger scale and for greater returns, gaining access to specific market knowledge from a party with specialist market experience outside the developer’s usual course of business From the developer’s viewpoint, in practice, it should be cautious not to over‑engineer the JV framework if this might fetter the management of the development process—beginning with the acquisition of land at the outset, continuing through the construction phase, and finally when making disposals upon completion. For example, a more...

A company is required to observe the statutory requirements in the Companies Act 2006 ( CA 2006) concerning the maintenance of accounting records. Further, additional rules on accounting records may govern a listed company, an AIM company, or a company whose securities are admitted to the AQSE Main Market, AQSE Trading or the AQSE Growth Market (previously the NEX Exchange Main Board, NEX Exchange Secondary Market and NEX Exchange Growth Market); however, these fall beyond the remit of this Practice Note. Certain or all of the statutory provisions on accounting records might likewise extend to other companies and entities, but that question also lies outside the remit of this Practice Note. This Practice Note does not consider those additional regimes, or the potential application of the statutory provisions to other bodies. The duty to keep accounting records All companies must retain adequate...

Rules and guidance The provisions governing annual accounts for LLPs falling outside the small and medium-sized LLPs regimes are contained in: Part 15 of the Companies Act 2006 ( CA 2006) The Limited Liability Partnerships ( Accounts and Audit) ( Application of Companies Act 2006) Regulations 2008, SI 2008/1911 (2008 Regulations), which apply parts of CA 2006 to LLPs The Large and Medium-sized Limited Liability Partnerships ( Accounts) Regulations 2008, SI 2008/1913 ( Large LLPs Regulations) The Limited Liability Partnerships, Partnerships and Groups ( Accounts and Audit) Regulations 2016, SI 2016/575 (2016 Regulations) This Practice Note considers the accounting framework as it applies to LLPs under the 2016 Regulations, which introduced various changes to the accounting regime for LLPs and qualifying partnerships. For a general overview of the statutory framework for LLP annual accounts, see Practice Note: LLP Accounts—an outline of the statutory...

Why do environmental issues need to be considered at the outset of a corporate transaction? Environmental and health & safety ( EHS) matters should be addressed at the heads of terms stage because: Clean-up costs for legacy contaminated land can represent one of the biggest financial exposures in a deal Environmental audits can take weeks (an intrusive phase 2 often lasts six to eight weeks). A seller may upload its own environmental reports to the data room to bolster negotiations on price and indemnities Where an environmental permit must be transferred, the process may take two to four months, or longer Smaller companies are frequently not compliant with health & safety legislation. The seller may commission an asbestos survey or implement a health & safety policy and manual See Practice Notes: Heads of terms—share and asset purchases Data...

This case tracker sets out the latest position and developments on key matters for corporate practitioners where the judgment was delivered, or is expected, in 2020. It encompasses significant cases before the High Court, Court of Appeal, the Supreme Court and the Court of Justice of the European Union. It is not designed to be a complete register of hearings in 2020. This tracker is divided into two parts: ongoing cases, ie those subject to appeal, and recent cases, listed with the most recent first For the purposes of this tracker: CA 2006 means the Companies Act 2006 FSMA 2000 means the Financial Services and Markets Act 2000 Ongoing cases Case: Boston Trust Company Ltd; and another company (in their capacities as trustees of Erutuf Trust) (suing on behalf of Erutuf Trust and all other shareholders in Tellisford Ltd other than VOC Trustee Ltd) v Szerelmey Ltd and...

It is market practice for a tax covenant, sometimes referred to as a tax deed, to be included within the transaction documents for a sale of the entire share capital of a company (the target), where the target is: a private company incorporated in the UK; or a private company incorporated outside the UK with a UK connection (ie, where the buyer is UK tax resident or the share purchase agreement ( SPA) is to be governed by English law) This Practice Note sets out: what a tax covenant is what a tax covenant does—broadly, it allocates, by reference to a specified date, responsibility between seller and buyer for the tax liabilities of a target company or group; and how sums paid under a tax covenant are treated for UK tax purposes What is a tax...

When a company has been struck off the register, it can, in some cases, be reinstated by applying to the court for an order under the Companies Act 2006. This Practice Note outlines the process for restoring a company to the register through a court order... Why restore a company to the register? Where a company has been removed from the register, an interested party may apply to the court to have it restored. Common motivations for restoration include: enabling a claim to be pursued against the company addressing assets the company owned at dissolution that passed as bona vacantia situations where the registrar struck the company off while it was still trading If the registrar initiated the striking-off, the applicant should assess whether the simpler, quicker administrative restoration route is available as an alternative to the court process......

This Practice Note examines conditions, pre-conditions and standard terms that commonly feature in public company takeover bids. It highlights the key categories—such as the acceptance condition, scheme-related conditions, and commercial and financial conditions—and sets out the constraints in the City Code on Takeovers and Mergers ( Code) on setting, triggering or waiving those conditions. It also outlines additional terms usually found in the offer document, including whether accepting shareholders may withdraw their acceptances. The Practice Note further provides a high-level overview of how the Code addresses competition references and regulatory clearances, while directing readers to Practice Note: Merger control and the Takeover Code for fuller guidance. Introduction A voluntary offer is ordinarily made subject to a customary suite of conditions, all of which must appear in the firm offer announcement. Each such condition should be clearly and fully stated in that...

This Practice Note This Practice Note outlines the law on quorum thresholds for a company’s general meeting or annual general meeting ( AGM) and reviews the minimum quorum requirements under the Companies Act 2006 ( CA 2006) and the Model Articles for private companies limited by shares and the Model Articles for public companies as contained in Schedule 1 and Schedule 3 to the Companies ( Model Articles) Regulations 2008, SI 2008/3229. A general meeting (including an AGM) must satisfy the applicable quorum (be quorate) for business to be validly conducted at the meeting. If the relevant quorum is not met (ie, the meeting is inquorate), any business conducted will be void. In practice, quorum provisions are often included in a company’s articles of association. Where the articles include no such provisions, the relevant provisions of CA 2006 will apply. During the...

This Practice Note is part of the Share purchase transaction collection Carrying out legal due diligence typically entails examining papers the seller provides in a data room or forwards to the buyer for assessment. This commonly covers a range of agreements (including specialist contracts), alongside records, ledgers and lists. On a share acquisition, corporate counsel will invariably scrutinise core corporate documentation, for example the company’s articles of association and its statutory books and records. The process must also comprise searches of public registers, for example Companies House and HM Land Registry. The disclosure letter will often include general disclosures reflecting what those public searches reveal; the buyer should require evidence of searches actually undertaken, not merely information that would have surfaced had a search been carried out. The buyer’s legal due diligence will typically concentrate on: title (the seller’s title to the sale shares, and title to key...

This Practice Note examines how directors exercise power and authority to take decisions, either collectively as the board or via a committee. It also addresses the statutory duties owed when making those choices, and matters particular to groups with shared directors. For convening board meetings—notice, what notices must contain, and who attends—see Practice Note: Directors’ decision-making—convening board meetings. For usual meeting conduct—the chair’s function, quorum and voting, declaring interests, reviewing papers and debate—see Practice Note: Directors’ decision-making—conduct at board meetings. For post‑meeting steps—preparing board minutes and subsequent administrative requirements—see Practice Note: Directors’ decision-making—post board meeting formalities. For decisions made by written resolution and by sole directors—see Practice Note: Directors’ decision-making—written resolutions and decisions by sole directors. Power and authority to make decisions The directors of a company are responsible for its day‑to‑day management. Their authority derives from the company’s articles of...

This Practice Note outlines the steps a private limited company must lawfully take to convert to an unlimited company (a re-registration from private limited to unlimited) under Part 7 of the Companies Act 2006 ( CA 2006). What is an unlimited company? An unlimited company is a body where members' liability to meet the company's obligations on a winding-up is not capped at any amount. An unlimited company cannot be a public company. It may, or may not, have a share capital (for example, a private company limited by guarantee can be re-registered as an unlimited private company without a share capital). For more information, see the Practice Note: Unlimited companies. Why re-register as an unlimited company? Members of unlimited entities forgo what is typically regarded as a principal benefit of incorporation, when compared with operating as a sole trader or a partnership: limited...

It is almost invariably sensible for the partners of a limited liability partnership ( LLP) to put in place a limited liability partnership agreement, both to prevent any unsuitable default rules under the Limited Liability Partnerships Act 2000 ( LLPA 2000) from automatically taking effect, and to augment the statutory legal regime where it is lacking. Default provisions The Limited Liability Partnerships Regulations 2001, SI 2001/1090 ( LLPR 2001) provide default terms that will govern how an LLP operates if, and to the extent that, there is no express agreement to the contrary......

What is environmental insurance? Environmental insurance shifts risk by indemnifying the policyholder for losses arising from potential environmental liabilities. For property-focused cover, the insured might be the purchaser, the vendor, or both. A standalone environmental policy is often necessary because public liability insurance commonly excludes environmental liabilities, except for sudden, unintended and unexpected pollution incidents. In addition, public liability usually responds only to third party damages and not to remediation of the insured’s own property. On-site remediation Off-site remediation Civil disputes Legal expenses Role of insurance Securing insurance can enable transactions or developments to progress where environmental risks and liabilities exist, by providing financial security and reducing uncertainty. It places the burden of liability with a suitable third-party insurer. Insurance can also support operators of high-hazard facilities in making financial provision for environmental loss. Key...

Borrowers can choose from a broad range of debt and capital structuring routes. Traditionally, senior debt (typically provided by banks) sat at the top, then mezzanine finance, followed by junior debt, each ranking ahead of unsecured creditors and shareholders/equity holders. After the 2007/8 credit crunch, businesses increasingly tapped capital markets and non-bank sources (eg private credit) to widen their funding, adding further layers of indebtedness. This Practice Note offers a straightforward overview of the different tiers of debt and security a restructuring lawyer may encounter. It outlines the financing layers and the forms of security commonly seen in practice by a restructuring lawyer. It also sketches how those tiers now sit together in practice. Capital structures and interplay between creditors Typically, external borrowings sit at the operating company ( Opco) level. The Opcos own the core business assets (eg premises, key...