04 dez uk scheme of arrangement
In addition, Regulation D under the Securities Act provides a non-exclusive "safe harbor" for the Section 4(a)(2) exemption, which permits the offer of securities to an unlimited number of accredited investors, using the Section 4(a)(2) exemption. Offers outside the US are typically made in an "offshore transaction" without "directed selling efforts" in order to comply with the safe harbour of Regulation S under the Securities Act. To ensure that the offer of securities as part of the scheme does not constitute a public offering, it is therefore customary that the offer in the US of scheme securities is made only to institutional accredited investors. This note is a guide to the main issues that the court will take into account when deciding whether to convene meetings of creditors and/or members for the purpose of voting on a scheme of arrangement, and subsequently, when deciding whether to sanction a scheme … Acquiring control 40 7. A scheme of arrangement can be used to effect a solvent reorganisation of a company or group structure, including by merger or demerger , as well as to effect insolvent restructurings such as by a debt for equity swap or by a wide variety of other debt-reduction strategies. The exemption is available if (i) the issuer is a foreign private issuer and is not an investment company; (ii) US holders hold no more than 10% of the securities to be exchanged; and (iii) the issuer permits US holders to participate in the offering on terms at least as favourable as those offered to other security holders. gan uk scheme of arrangement update. Where the UK Schemes of Arrangement and US Securities Considerations. In the context of a scheme of arrangement, the following exemptions from registration may apply: Section 4(a)(2) exempts from registration offers and sales by an issuer that do not involve a public offering or distribution. A scheme of arrangement is a formal statutory procedure under Part 26 of the Companies Act 2006 under which a company may enter into a compromise or arrangement with its members or creditors (or any class of them). the average daily trading volume of the securities in the US for a recent twelve-month period ending on a date no more than 60 days before the public announcement of the tender offer exceeds 10 percent of the average daily trading volume of that class of securities on a worldwide basis for the same period; or, the most recent annual report or annual information filed or submitted by the issuer with securities regulators (in any jurisdiction) indicates that US holders hold more than 10 percent of the outstanding subject class of securities; or. Therefore a company is likely to prefer a route that does not require such a registration. Among other provisions, Rule 10b-5 provides that it is unlawful in connection with the sale of any security "to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading". In a number of recent schemes of arrangement that involved securities, a combination of Sections 4(a)(2) and 3(a)(10) were used, indicating that issuers continue to value the pre-emption of state securities laws, the exemption from the Trust Indenture Act (in case of debt securities) and the exemption from the SEC filing requirements. An issuer is presumed to be a foreign private issuer and US holders are presumed to hold less than 10% of the outstanding securities unless: Rule 802 is an attractive option since the debt securities issued under this exemption will be exempt from the Trust Indenture Act. There is no need for a company to be insolvent under English law for a scheme of arrangement to be available … Making a bid 47 8. As detailed above, each exemption has different requirements, advantages and disadvantages, depending on the specific circumstances of the proposed securities offering and the companies have the ability to choose the most suitable combination. If the registration exemptions above cannot be used for particular investors who are not eligible under one of the above exemptions, mechanisms to avoid unfairness to holders have been created, such as placing the scheme securities with a trustee for a holding period during which the ineligible holder may designate an eligible recipient to receive the restructured securities, and to whom the holder will have in effect sold their entitlement. As such, care should be taken that the explanatory statement contains sufficient detail, in an accurate manner, to allow scheme creditors to make an informed decision on the securities offered in the scheme proposals. It is the nearest U.K. equivalent to a chapter 11 plan. Securities issued in reliance on Section 3(a)(10) are generally not considered "restricted securities" and are not subject to US. None of the exemptions discussed here pre-empt blue sky laws so the issuer will need to conduct a blue sky survey to determine the residency of the investors and to identify applicable state exemptions. Section 12(g) of the Exchange Act requires that a foreign private issuer register any "class" of "equity securities" with the SEC if: (i) it has total assets exceeding $10 million and (ii) such class of equity securities is "held of record" by 2,000 or more persons (US or non-US) globally or 500 or more non-Accredited Investors (US or non-US) globally. A scheme of arrangement is often preferable to a judicial management in various situations. In addition, the securities will be subject to blue sky laws. As such, adequate time should be allotted for the offer to be held open. Important notices. In or… resale limitations, unless the recipient is an "affiliate" of the issuer (or was one within the prior 90 days). For the purposes of this Practice Note, the key change is the removal of the ability to passport a prospectus from the UK to the EEA, which may make schemes of arrangement more popular on securities exchange offers where there are offeree shareholders in the EEA. Proposals of the Scheme Administrator, 2 April 2013 Letter to Scheme Creditors dated 13 November 2012 regarding the triggering of the Scheme of Arrangement Proposal in relation to a Scheme of Arrangement sanctioned by the court on 19 January 1994 Letter to members, 9 December 1993 Neither Sections 4(a)(2), 3(a)(10) nor Rule 802 act as an exclusive exemption; an issuer making an offer or sale of securities in reliance on one of these exemptions or safe harbours may also rely on any other applicable exemption from the registration requirements of the Securities Act. Schemes of arrangement are an important and flexible mechanism, which can be used to reorganise a company's capital. An offer to all, or a substantial majority of, security holders which results in an offer for, or exchange of, existing securities, may potentially constitute a tender offer under US securities laws. The SEC, in no-action letters and in guidance on this topic, has clearly stated its view that the term "any court" in Section 3(a)(10) may include a foreign court (such as the English High Court considering a scheme of arrangement), provided all relevant requirements that apply to exchanges as approved by US courts, as set out below, are met: Schemes can typically be structured to meet these requirements. In addition, while neither of the exemptions mentioned herein pre-empt "blue sky laws", and the company will need to conduct a "blue sky laws" survey to determine the residency of offerees to identify applicable US state exemptions, so long as the US sales are made only to accredited investors in compliance with Section 4(a)(2) this is expected not to raise any "blue sky laws" concerns. Rule 802 under the Securities Act provides an exemption from the registration requirements of the Securities Act for certain cross-border exchange offers and business combinations by foreign private issuers involving the issuance of securities. Once voting on the scheme has taken place and the required number of creditors has agreed to its use, the arrangement is binding … Significantly, a scheme of arrangement can be used to implement a restructuring where not all creditors agree to the compromise proposed. Rule 14e-1 under the Exchange Act makes it unlawful for any person who makes a tender offer to: (i) hold the offer open for less than 20 business days; (ii) make certain material changes to the offer without extending the offer period for an additional 10 business days; (iii) fail to pay the consideration offered or return the securities deposited; or (iv) extend the length of a tender offer without sending a notice. A scheme of arrangement was sanctioned by the High Court of Justice of England and Wales. © White & Case LLP var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising. Usually a target company will use a scheme of arrangeme nt because they support an offer. The principal disadvantage of this exemption is that the information sent to investors must be submitted to (but not registered with) the SEC and the securities issued in reliance on Rule 802 will be "restricted securities" and may not be freely resold in the US without registration or exemption from registration. At first blush the two processes are very similar. Neither Sections 4(a)(2), 3(a)(10) nor Rule 802 act as an exclusive exemption; an issuer making an offer or sale of securities in reliance on one of these exemptions or safe harbours may also rely on any other applicable exemption from the registration requirements of the Securities Act. By continuing to browse this website you accept the use of cookies. The procedure for Schemes is contained in Part 26 of the Companies Act 2006 (the “CA 2006”), which states that a company may make a compromise or arrangement with its members or creditors (or any class of them) about (in theory at least) anything which the parties may agree on. Section 3(a)(10) provides an exemption from registration based on a court or a government agency's approval of the fairness of the offering. UK law permits schemes of arrangements to include third-party releases. accredited investors or offers made in offshore transactions. accredited investors or offers made in offshore transactions. This publication is protected by copyright. It is not an insolvency process and is utilised under the Companies Act 2006 rather than insolvency legislation, but it must still be sanctioned by court process. the issuer knows or has reason to know, before the public announcement of the offer, that the level of US ownership exceeds 10 percent of such securities. As detailed above, each exemption has different requirements, advantages and disadvantages, depending on the specific circumstances of the proposed securities offering and the companies have the ability to choose the most suitable combination. The principal disadvantage of this exemption is that the information sent to investors must be submitted to (but not registered with) the SEC and the securities issued in reliance on Rule 802 will be "restricted securities" and may not be freely resold in the US without registration or exemption from registration. We predict that this will continue in 2016, despite European alternatives, because of the scheme’s flexibility, predictability, the speed of access … The defence 65 ... resident in the UK, the Channel Islands and the Isle of Man and takeovers of certain private companies having public c ompany characteristics. Click here to read more about how we use cookies. It may affect mergers and amalgamations and may alter shareholder or creditor rights. Like the scheme, the restructuring plan sits in the Companies Act 2006 rather than the Insolvency Act 1986. In addition, the securities will be subject to blue sky laws. Among other provisions, Rule 10b-5 provides that it is unlawful in connection with the sale of any security "to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading". Attorney Advertising. If the registration exemptions above cannot be used for particular investors who are not eligible under one of the above exemptions, mechanisms to avoid unfairness to holders have been created, such as placing the scheme securities with a trustee for a holding period during which the ineligible holder may designate an eligible recipient to receive the restructured securities, and to whom the holder will have in effect sold their entitlement. Section 3(a)(10) provides an exemption from registration based on a court or a government agency's approval of the fairness of the offering. The term "tender offer" is not defined under US securities laws, but a scheme of arrangement which results in the transfer or purchase of securities may potentially contain several of the features of transactions that the SEC has considered to qualify as a tender offer. GAN plc Provides Update on UK Scheme of Arrangement Ahead of NASDAQ Listing. As such, care should be taken that the explanatory statement contains sufficient detail, in an accurate manner, to allow scheme creditors to make an informed decision on the securities offered in the scheme proposals. A scheme of arrangement is a procedure that allows a company to reconstruct its capital, assets or liabilities with the approval of its shareholders and the Court. In addition, the securities will be subject to blue sky laws. Schemes of arrangement 17 4. A Scheme of Arrangement helps a company in the restructure of its debt, and aids recovery from financial distress. In structuring a UK scheme of arrangement that involves the restructuring of existing securities and/or the offer of new securities, due consideration must be given to the relevant US securities laws and registration exemptions thereunder, since security holders who are US persons or resident in the United States may be involved or new securities offered as part of the scheme of arrangement may be distributed into the US. In addition, the securities offered will be "restricted securities" and may not be freely resold in the US without registration thereof or an exemption from registration. In a number of recent schemes of arrangement that involved securities, a combination of Sections 4(a)(2) and 3(a)(10) were used, indicating that issuers continue to value the pre-emption of state securities laws, the exemption from the Trust Indenture Act (in case of debt securities) and the exemption from the SEC filing requirements. Therefore a company is likely to prefer a route that does not require such a registration. In addition, the securities will be subject to blue sky laws. If a company is offering securities, it must comply with both federal regulations and state securities laws and regulations in the states where securities are offered and sold (typically, the states where offerees and investors are based). In order to comply with Section 4(a)(2), an issuer may only offer and sell securities into the US to persons the issuer reasonably believes are accredited investors as defined in Rule 501 under the Securities Act ("accredited investors"). It is not actually an insolvency procedure and can be usedby both solvent and insolvent companies to agree any issue or matter with itscreditors and/or members. 21 December 2015 The English scheme of arrangement is a very popular European restructuring tool. If no eligible recipient is designated within the set timeframe, the trustee will sell the securities and give cash proceeds to ineligible holders. The principal disadvantage of this exemption is that the securities may not be offered for cash and debt securities issued under this exemption are not exempt from the Trust Indenture Act. The term "tender offer" is not defined under US securities laws, but a scheme of arrangement which results in the transfer or purchase of securities may potentially contain several of the features of transactions that the SEC has considered to qualify as a tender offer. As such, in schemes where equity is being offered or transferred, attention should be given to the number of holders. It is a formal arrangement between the target company and its shareholders, which is governed by the Companies Act 2006. the average daily trading volume of the securities in the US for a recent twelve-month period ending on a date no more than 60 days before the public announcement of the tender offer exceeds 10 percent of the average daily trading volume of that class of securities on a worldwide basis for the same period; or, the most recent annual report or annual information filed or submitted by the issuer with securities regulators (in any jurisdiction) indicates that US holders hold more than 10 percent of the outstanding subject class of securities; or. The Bankruptcy Court acknowledged that schemes of arrangement under UK law have been routinely recognized as foreign proceedings in chapter 15 cases. lenders or debenture holders). 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