Welcome to the latest edition of the Corporate Update from Steptoe & Johnson. The articles are intended to provide an insight but not necessarily a comprehensive view from an English law perspective. If any of these articles are of interest to you and you would like more information on how the issues in question could affect your business, please contact Michael Thompson or your regular Steptoe contact and we would be delighted to discuss the matter with you further.
We welcome your feedback and suggestions for future editions.
1. Proposed Changes to the UK Takeover Code
Following Kraft's £11.5bn hostile takeover of Cadbury last year, the Code Committee of the UK Takeover Panel published a public consultation paper setting out proposed amendments to the UK Takeover Code. There had been general concern that the Code made it too easy for bidders to destabilise target companies with only vague (rather than certain) offers and the Panel published an initial consultation paper in mid-2010, with a view to revising the Code over the longer term. The Panel views much of its role as policing what ought to be a proper and reasonable balance in takeover bids between the conflicting interests of a bidder and a target. The Panel's recent public consultation resulted from a general feeling that, recently, the balance of interests had shifted unfairly in favour of bidders. After publishing its latest public consultation paper (PCP 2011/1) on 21 March, the Panel has taken another step towards introducing significant changes to the Code and this article reviews those changes.
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2. A Guide to MAC clauses in M&A transactions
A material adverse change (MAC) clause (also sometimes referred to as a material adverse event or material adverse effect clause) is a provision commonly found in M&A and lending agreements that aims to give the buyer (or funder) the right to withdraw from the transaction upon the occurrence of certain events which are detrimental to the target company (or borrower). MAC clauses often feature in public and private M&A transactions and tend to receive a great deal of attention in the aftermath of significant events affecting the economy at large or a particular industry, for example, the events following 11th September 2001 and the recent financial crisis saw a discernable increase in buyers/bidders invoking MAC clauses in agreements that were signed before that period. This article briefly considers the key issues to consider from a buyers/bidders and target company's perspective in relation to the inclusion of MAC clauses in the context of public and private M&A transactions.
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3. Corporate governance for UK private and unlisted companies
The principles of corporate governance are well established for UK public listed companies, and the perceived benefits of good corporate governance for those companies and their shareholders, the wider investment community and indeed the national economy, are well understood. Furthermore, in recent years corporate governance has received increased international attention because of (and has evolved as a consequence of) a number of high-profile scandals involving the abuse of corporate power and, in some cases, alleged criminal activity by corporate officers in relation to public listed companies. But what of corporate governance in the context of private/unlisted companies, which until relatively recently has received little or no attention from governance experts and policy makers? In November 2010 the Institute of Directors published some guidance on corporate governance for private/unlisted companies in a paper entitled "Corporate Governance Guidance and Principles for Unlisted Companies in the UK" (the "Guidance"). This article looks at the Guidance and the 14 principles within it that provides advice on corporate governance to directors and company secretaries of private/unlisted companies including start-ups, owner managed companies, family-owned companies, private equity owned companies and joint ventures.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
