By way of background, a scheme of arrangement is a flexible tool for court-approved corporate reorganizations found in the law of a variety of jurisdictions (including the UK, India, Australia and South Africa). That said, schemes of arrangement are regularly usedby insolvent companies in order to restructure debts or to agree a way forwardwith creditors in an effort to avoid insolvent liquidation. 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. Issuers often voluntarily enhance this requirement to require investors to be institutional accredited investors or qualified institutional buyers (as defined under Rule 144A), to limit the number of security holders without professional investment experience. 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 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. 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. The principal advantage of relying on Section 4(a)(2) and the relevant safe harbours is that debt securities issued under this exemption are exempt from the Trust Indenture Act (See "Other Considerations—Trust Indenture Act" below). Section 3 (a) (10) of the Securities Act provides an exemption from Section 5 that works well for schemes of arrangement. A scheme of arrangement (or a "scheme of reconstruction") is a court-approved agreement between a company and its shareholders or creditors (e.g. Click here to read more about how we use cookies. the court or authorised governmental entity must hold a hearing before approving the fairness of the terms and condition of the transaction, which must be open to everyone to whom securities would be issued in the proposed exchange; adequate notice of the hearing must be given to all those persons, and there cannot be any improper impediments to the appearance by those persons at the hearing. Finding that the requirements of sections 1507(b) and 1521(a) were satisfied and furthered the goals of a chapter 15, the Bankruptcy Court entered an order enforcing the Scheme. It may affect mergers and amalgamations and may alter shareholder or creditor rights. As such, adequate time should be allotted for the offer to be held open. The Flawed Headcount Requirement on Schemes of Arrangement, Cortefiel – The Use of Schemes of Arrangement for ‘Amend & Extends’, Second Infrastructure Investment Plan for Mexico, Foreign direct investment reviews 2020: A global perspective - Spain, UK Supreme Court clarifies arbitrator’s duty of disclosure when accepting multiple appointments in related arbitrations. Norwegian offshore survey specialist PGS has launched a scheme of arrangement in the UK via the issuance of a practice statement letter to the … 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. Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. 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. 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". As such, in schemes where equity is being offered or transferred, attention should be given to the number of holders. the securities must be issued in exchange for securities, claims or property interests and cannot be offered for cash; a court or authorised governmental entity must approve the fairness of the terms and conditions of the exchange; the reviewing court must find, before approving the transaction, that the terms and conditions of the exchange are fair and be advised before the hearing that the issuer will rely on the 3(a)(10) exemption; and. Copyright © var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. UK Schemes of Arrangement and US Securities Considerations. Bidding companies are much more likely to gain the support of target company shareholders if the board recommends it, which tends to make the process quicker and subdue any debate.
2020 uk scheme of arrangement