Attorney Advertising. Build a Morning News Brief: Easy, No Clutter, Free! Schemes of arrangement are an important and flexible mechanism, which can be used to reorganise a company's capital. 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. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. A scheme of arrangement under §425 of the Companies Act of 1985 is a procedure under which a company may make a compromise with its creditors or any class of them. 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 … 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. A scheme of arrangement is an agreement between the companyand its creditors and/or members (or a certain class or classes of them) abouta specified issue. Usually a target company will use a scheme of arrangeme nt because they support an offer. 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 was sanctioned by the High Court of Justice of England and Wales. Schemes of arrangement 17 4. Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. While the SEC regulates and enforces the federal securities laws, each state has its own securities regulator who enforces what are known as "blue sky" laws. © White & Case LLP var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising. 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. 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 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 operation of the UK takeover regime may be affected by Brexit. 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 … 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. Hold-Outs Beware: UK Schemes of Arrangement and Chapter 11 Lie in Wait August 2013 Alerts The recent Thomas Cook refinancing and Cortefiel scheme of arrangement offer contrasting examples to investors of the risks and rewards of adopting a hold-out position in … 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. 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. 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). There is no need for a company to be insolvent under English law for a scheme of arrangement to be available … Introduction. 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). This publication is provided for your convenience and does not constitute legal advice. 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. If no eligible recipient is designated within the set timeframe, the trustee will sell the securities and give cash proceeds to ineligible holders. 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. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. 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. 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. However, Section 304 of the Trust Indenture Act does not provide an exemption for debt securities issued pursuant to the exemptions available under Section 3(a)(10) or Rule 802 of the Securities Act (and therefore an application for qualification under the Trust Indenture Act must be filed and approved by the Securities Exchange Commission if relying on the exemptions available under Section 3(a)(10) or Rule 802 of the Securities Act). Therefore a company is likely to prefer a route that does not require such a 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. 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. Like the scheme, the restructuring plan sits in the Companies Act 2006 rather than the Insolvency Act 1986. Files for UK Scheme of Arrangement as a major step towards NASDAQ listing following the confidential filing of an F-1 on 31 January 2020 with the US Securities and Exchange Commission 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. 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 content of an explanatory statement in respect of a scheme whereby the scheme creditors will be entitled to securities in the scheme proposals will be deemed to have been made by the issuer, so the issuer, and potentially any officer of the issuer, will be subject to potential liability under Rule 10b-5. A Scheme is a statutory procedure which permits a company to make an arrangement or compromise with its members or creditors (or any class of them) which, if approved by the requisite majority of such members or creditors and sanctioned by the court, will be binding on all 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. GAN plc Provides Update on UK Scheme of Arrangement Ahead of NASDAQ Listing. 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. The applicant in this case is an insurance company with long-tail exposure (mostly in the US) which is currently unable to meet the minimum capital requirements imposed by Solvency II. 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.

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