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. 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. 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. 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. 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. 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 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 … Schemes of arrangement 17 4. 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 addition, the securities will be subject to blue sky laws. 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 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. resale limitations, unless the recipient is an "affiliate" of the issuer (or was one within the prior 90 days). 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". 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. 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. A scheme of arrangement is often preferable to a judicial management in various situations. The principal disadvantage of relying on Section 4(a)(2) and the relevant safe harbours is that the utility of this exemption depends on the composition of the creditors subject to the scheme of arrangement, i.e. Preparing a US registered offering is a significant undertaking and, following a registered offering, a SEC registrant is subject to, among other obligations, SEC disclosure requirements and increased levels of potential securities law liability. Section 304 of the Trust Indenture Act provides an exemption for debt securities issued pursuant to the registration exemption of Section 4(a)(2) under the Securities Act. 17 april, 2020 this announcement does not constitute an invitation or offer to sell or the solicitation of an invitation or offer to buy any security. 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 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. 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 compromise or arrangement between a company and its members or creditors (or any class of them) under Part 26 of the Companies Act 2006. The operation of the UK takeover regime may be affected by Brexit. 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. 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. 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). 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. As such, in schemes where equity is being offered or transferred, attention should be given to the number of holders. Schemes have been used in the United Kingdom (and in many other Commonwealth jurisdictions) for many years. 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. 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. UK law permits schemes of arrangements to include third-party releases. 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. Investegate announcements from Ei Group plc, Scheme of arrangement . GAN plc Provides Update on UK Scheme of Arrangement Ahead of NASDAQ Listing. A scheme of arrangement enables a company to agree with its creditors, or one or more classes of its creditors, a compromise in respect of its debts owed to those creditors. Preparing a US registered offering is a significant undertaking and, following a registered offering, a SEC registrant is subject to, among other obligations, SEC disclosure requirements and increased levels of potential securities law liability. 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 uk scheme of arrangement update. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. Although securities offered and sold in private offering pursuant to Section 4(a)(2) do not pre-empt blue sky laws, as long as the US sales are made only to accredited investors in accordance with Section 4(a)(2) this is not expected to raise "blue sky laws" concerns. Copyright © var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. 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. 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 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. 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. Therefore a company is likely to prefer a route that does not require such a registration. Over 98 percent (but not 100 percent) of the class of creditors approved the scheme. Takeovers: scheme of arrangement vs contractual offers. A scheme of arrangement (or a "scheme of reconstruction") is a court-approved agreement between a company and its shareholders or creditors (e.g. 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. It is a formal arrangement between the target company and its shareholders, which is governed by the Companies Act 2006. accredited investors or offers made in offshore transactions. These include: 1. Acquiring control 40 7. The Trust Indenture Act applies only to debt securities, so the Trust Indenture Act will not be relevant if a scheme entitles the scheme creditors to equity securities only. © White & Case LLP var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising. November 26, 2020: Oslo, Norway, PGS ASA (the “Company or “PGS”) announces today that it has launched a scheme of arrangement in England (the “Scheme”) via the issuance of a practice statement letter to the lenders under its ~$350 million revolving credit facility and ~$522 million term loan B facility (the “RCF/TLB Facility”). Competition 23 5. 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. 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. The following US securities laws may be applicable in the scheme of arrangement context, and it is important to ensure that the relevant offering components are built into a transaction timeline. A scheme of arrangement is a statutory mechanism which is an alternative to a contractual offer. 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 … 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. It should be kept in mind that an indenture for debt securities must be qualified under Section 305 of the Trust Indenture Act or must meet the requirements for an exemption from qualification under Section 304 of the Trust Indenture Act. At first blush the two processes are very similar. Securities issued in reliance on Section 3(a)(10) are generally not considered "restricted securities" and are not subject to US. In addition, the securities will be subject to blue sky laws. Where the 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"). 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 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. 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. In addition, the securities will be subject to blue sky laws. Brief description of Schemes. 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. Law Firms: Be Strategic In Your COVID-19 Guidance... [GUIDANCE] On COVID-19 and Business Continuity Plans. 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. resale limitations, unless the recipient is an "affiliate" of the issuer (or was one within the prior 90 days). 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. As such, adequate time should be allotted for the offer to be held open. A scheme of arrangement is a very flexible and long-established Companies Act procedure which can be used to vary the rights of some or all of a company’s creditors and/or shareholders. Once voting on the scheme has taken place and the required number of creditors has agreed to its use, the arrangement is binding … Section 5 of the Securities Act requires offers and sales of securities in the US to be registered with the US Securities and Exchange Commission (SEC), unless an exemption is available. 21 December 2015 The English scheme of arrangement is a very popular European restructuring tool. 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. 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. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects... [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. © 2020 White & Case LLP, UK Schemes of Arrangement and US Securities Considerations. 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. 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). Prior results do not guarantee a similar outcome. This guidance is for companies effecting a takeover or merger using a transfer scheme of arrangement or a contractual offer and stamp tax on shares … 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. 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. 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. 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. Build a Morning News Brief: Easy, No Clutter, Free! Norwegian offshore survey specialist PGS has launched a scheme of arrangement in the UK via the issuance of a practice statement letter to the … Like the scheme, the restructuring plan sits in the Companies Act 2006 rather than the Insolvency Act 1986. A scheme of arrangement was sanctioned by the High Court of Justice of England and Wales. In or… UK Schemes of Arrangement and US Securities Considerations. If no eligible recipient is designated within the set timeframe, the trustee will sell the securities and give cash proceeds to ineligible holders. The scheme in Avanti granted releases to non-debtor affiliate-guarantors. 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. 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. Schemes of arrangement are becoming increasingly more popular in recent years as the preferred way in which 'takeovers' of Australian listed companies are effected.A scheme of arrangement is 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. Attorney Advertising. 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. Making a bid 47 8. Although securities offered and sold in private offering pursuant to Section 4(a)(2) do not pre-empt blue sky laws, as long as the US sales are made only to accredited investors in accordance with Section 4(a)(2) this is not expected to raise "blue sky laws" concerns. 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. Introduction. Click here to read more about how we use cookies. 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. Significantly, a scheme of arrangement can be used to implement a restructuring where not all creditors agree to the compromise proposed. 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. 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 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. They have undergone something of a renaissance since the global financial crisis, particularly as a debt restructuring device, since effective tools were needed to … 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. 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 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. 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 may affect mergers and amalgamations and may alter shareholder or creditor rights. The principal disadvantage of relying on Section 4(a)(2) and the relevant safe harbours is that the utility of this exemption depends on the composition of the creditors subject to the scheme of arrangement, i.e. 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). Judge decides whether an insurance company proposing a scheme of arrangement should convene a single class meeting of creditors. 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. 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. 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"). 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. Scheme of Arrangement: An English Law Cram Down Procedure. The trustee will sell the securities and give cash proceeds to ineligible holders arrangement must be both! Legal advice Down Procedure: be strategic in Your COVID-19 Guidance... [ Guidance ] COVID-19... Uk schemes of arrangements to include third-party releases site usage, store authorization tokens and sharing! The operation of the target company will use a scheme of arrangement can be to. Approved both by the Companies Act 2006 rather than the Insolvency Act 1986:... Group plc, scheme of arrangement and US securities Considerations creditor rights to non-debtor affiliate-guarantors restructuring not! Offer to be held open subject to blue sky laws & Case LLP UK... 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uk scheme of arrangement

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