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2019 Summer review: M&A legal and market developments

We set out in the attached Newsletter a number of interesting English court decisions and market developments which have taken place in the first half of 2019 and their impact on M&A transactions. This review looks at these developments and gives practical guidance on their implications. The Newsletter summarises each court decision or market development and highlights key lessons from each case, and you can click where indicated to access more detailed analysis.

Contents

Company law

There have been some particular cases of interest on a range of company law issues, specifically: 

  • Parent's duty of care in relation to pollution caused by subsidiary
  • Directors' duties and collective decision-making by a board
  • Unlawful dividends, creditors' interests duty and transactions at an undervalue with intent to defraud creditors
  • Cancellation scheme of arrangement – scope of restructuring exemption

Contractual provisions

A number of cases have looked at common contractual provisions on M&A deals, including: 

  • Alleged breaches of warranty – notice of claims, fair disclosure and warranties on financial projections
  • Construction of notice of claims provision in share SPA
  • Third party rights – successful designation of a class of beneficiaries and conferment of a benefit
  • Property lease not frustrated by Brexit 
  • Non-compete covenants in share SPA – restraint of trade doctrine did not apply to procurement obligation
  • Measure of damages for breach of warranty in share SPA
  • Contractual interpretation – futility principle did not apply to condition precedent

Good faith

Recent cases have looked again at contractual duties of good faith and the relationship between contracting parties, including: 

  • Implied duties of good faith in relational agreements
  • Contractual discretions – guidance on duty to act rationally

Listed companies

There has been an interesting FCA ruling in a competition decision in the context of an IPO and placing.

 

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