6. Risk Allocation III Flashcards
(17 cards)
examples of conditions precedent
HMRC issuing a clearance on share acquisition re roll over relief from capital tax
CMA notifying buyer that acquisition wont be subject to phase 2 investigation
provision or transfer of regulatory licence for the particular industry (eg environmental for regulated industrial processes)
landlord consenting to assignment
shareholders passing resolution
what must happen if spa is made conditional
agreement must clearly state each party’s obligation re each condition, date by which each condition must be met, any right to terminate prior to completion
what are some standard condition precedents
obligation on one party to take all reasonable steps to procure satisfaction of condition asap
long stop date by which conditions ought to be satisfied by
if conditions are satisfied prior to long stop date, provision for completion to take place within a specified period of this happening
why will buyer require undertaking from seller as to how target is to be run between signing spa and completion
seller might neglect the business, knowing buyer must go ahead with purchase
common undertakings buyer will require from seller
not to lend / borrow money except re matters in ordinary course of business
settle any claim or dispute
acquire or agree to acquire any property, commit itself to capital expenditure, or enter into hire purchase or leasing arrangements
enter into agreement, or dispose of all or part of its business or assets except in ordiinary course of business
alter terms of employment of any employee/director
appoint any additional directors
what might a buyer do to protect its position
require that reps and warranties are repeated at the date of completion
buyer may argue for right to withdraw in the event there is a breach
what might a buyer in a strong bargaining position argue for
right to terminate agreement in the event of a material adverse change in business, assets, or profits of target
how can completion be orgainsed
through a completion agenda (agreed checklist) setting out who should be present, any authorisations required, documents that must be produced, and by whom
what if an individual cannot attend the completion meeting in person
may execute a power of attorney allowing another the power to sign documents
what should legal advisers check for
that sale is in accorance with directors duties, and if sale is to a director or a person connected, approval of shareholders might be required
requisite formalities to transfer legal interest in assets to buyer
conveyances, transfers or assignment of land and premises
assignment of good will, certain IP rights, and benefit of contracts
how can stock and moveable assets be transferred
by delivery
which docs should be handed over at completion
disclosure letter
board res authorising rep to attend to completion arrangments
docs transferring title to assets
deeds and documents of title to assets
deed and documents of title (inc freehold and leasehold)
duly executed releases of charges
financial records and books of accounts, customerlists, computer programs, designs, etc
originals, counterparts or certified copies of licences to assign leashold
sr of selling co resolving to change its name if that has been agreed
what is needed to transfer legal interest in shares
stock transfer form
share certificates
matters buyer is to deal with at completion bm of target
approval of share transfer
appointment of new directors
acceptance of resignations of directos
acceptance of resignation of co auditors and appointment of new
change of accounting reference date
change of registered office
alteration of existing bank mandates and completion of new finance arrangements
matters that may require sh approval
giving consent to spt under s190
consenting to a term in directors service contract wher employment is for a term in excess of 2 years
altering articles
post-completion matters
sdlt within 30 days
forms notifying any change of reg office
copy of any sr to CH
print of any neew articles
