EU Corporate Sustainability Reporting Directive – New ESG disclosure rules

BACKGROUND

In April 2021 the European Commission presented a proposal for a Corporate Sustainability Reporting Directive (CSRD) that would amend the current Non-Financial Reporting Directive (NFRD) and form part of the wider EU policy to require companies to publicly disclose information and data around environmental, social affairs and governance matters.

On 28 November 2022, the European Council adopted the CSRD following adoption by the European Parliament on 10 November 2022. The CSRD will come into force 20 days after publication in the EU Official Journal and EU member states will then have 18 months to incorporate it into their national laws.

SCOPE

The CSRD creates new sustainability reporting requirements and expands the scope of companies that will be subject to the EU sustainability reporting framework. Under the current NFRD, large EU listed companies, credit institutions, insurance companies and other entities are required to report and disclose certain sustainability information on an annual basis. The CSRD expands the scope of disclosure requirements to non-EU companies with substantial operations in the EU.

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The Call of Duty (of Care) – the Potential Ramifications of the Tulip Trading case

The recent case of Tulip Trading Ltd v Bitcoin Association For BSV & Ors [2022] EWHC 667 (Ch) considered, amongst other things, the potential fiduciary duties owed to crypto owners by developers of crypto software. This judgment originated from an application from the Second to Twelfth, and Fifteenth and Sixteenth Defendants who challenged the jurisdiction of the Court. In this case, it was found that the Defendants did not owe a duty to help the Claimant recover its assets. At first glance, this seems like bad news for victims of crypto fraud. However, if you go beyond the substantive judgment and look at the judge’s obiter comments, the legal developments following the judgment (including the permission to appeal), and the details of the subsequent settlement of the claim, it is arguable that this judgment provides possible scope for an additional strategy for the recovery of crypto assets in the future. Continue reading “The Call of Duty (of Care) – the Potential Ramifications of the Tulip Trading case”

New Compulsory Registration Requirements for Non-UK Entities Holding Real Estate in the UK

Various provisions of the Economic Crime (Transparency and Enforcement) Act 2022 (the Act) came into effect on 1 August 2022 with the intention of increasing the transparency of the ultimate ownership of UK real estate and prevent the use of non-UK entities by those seeking to disguise ownership for the purpose of money laundering or other illegitimate purposes.

The Act has introduced new compulsory requirements for any non UK corporation, partnership or other entity that is a legal person under its governing law (Overseas Entity) that owns or acquires a qualifying estate in any real estate in the UK to register itself and details of its managing officers (e.g. director, manager or secretary) and beneficial owners at UK Companies House in a newly created Register of Overseas Entities (ROE).

To read the full text of this Duane Morris Alert, please visit the firm website.

 

The UK Loan Recovery Scheme

By Helen Ryan 

The British Business Bank’s (“BBB”) Coronavirus Business Interruption Loan Scheme (“CBILS”) was first introduced in April 2021. The new iteration of the Scheme, the Recovery Loan Scheme (“RLS”) launched in August 2022 and will run until 2024.

Following on from our previous article regarding the CBILS, our follow-up article provides updated guidance regarding the new iteration of the Scheme, and examines the amendments that have been made to the Scheme.

Background

The RLS is a government-backed scheme aimed at supporting access to finance for businesses in the United Kingdom, operated by the BBB on behalf of the Secretary of State for Business, Energy & Industrial Strategy. The Scheme’s accredited lenders provide support by means of either a loan, overdraft, invoice finance facility or asset finance facility[1]. The Scheme’s aim is to provide financial aid to businesses that have been affected by Covid-19. The loan can be used for any legitimate business purposes, such as managing cashflow, investment and growth. The eligibility criteria for availing of the Scheme remains the same: small and medium businesses with an annual turnover of up to £45 million. Previously, the CBILS required that the borrower must confirm that it has been negatively impacted by Covid-19.

New Developments

As an update to the previous Scheme, the Covid impact criterion is absent in the new iteration of the Scheme. In the eligibility section of the BBB’s website, it states that there is “No Covid-19 impact test required: Unlike the previous iteration of the scheme, for most borrowers, there is no requirement to confirm they have been affected by Covid-19”[2]. It is unknown whether the absence of the requirement is in direct response to market feedback on the CBILS, however, the lack of the impact requirement is likely due to the ongoing effect that the pandemic has had on the economy, as observed through the ongoing supply chain issues and the cost of living crisis.

Previously, the Scheme supported loans of up £10 million for individual businesses and £30 million across a group, and also provided accredited lenders with a government-backed guarantee of 80 per cent on losses that may arise on facilities of up to £10 million. By contrast, the new iteration will support lending of up to £2 million for borrowers outside the scope of the Northern Ireland Protocol. Borrowers within the scope of the Northern Ireland Protocol may apply for lending of up to approximately £1 million, (subject to aid limit restrictions), and will provide the lender with a 70 per cent government-backed guarantee[3].

The BBB states that businesses that took out a previous CBILS facility before 30 June 2022 are not prevented from accessing the new iteration of the Scheme[4]. However, there is a possibility that businesses may not be eligible to receive the maximum amount.

The BBB also states that the term loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years[5].

Lenders in the Scheme and the Application Process

When considering a prospective lender, the BBB’s website offers two filter options: ‘Filter by Financial Variant’ and ‘Filter by Region’. The current list of accredited lenders is detailed below:

The new iteration’s list of accredited lenders is short in comparison to the previous list affiliated with the RLS (but does include RBS, HSBC, Lloyds Bank and Natwest among others) and availability varies by region. However, it is likely that the list of accredited lenders will expand over time.

Under RLS, lenders are required to undertake their standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants[6]. Once an application has been submitted to an accredited lender, the lender will determine whether they can offer a commercial facility on better terms than the RLS facility. If they are able to offer better terms, they will do so. Otherwise, the lender, at their discretion, may elect to use the RLS to support an application. If one’s application with a lender is rejected, a borrower is not prohibited from applying to other RLS-accredited lenders.

For More Information

If you have any questions about this blog, please contact Drew D. SalvestNatalie A. StewartRebecca Green, Helen Ryan, any of the attorneys in our Banking and Finance Industry Group or the attorney in the firm with whom you are in regular contact.

[1] https://www.ukfinance.org.uk/covid-19/business-support/recovery-loan-scheme-qa-businesses

[2] https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/for-businesses/

[3] https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/for-businesses/

[4] https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/

[5] https://www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/

[6] https://blogs.duanemorris.com/london/2020/03/31/new-covid-19-uk-government-financing-options-available/

All small claims are equal, but some small claims are more equal than others

By Oliver Kent and Sam Laycock

Disgruntled holidaymakers who have suffered delay at the hands of their airlines are among the potential claimants who may soon find that the familiar phrase, “I’ll see you in court”, doesn’t quite have the same impact it used to. Enter: the ‘Small Claims Paper Determination Pilot’ (“the Pilot”). Introduced under the 143rd Practice Direction Update as PD 51Z1, this update applies to proceedings issued after 1 June 2022 and allows the Courts to determine the outcomes of matters allocated to the small claims track without a hearing (i.e. on paper) and ultimately, without reference to the parties concerned.2
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To Pay or Not to Pay – Factors to Consider when Faced with a Ransomware Attack

By Chris Recker and Charlyn Cruz

In this digital age, the data held by an organisation can be one of its most important commodities. Threat actors (also known as malicious actors) recognise this and as such, cyberattacks have been on the rise. In particular, ransomware attacks have increased in frequency – studies have found that more than three-quarters of UK businesses were affected by ransomware in 2021. This is to be expected, not least because an organisation can still experience significant disruption, even where it is not the target of a ransomware incident (for example, it could be that an organisation further up or down the supply chain may have been affected).

So what should a company do when their data is being held captive? Should they submit to the demands of the threat actor and simply pay? Or should they refuse to back down, on moral grounds (amongst other things)?

Continue reading “To Pay or Not to Pay – Factors to Consider when Faced with a Ransomware Attack”

Bank of England explores impact of climate change on the UK banking sector

On 8 June 2021, the BoE published the “Climate Biennial Exploratory Scenario: Financial risks from Climate Change” (CBES), identifying climate change as a financial risk with a view to exploring its impact on the banking and insurance sectors. In this post we take a look at the CBES and its implications for banks and borrowers.

To read the full text of this blog post by Duane Morris attorneys Drew Salvest, Natalie Stewart and Rebecca Green, please visit the Duane Morris ESG Blog.

Multiplex v Bathgate: Legal Riddles and Unsolvable Problems

Mr Justice Fraser’s decision in Multiplex Construction Europe Ltd v Bathgate Realisation Civil Engineering Ltd and Others is one of the more curious decisions you will ever read.

Not that I would particularly encourage anyone to read it. The case necessitated some pretty comprehensive and in-depth legal analysis that means the judgment runs to some 206, fairly dense, paragraphs, and an Appendix; I would challenge even the most avid consumer of legal treatises to read the whole thing in one sitting without their eyes glazing over at some point. Helpfully, my colleague Vijay Bange has already produced a very useful summary of the decision and its legal implications here.

However, the density and depth of the judgment does not mean it is without interest; far from it. In fact I suspect this case will prove to be one of the more fascinating legal tangles the Courts will be asked to unravel this year. This article looks at some of the more curious aspects of this dispute, away from the key aspects of the case. Continue reading “Multiplex v Bathgate: Legal Riddles and Unsolvable Problems”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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