By Natalie Stewart & Drew Salvest
HM Treasury has opened a consultation regarding a regulatory gateway for authorised firms approving the financial promotions of unauthorised firms. Responses to the consultation are sought by 25 October 2020 and the government is particularly interested in responses from authorised firms currently approving the promotions of unauthorised persons, retail consumers and unauthorised persons which communicate financial promotions. Unauthorised firms who rely on authorised persons to enable them to market products in the UK should consider approaching their usual approving firms to ensure any implementation of this consultation does not inhibit market access.
Financial promotions (“Promotions”) are restricted under Section 21 of the Financial Services and Markets Act 2000 (“FSMA”), pursuant to which a person must not, in the course of business, communicate an invitation or inducement to engage in investment activity unless the Promotion has been made or approved by an authorised person or it is exempt. Unauthorised firms often use authorised firms which are authorised to carry on a regulated financial services activity to approve their Promotions in order to comply with the regulations (the “Authorised Persons Approval Route”).
Authorised firms are not required to notify the Financial Conduct Authority (the “FCA”) once they have approved an unauthorised firm’s Promotion, nor does the FCA sign off on approved Promotions before they are communicated to consumers. As such, the FCA is only made aware of potential breaches of the relevant regulations. Continue reading HM Treasury Consultation on the regulatory framework for the approval of financial promotions
Many hope to see an expansion in areas that stimulate growth in a more environmentally friendly manner
By Drew D. Salvest & Natalie A. Stewart
While the world is currently focused on the impact of COVID-19 on the global economy, with “COVID-19 Bond” issuance easily outdistancing the current volume of green financing, it is time to consider post-COVID-19 activities. One positive effect of the pandemic is the demonstrable improvement of carbon levels and other environmental measures. So, as national governments consider measures to reopen their economies, lenders and borrowers may want to consider how best to finance the economies’ reemergence. Many hope to see an expansion in areas that stimulate growth in a more environmentally friendly manner.
In this context, loan market groups including the Asia Pacific Loan Market Association (APLMA), Loan Market Association (LMA) and Loan Syndications and Trading Association (LSTA) have recently published guidance to market participants on how to apply the Green Loan Principles (GLP) and Sustainability Linked Loan Principles (SLLP) in practice. The aim of the guidance is to develop the market for green financing, following the publishing of the GLP in March 2018 and the SLLP in March 2019.
The key difference between green loans and sustainability linked loans is that green loans place greater significance on the use of proceeds for green projects, whereas sustainability linked loans look to the sustainable nature of the borrower measured against specific targets. Loans can follow both the GLP and SLLP, but are rarely seen in the current market.
Further guidance has been given on the following aspects: Continue reading New Guidance Documents on Green Loan Principles and Sustainability Linked Loan Principles for a Post-COVID-19 World
By Drew Salvest
A client is prudently engaging with its bank to put in place a credit facility to address working capital needs which it anticipates might grow due to the Covid-19 isolation measures causing its customers to reduce requirements for its services and to pay more slowly than during less distressed times. As the motivation for this client to enter into the facility was its potential exposure to the risks to general economic conditions arising from the pandemic, the client was understandably concerned about the lender’s insistence on the inclusion of a “Material Adverse Change” or “MAC” representation and event of default.
The client’s question to us, after vain attempts to remove the language and tepid protestations from its relationship manager that such clauses “are rarely relied upon”, was whether it had any reason to be concerned.
To be fair to the lender, MAC events of default are rarely relied upon to enforce an event of default. However, the Covid-19 pandemic and the government ordered lockdown is having an unprecedented impact on the UK and the global economy. One has to consider whether the changed circumstances arising from this event might have a similarly unprecedented change in the approach lenders take in limiting losses in their loan portfolios. More importantly, if it does, will a typical MAC clause assist them? Continue reading MAC Clauses & COVID-19: A Free Pass For Lenders?
By Drew D. Salvest & Natalie A. Stewart
The UK government recently announced a package of measures to provide liquidity to UK businesses during the COVID-19 pandemic. Two schemes are particularly useful for financing needs: the HM Treasury and the Bank of England COVID-19 Corporate Financing Facility and the British Business Bank Coronavirus Business Interruption Loan Scheme. Our Alert provides summaries of the financing schemes, eligibility requirements and the application process.
HM Treasury and the Bank of England COVID-19 Corporate Financing Facility
Who Is Eligible?
Continue reading New COVID-19 UK Government Financing Options Available