Banking and Capital Markets 2021

Adams

Sujets

• Droit et juridique
• Bank regulation

Informations

• Publié par: College of Law Publishing
• Date de parution: 01 janvier 0001
• Nombre de lectures: 1
• EAN13: 9781913226930
• Langue: English

Extrait

BANKING AND CAPITAL MARKETS
BANKING AND CAPITAL MARKETS
David Adams LLB, Solicitor
Published by
College of Law Publishing,
Braboeuf Manor, Portsmouth Road, St Catherines, Guildford GU3 1HA
© The University of Law 2021
David Adams has asserted his moral rights under ss 77–80 of the Copyright, Designs and Patents Act 1988
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any way or by any means, including photocopying or recording, without the written permission of the copyright holder, application for which should be addressed to the publisher.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
ISBN 978 1 913226 81 7
Typeset by Style Photosetting Ltd, Mayfield, East Sussex
Tables and index by Moira Greenhalgh, Arnside, Cumbria
Preface
The hardest part in writing this book was deciding what should be left out; a work entitled ‘Banking and Capital Markets’ could justifiably run to a dozen volumes. However, from a solicitor’s perspective, banking practice is essentially ‘document driven’, and so Part I of this book is devoted to the fundamentals behind drafting loan facility documentation. Probably the most legally complex area of a banking solicitor’s practice is that of security: Part II therefore explains the fundamental issues of secured lending. Lastly, Part III of the book introduces capital markets financing and, in particular, the process of issuing a eurobond. The reader should be aware that this book is primarily designed as an integral part of the Legal Practice Course elective, ‘Banking and Debt Finance’.
In true preface tradition, I must record my thanks to the people who saved me from making countless mistakes. In particular, I must thank ex-client Ian Brown, colleagues Patrick O’Connor, David Dunnigan and Julia Machin, and ex-colleague Frances George. Following preface tradition still further, I take all responsibility for the mistakes that remain. This book is dedicated to Jayne, who supported me through the pregnancy pains of its creation whilst suffering her own, and to little Tabitha and Francesca for giving me the best incentive to finish writing.
The law is stated as at 1 October 2020 (unless indicated otherwise).
Lastly, the Financial Times articles reproduced throughout the book are from various years and are intended to provide contextual illustrations of topics rather than current market positions.
DAVID ADAMS
London
Contents
PREFACE
TABLE OF CASES
TABLE OF STATUTES
TABLE OF SECONDARY LEGISLATION, ACCOUNTING STANDARDS AND RULES
TABLE OF ABBREVIATIONS
Chapter 1 RAISING FINANCE: AN OVERVIEW OF PLAYERS AND PRODUCTS
1.1 Introduction
1.2 Borrowers
1.3 Lenders
1.4 A bank is a bank is a bank
1.5 The finance solicitor’s role
1.6 Perspectives
Part I FACILITY AGREEMENTS
Chapter 2 DUE DILIGENCE, COMMITMENT LETTERS AND THE TERM SHEET
2.1 Introduction: understanding the context
2.2 Due diligence
2.3 The term sheet and commitment letter
2.4 What should the commitment letter cover?
2.5 What should a basic term sheet cover?
2.6 Legal effect of the term sheet
2.7 Private equity term sheets
2.8 From commitment documents to loan: duty to negotiate in good faith?
2.9 Sample term sheet
2.10 Confidentiality letter
Chapter 3 PLAIN VANILLA OR BELLS AND WHISTLES?
3.1 Introduction
3.2 Common types of facility
3.3 Syndicated facilities
3.4 Leveraged acquisition facilities
3.5 Other forms of short-term lending
3.6 Which facility is appropriate?
3.7 Anatomy of a facility agreement
3.8 Matched funding
3.9 Further reading
Chapter 4 WHEN, WHO, WHERE, WHAT AND WHY?
4.1 Introduction
4.2 Date
4.3 Parties
4.4 Interpretation/definitions
4.5 The facility
4.6 Purpose clause
4.7 Conditions precedent
4.8 Availability
4.9 Floating rate interest
4.10 Fixed rate interest
4.11 Interest periods
4.12 Apportionment: the ‘day count fraction’
4.13 Ratchets
4.14 Hedging
4.15 Default interest
4.16 Basis points
Summary
Chapter 5 REPRESENTATIONS
5.1 Introduction
5.2 Representations in a facility agreement
5.3 Representations – the bank’s perspective
5.4 Representations – the borrower’s perspective
5.5 Representations in contract law
5.6 Conclusion
Chapter 6 A REVIEW OF COMPANY ACCOUNTS
6.1 Introduction
6.2 Financial statements
6.3 The balance sheet
6.4 Income statement
6.5 Directors’ report, auditor’s report, and notes to the accounts
6.6 Cash flow statements
6.7 Consolidated accounts
6.8 Management accounts
6.9 Accounting regulations
Summary
Chapter 7 UNDERTAKINGS
7.1 Introduction
7.2 What is an undertaking?
7.3 Financial covenants
7.4 Information undertakings
7.5 General undertakings
7.6 Undertakings – the bank’s perspective
7.7 Undertakings – the borrower’s perspective
Chapter 8 EVENTS OF DEFAULT
8.1 Introduction
8.2 Why have events of default?
8.3 Common events of default
8.4 Events of default and other clauses
8.5 Action on default
8.6 Grace periods, defaults and potential events of default
8.7 Events of default – the bank’s perspective
8.8 Events of default – the borrower’s perspective
Chapter 9 BOILER PLATE, MECHANICS AND MISCELLANEOUS CLAUSES
9.1 Introduction
9.2 Repayment, prepayment and cancellation
9.3 Margin protection
9.4 Costs and expenses
9.5 Fees
9.6 Remedies, waivers, partial invalidity and amendments
9.7 Force majeure
9.8 Governing law and jurisdiction
9.9 Miscellaneous
9.10 Schedules
9.11 Execution
9.12 US and English law loan facilities
Chapter 10 NOVATION, ASSIGNMENT AND SUB-PARTICIPATION
10.1 Introduction
10.2 Why sell a loan?
10.3 Moving rights and obligations
10.4 Selling assets
10.5 Global Transfer Agreement
10.6 The Loan Market Association (‘LMA’)
10.7 Tax implications
10.8 Financial Services and Markets Act implications
10.9 Borrower transfers
10.10 Other jurisdictions
10.11 Securitisation
10.12 Asset sales – the bank’s perspective
10.13 Asset sales – the borrower’s perspective
10.14 Further reading
Chapter 11 DRAFTING TIPS
11.1 Introduction
11.2 Creating the document
11.3 The aims of drafting
11.4 Templates and precedents
11.5 Drafting techniques
11.6 Key words
11.7 Time computations
Part II SECURED LENDING
Chapter 12 COMMON FORMS OF SECURITY
12.1 Introduction
12.2 Categorising security
12.3 Giving rights over assets
12.4 Transfer of ownership
12.5 Giving physical possession
12.6 Assignment
12.7 Some terminology
12.8 Further reading
Chapter 13 QUASI-SECURITY
13.1 Introduction
13.2 Third party support – guarantees and comfort letters
13.3 Negative pledge
13.4 Retention of title
13.5 Set-off
13.6 Why take security?
13.7 Security – the bank’s perspective
13.8 Security – the borrower’s perspective
13.9 Further reading
Chapter 14 FURTHER ISSUES ON TAKING SECURITY
14.1 Introduction
14.2 Perfection through registration
14.3 Priority of security
14.4 Contractual subordination
14.5 Tacking
14.6 Ruling off accounts
14.7 Fixed or floating charge?
14.8 Hardening periods
14.9 Capacity
14.10 Corporate benefit
14.11 Financial assistance
14.12 Applicable law
14.13 UNCITRAL Model Law
14.14 Other considerations on taking security
14.15 Further reading
Chapter 15 SECURITY DOCUMENTATION – DEBENTURES
15.1 Introduction
15.2 Structure of a typical debenture
15.3 Execution
Chapter 16 LEGAL OPINIONS
16.1 Introduction
16.2 What are legal opinions?
16.3 Preamble
16.4 Assumptions
16.5 Opinion
16.6 Qualifications
16.7 Foreign counsel legal opinions
16.8 Conclusion
Part III CAPITAL MARKETS
Chapter 17 INTRODUCTION TO INTERNATIONAL CAPITAL MARKETS
17.1 Introduction
17.2 What is a capital market?
17.3 Domestic and euromarkets
17.4 Debt and equity securities
17.5 Bonds and notes
17.6 Other debt securities
17.7 Primary and secondary markets
17.8 Clearing systems
17.9 International Capital Markets Association
17.10 The issuers
17.11 Credit rating
17.12 Further reading
Chapter 18 THE FORMS AND LEGAL CHARACTERISTICS OF A BOND
18.1 Introduction
18.2 The form of a bond
18.3 Legal nature of a bond
18.4 Comparing registered and bearer bonds
18.5 The legal effect on bearer bonds held in clearing systems
18.6 Further reading
Chapter 19 ISSUING A BOND – THE PARTIES AND DOCUMENTATION
19.1 Introduction
19.2 Parties to a bond issue
19.3 Documentation of a bond issue
19.4 Terms and conditions of a bond
Chapter 20 BOND PROSPECTUS AND LISTING PARTICULARS
20.1 Introduction
20.2 Obtaining a London listing
20.3 When is an approved prospectus required?
20.4 Contents of a prospectus
20.5 General duty of disclosure
20.6 Omission of information
20.7 Liability for prospectus and listing particulars
20.8 The ‘Golden Belt’ case
20.9 Other jurisdictions
Chapter 21 ISSUING A BOND – THE PROCESS
21.1 Introduction
21.2 The stages of a bond issue
21.3 Mandate
21.4 Due diligence
21.5 Documentation
21.6 Marketing
21.7 Launch and syndication
21.8 Listing
21.9 Signing
21.10 Closing
GLOSSARY
BIBLIOGRAPHY
INDEX
Table of Cases A Agnew and Another v Commissioner of Inland Revenue (’Brumark’) [2001] UKPC 28, [2001] 3 WLR 454 172 Al Nakib Investments (Jersey) v Longcroft [1990] 3 All ER 321 231 Argo Fund Ltd v Essar Steel Ltd [2005] EWHC 600 (Comm) 124 Atlantic Computers plc (in administration), Re; National Australia Bank Ltd v Soden [1995] BCC 696 150 B Barbudev v Eurocom Cable Management Bulgaria [2012] EWCA Civ 548 17 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 37 BNP Paribas v Yukos Oil Company [2005] EWHC 1321 (Ch) 91 BNY Corporate Trustee Services Ltd v Eurosail-UK-2007-3BL Plc & Others [2011] EWCA Civ 227 89 Bradman v Trinity Estates plc [1989] BCLC 757 110 Brightlife, Re [1987]