In Practice

The UK’s second batch of Sukuk and the question of Shariah compliance: exclusion clauses v due diligence

In this In Practice article, UK and international legal authority on Islamic financial law, Dr Lu’ayy Minwer Al-Rimawi, questions the excessive use of exclusion clauses in the UK’s latest Sukuk issuance to exclude liability for Shariah compliance.

The Bank of England’s first ever bail-in recognition

In this article, Carl Baker considers the Bank of England’s decision to recognise the bail-in of loans to PrivatBank, a Ukrainian bank resolved in accordance with Ukraine’s resolution regime.

Section 32 Limitation Act: an evolving yet difficult route for claimants

Is it time to review your “standard” increased costs clauses in facility documentation?

With the advent of the final stage of Basel III implementation (often referred to as Basel IV), it is time again for lenders and borrowers to consider the formulation of “boiler plate” increased costs clauses in their existing credit documentation and future transactions. In this In Practice article we highlight some of the potential interactions the latest reforms may have with commonly seen drafting both in the UK and the US and discuss some of the devices which borrowers and sponsors may use to mitigate the likelihood of being on the receiving end of an increased costs claim in the future.

ESG: authorities’ potential enforcement action against companies

The environmental regulatory risk landscape is evolving in ways that companies may not yet have considered. It is already well-known that financial regulators are working to protect capital market participants from greenwashing by the adoption of sustainability disclosure standards and the creation of a green taxonomy. Comparatively less attention has been paid to authorities with broad regulatory remits covering most or all sectors of the economy, which are increasingly using their powers to take enforcement action or cause reputational harm in respect of companies who engage in greenwashing. Meanwhile, private actors such as non-governmental organisations (NGOs) with ESG mandates can opportunistically seek to trigger or encourage investigations by such authorities, so as to pressure businesses to change behaviours. In this article, we examine the role of two such authorities: the Competition and Markets Authority and the UK National Contact Point.

The Quincecare duty: 30 years on

In a sign of the times, the first quarter of this year has seen three cases on a bank’s duty to refrain from executing a payment instruction where it has reasonable grounds to suspect the transaction may be an attempt to misappropriate the account-holder’s funds. Until now, in the thirty years since it was first recognised, cases relating to the so-called Quincecare duty have been few and far between. This in itself indicates the narrow circumstances in which the courts have found the duty has not only been breached, but even arisen in the first place.

The ESG revolution in funds finance

There has been something of a revolution in ESG (Environmental, Social and Governance) in the funds finance industry over the past several years. For large private equity sponsors an ESG linked capital call or subscription line facility is now becoming more of the norm than the exception. Increased awareness of the importance of ESG and in Europe, the implementation of various regulations that promote measurement and adoption of ESG favourable practices, have been the greatest factors in this growth. Investors in funds now require disclosure by fund managers prior to closing a fund on what their ESG policy and strategy is when deploying capital.

Fund finance: the securitisation question

Does a transaction in the European fund finance market constitute a “securitisation” under EU and UK securitisation regulatory frameworks? The answer impacts the potential regulatory capital treatment and liquidity of the financing and, accordingly, the pricing that lenders may be able to provide. Funds need to be aware of this question and the regulatory implications across Europe.

Core-plus infrastructure and leveraged financing: the continued convergence of terms

In this In Practice article, the author sets out some of those terms more commonly being sought by infrastructure funds for the debt financing of their assets, which traditionally would have been more commonly seen in the PE/leveraged buyout debt market.

Crypto yield

Bitcoin, the original cryptoasset, does not pay interest or otherwise generate cashflows under the smart contract of the protocol. That has not, however, stopped the crypto community from developing products and code that do exactly that both for bitcoin and for many other types of cryptoasset. Charles Kerrigan explores the new market for crypto products with cash flows.