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International Developments

Cleary Gottlieb Discusses Upcoming LIBOR Transition

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On 16 January 2020, the Bank of England (the “BoE”), the UK Financial Conduct Authority (the “FCA”) and the Working Group on Sterling Risk-Free Reference Rates (“RFRWG”) published a set of documents outlining priorities and milestones for 2020 on LIBOR transition.[1]

UK regulators have signalled that 2020 is a critical year in the transition efforts from LIBOR to alternative risk-free rates such as the Sterling Overnight Index Average (“SONIA”), the RFRWG recommended replacement rate for Sterling LIBOR-referenced transactions. The suite of publications released last month set out key priorities and milestones for transition progress in 2020, and help to … Read more

Financial Regulators Warn Over Chinese Audit Quality Amid Coronavirus Outbreak

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In November 2019, we met with senior representatives of the four largest U.S. audit firms, including certain of their network representatives, to discuss audit quality across their global networks and certain of the challenges faced in auditing public companies with operations in emerging markets, including China.  Those November 2019 meetings, which were discussed in a contemporaneous joint press release,[1] were part of our ongoing efforts to address the issues highlighted in our December 2018 Statement on the vital role of audit quality and regulatory access to audit and other information internationally.[2]  Significantly, among those issues is that the

… Read more

Skadden Discusses Merger Reviews and Antitrust Investigations Under Brexit Agreement

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The U.K. Competition and Markets Authority (CMA) has published “Guidance on the Functions of the CMA Under the Withdrawal Agreement” (Guidance), which sets out the regulator’s approach to merger and competition cases during the Brexit transition period that will run until at least through December 31, 2020 (Transition Period):

  • The Guidance confirms that during the Transition Period, the U.K. and the EU merger procedures will remain closely aligned. The EU competition and merger control rules will continue to apply as if the U.K. were still an EU member state.
  • The European Commission (EC) will have exclusive jurisdiction over

… Read more

The Results Are in: Global Investor-Director Survey on Climate Risk Management

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Institutional investors are increasingly focused on “extra-financial performance” as a predictor of long-term success of companies. Topics like climate change, CO2 emissions reduction, respect for the environment, labour rights, and diversity are more and more factored into investment decisions.

Investors, directors and company management need to work together to leverage the new regulatory environment, address unprecedented environmental and social challenges, and promote disruptive technological innovation to strengthen business models and improve performance.

About the Survey

This global survey, conducted by a team of academics from the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School and Environmental, … Read more

Davis Polk Reviews China Antitrust in 2019

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Last year marked the eleventh anniversary of China’s Anti-Monopoly Law (the “AML”).  In 2019, China announced the first-ever set of proposed amendments to the AML as well as the introduction of several new regulations aimed at more transparency and efficiency in antitrust enforcement and codifying noteworthy deviations between Chinese and United States and European Union antitrust laws.

In the past year, the State Administration for Market Regulation (“SAMR”) approved five transactions with conditions (i.e., remedies), a slight uptick from four in 2018.  The average review time for these five transactions was approximately one year.  SAMR did … Read more

Cleary Gottlieb Discusses Final CFIUS Regulations

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On January 13, 2020, the U.S. Department of the Treasury (“Treasury”) released final regulations (the “Final Regulations”)[1] implementing the updates to the foreign investment review process of the Committee on Foreign Investment in the United States (“CFIUS”) contained in the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”).  The Final Regulations, effective February 13, 2020, largely track the September 2019 proposed regulations (the “Proposed Regulations”)[2] to implement FIRRMA’s expansion of CFIUS’s jurisdiction.  FIRRMA in turn codified existing CFIUS practice as it has evolved in recent years, particularly … Read more

Cleary Gottlieb Discusses Developments in Brexit and Corporate Governance

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In 2020, businesses operating in the UK will need to grapple with the continued uncertainty caused by Brexit and will need to closely monitor a number of important corporate governance and reporting developments expected in the coming year.

Continued Uncertainty Caused by Brexit

When we first wrote about Brexit-related risks in our 2017 memo, “The Change in Administration in the United States and Brexit and Political Uncertainty in the United Kingdom and Europe,” few would have predicted that the ensuing political uncertainty would remain at the top of the UK corporate agenda three years later.

2019 saw businesses continue to … Read more

ISS Offers 2019 Hong Kong Proxy Season Review

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In early 2019, the government of Hong Kong proposed a bill that would allow for the transfer of criminal suspects to jurisdictions with which it does not have an extradition agreement, including Mainland China. The proposed extradition bill triggered an intense public backlash as opponents believed the bill would expose Hong Kong to China’s legal system, jeopardizing the city’s autonomy and status as a financial hub. Millions of demonstrators took to the streets in June, clashing with law enforcement and demanding withdrawal of the extradition bill. The ongoing protests have taken a heavy toll on Hong Kong’s economy. Industries, including … Read more

Gibson Dunn Offers 2019 Year-End FCPA Update

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2019 was, by many measures, the most significant year ever in Foreign Corrupt Practices Act (“FCPA”) enforcement. More than $2.6 billion in corporate fines sets a new high-water mark, driven by the two largest corporate resolutions in the statute’s history. Fifty-four FCPA enforcement actions, or 73 total cases including ancillary actions, brought by the FCPA Units of the U.S. Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”), each rank second only to 2010 in the annals of FCPA enforcement. Four FCPA and FCPA-related trials is the most ever. Add on top of this new FCPA enforcement policy guidance … Read more

ISS Discusses Investor Considerations for Aramco Oil

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When Saudi Arabia’s Crown Prince Mohammad Bin Salman announced plans to sell stakes in state-owned Saudi Arabian Oil Co. (Saudi Aramco) in 2016, he was also setting the stage for the biggest initial public offering (IPO) in history. On December 5, 2019 Saudi Aramco, the world’s largest oil company, confirmed the price of its shares at SAR 32 ainitiapiece, raising $25.6 billion before it appeared on the Saudi Stock Exchange (Tadawul) on December 11, 2019.

This investment opportunity enters the market at a time when investors are moving away from traditional energy stocks and focusing on investments with a reduced … Read more

Long-Run Short Selling

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On December 3, 2019, Japan’s Government Pension Fund (GPIF) announced that it would suspend share lending to short sellers.  This is the latest development in a growing global regulatory skepticism of shorting, with Reuters recently reporting that short selling bans are under consideration in South Korea, Germany, France, Italy, and Turkey.  Prominent short activists have characterized these regulatory efforts as a “war on truth,” calling themselves modern-day Davids fighting corporate Goliaths, powerful companies who commandeer protectionist instincts to shield local industry from legitimate criticism.

To be sure, a large academic literature has found that short selling improves price … Read more

Gibson Dunn Discusses EU and U.S. Expectations for Internal Compliance Programs

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The European Union has become more active in addressing EU common foreign and security policy (“CFSP”) objectives with the help of what it calls “restrictive measures,” i.e., EU Financial and Economic sanctions. As indicated in our recent client alert, The EU Introduces a New Sanctions Framework in Response to Cyber-Attack Threats and even more recent by introducing a framework for EU Financial Sanctions against Turkey,[1] it has also specifically started to unilaterally implement sanctions addressing EU security concerns, including issues beyond traditional areas addressed by sanctions such as “traditional” sanctions imposed due to terrorism and international relations-based … Read more

Reaching for Yield and the Diabolic Loop in a Monetary Union

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One of the repercussions of the housing market collapse in the U.S. in 2007 was global anxiety about excess leverage, debt repayment, and overall credit conditions. Risk-pricing levels increased abruptly for highly indebted countries, making new borrowing to refinance debt increasingly difficult. Next year marks a decade since the eruption of the Eurozone sovereign debt crisis, when Greece, Italy, Ireland, Portugal, and Spain, known as the GIIPS countries, experienced an unprecedented rise in their borrowing rates.

For example, Greece and Ireland in 2010 ran an unprecedented peace-time deficit, reaching 15.8 percent and 32 percent of GDP, respectively. The Irish government … Read more

Restructuring Argentina’s Sovereign Debt: Navigating the Legal Labyrinth

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For almost two years, Argentina has been facing a severe economic recession and has not had the ability to access international capital markets. This has been due to several factors, including a general capital flight from emerging markets following the U.S. Federal Reserve’s interest rate hikes throughout 2018, and the country’s persistent fiscal deficits and macroeconomic imbalances. The crisis moreover comes at a time when the risk of a global economic slowdown has sharply increased.

All of this has left Argentina vulnerable to a sovereign debt crisis. The president elect, Alberto Fernandez, has stated that once he takes office … Read more

Davis Polk Discusses Strengthening UK Merger Control

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The UK operates a voluntary merger control regime[1].  In addition, the European Commission (EC) operates a ‘one-stop shop’ jurisdiction to review the largest and most complex cases on behalf of all EU Member States, including the UK.  The combination of a voluntary UK regime and EC jurisdiction over major deals has resulted in the UK’s antitrust authority – the Competition and Markets Authority (CMA) – historically having a lower profile than many other major G20 enforcement authorities.

With Brexit now looming, however, the CMA is seeking to raise its global profile and to articulate … Read more

Wachtell Lipton Discusses Shareholder Activism in France as Model for U.S.

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In response to the sharp increase in campaigns by activist hedge funds in France and Europe generally, a French commission has conducted an extensive investigation and issued a carefully researched, reasonable and balanced report recommending regulatory and procedural changes to rebalance the relationship between companies and activists.  The key recommendations are:

  1. “[S]tronger transparency measures applicable to investors taking public positions, directly or indirectly, aimed at influencing an issuer’s strategy, financial position or governance.  An activist taking a public position should disclose, inter alia, the number of shares and voting rights and the type of securities held in the issuer,

… Read more

“Centros” and Defensive Regulatory Competition in the European Union

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Centros, a landmark 1999 decision by the European Court of Justice (now Court of Justice of the European Union or CJEU), has profoundly transformed European company law. Previously, many EU member states used the “real seat theory” to hinder regulatory arbitrage. Under this theory, a company had to incorporate pursuant to the procedures of the jurisdiction where its administrative center was located. For example, for a firm with its headquarters in Germany to acquire full legal status in the eyes of German courts, it had to be formed under German law. The theory was not aimed at protecting … Read more

Welcome to Vilnius: Regulatory Competition in the EU Market for E-Money

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If you google “Lithuania e-money,” the auto-fill function will suggest that you search for ”Lithuania e-money license.” If you accept the tip, the first result will be Ecovis, which describes itself as “the most experienced finance institution and FinTech licensing advisor” for Lithuanian licenses. The second Google result is SB-SB Legal Services, which has a more global reach and boasts of being “capable of proposing a wide choice of countries suitable for the registration of payment systems. We offer electronic money licenses in European countries, including Lithuania, Malta, Czech Republic, Cyprus, Estonia, Bulgaria, Switzerland, Great Britain and Gibraltar,” in addition … Read more

Cleary Gottlieb Discusses EU’s New Whistleblower Protections

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A lively debate has been sparked both among the public and scholars about the protection of informants, promp­ted in part by the whistleblowers who uncovered the scandals that recently attracted so much interest in the media, including Cambridge Analytica, the Panama Papers or LuxLeaks.  One topic under dis­cussion is the extent to which whistleblowers should enjoy “the legal regime’s blessing” and be protected against sanctions, inter alia, under labor or criminal law, in view of the tension between private interests in the protection of internal matters and the public interest in uncovering legal vio­lations and internal irregularities.

Under … Read more