The Journal of International Banking Law and Regulation (JIBLR) has published an article written by members of our securities class action practice: Capital Raisings and Opportunistic M&A in a Covid-19 Environment—Lessons Learned from the Global Financial Crisis.
Covid-19 will make it inevitable that some companies will need to bolster their capital positions, which will lead to rights issues and other forms of capital raising later this year and into 2021. On the other hand, there will be other companies who emerge from the immediate crisis and identify opportunities to gain market share or pursue other strategic goals through mergers and acquisitions. The article considers class action specific issues which companies may face during these types of transaction. There are certain parallels which may be drawn between the current environment and the financial crisis, and the article identifies learning points from the two class actions commenced in the English courts following major transactions in the run-up to and at the height of the financial crisis—the Royal Bank of Scotland rights issue and Lloyds’ acquisition of HBOS.
In particular, the article considers:
- The legal tests governing what information is required to be disclosed;
- Relevant considerations when information is excluded from public disclosures;
- Forward-looking guidance;
- Specificity of risk factors;
- The impact of timetable pressure;
- Working capital statements;
- Recommendations to shareholders; and
- Regulator capriciousness.
Please contact Ceri Morgan if you would like to request a copy of the full article.