Business Law International (BLI)

The Covid-19 pandemic continues to have a profound effect on our societies and on our economies. Policy-makers across the globe are providing unprecedented support to citizens, businesses and financial markets, in order to keep our economies moving and to fuel recovery. Responses differ by jurisdiction, both in the level and in the nature of the support. This article examines the responses of policy-makers in the United Kingdom and the Netherlands, with a particular focus on business support, rescue and recovery, and considers whether the support packages may unintentionally be providing harbours for unviable businesses.

Read this article online 

This is the second part of an article; the first part was published in Business Law International Volume 22, Number 1 (January 2021).

This second part continues the article’s exploration of those areas of EU law that permit a Member State legitimately to interfere in markets, coupled with the unique set of checks and balances available under EU law that are designed to ensure that a Member State, when exercising its legitimate interests, does not do so in ways that subvert the free trade principles upon which the EU is based. The working premise of this article is that those checks and balances within the EU legal order should mean that any state of ‘new normal’ in the business world in the wake of Covid-19 has the potential to revert to a more old-fashioned ‘normal’ once economic circumstances have changed fundamentally. The political and legal challenges for forging a new balance between the state and industry, given the lack of such instruments, might be much more challenging in many other parts of the world without the web of checks and balances that exist in the very special ‘federal’ structure that characterises the EU.

Read this article online 

With the ushering in of South Africa's Companies Act 71 2008 came innovative rules with provisions that are somewhat difficult to understand. Some of the puzzling and mysterious provisions that formed part of Act 71 were corrected through the Companies Amendment Act 3 2011. The aim of this article is to explain the provisions and effects of section 136(2) of the 2008 Act and section 87 of the Amendment Act. Both these sections relate to alteration of agreements. These sections are assessed to determine when and to what extent the alteration of agreements would apply to business rescue. The article seeks to demonstrate that business rescue provisions are crafted to balance the creditors’ contractual rights with the methodologies intended to realise the rehabilitation of entities in distress. Lack of clarity on how business rescue affects contracts where both the creditor’s and the company’s performance is outstanding is also problematic; this issue is assessed. To highlight the importance of securing creditors’ rights, a brief appraisal of the British corporate rescue regime is provided. Similarly, a look at the provisions of the EU Directive (2019/1023) on how to make business rescue more efficient provides valuable lessons.

Read this article online 

The United Kingdom exited the European Union on 31 January 2020. By virtue of this, the EC Takeover Directive ceased to apply in the UK, and thus there was a need to amend the existing regulatory framework on takeovers for it to operate after the UK’s exit from the EU. As a result, the Code Committee of the Takeover Panel published a Public Consultation Paper proposing amendments to the Takeover Code. A Response Statement was also published by the Code Committee with final proposed amendments. Final amendments to the Takeover Code were later published in Instrument 2019/3. Likewise, the Takeovers (Amendment) (EU Exit) Regulations 2019 made the necessary amendment to the Companies Act 2006.

The Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, which entered into force on 31 January 2020, states however that there shall be ‘a transition or implementation period, which shall start on the date of entry into force of this Agreement and end on 31 December 2020’. Such transition or implementation period can be extended ‘for up to 1 or 2 years’, with the decision regarding the extension needing to be taken ‘before 1 July 2020’. The UK decided not to request the extension of the transition or implementation period and thus the period ended on 31 December 2020.

The first part of this article discusses the Takeover Code and the Takeover Panel. This is then followed by an examination of the rules of the Takeover Code relating to the non-frustration rule. The article then delves into the duties of directors under the company law regime and expounds the desirability of the non-frustration rule. The article concludes by stating that the amendment to the regulatory framework on takeovers does not bring about a substantial change to the current regime and calls for the abolition of the non-frustration rule.

Read this article online 

In HMRC v Development Securities, the UK Court of Appeal reinstated the first-tier decision that Jersey-incorporated subsidiaries of a UK parent were UK tax resident by reason of having their central management and control in the UK on the basis that they were simply following the instructions of a UK parent without themselves considering the merits of entering the transaction. This arguably constitutes a widening of the test of corporate residence for UK tax purposes.

Read this article online

Consulting editor: Christoph H Vaagt on behalf of the International Bar Association

Read this article online

• Volume 22 Number 1, January 2021
• Volume 21 Number 3, September 2020
• Volume 21 Number 2, May 2020
• Volume 21 Number 1, January 2020
• Volume 20 Number 3, September 2019
• Volume 20 Number 2, May 2019
• Volume 20 Number 1, January 2019