For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.
The European Union and the UK—On 23 June 2016, voters in a UK referendum voted 52 percent to 48 percent to leave the European Union. The referendum result is not binding on the UK Parliament, which still needs to decide whether, when and how to implement the decision. Whatever lies ahead, the reality is that it will likely take at least two years to give effect to the UK's separation from the EU. In the meantime, the contingency plans that financial institutions and other businesses have been making since the referendum was announced are being revisited. A Jones Day webcast discussing the ramifications of Brexit is available here.
The UK—On 1 August 2016, six years after it received Royal Assent, the UK Third Parties (Rights Against Insurers) Act 2010 ("2010 Act") will finally come into force. It is expected to provide a more effective mechanism for third-party claimants to seek recovery directly from an insolvent debtor's liability insurers. The 2010 Act will supersede the UK Third Parties (Rights Against Insurers) Act 1930 ("1930 Act"), which provides for a statutory assignment to a third-party claimant of an insolvent debtor's rights to claim against its liability insurer. This allows the third party to "step into the shoes of" the insured debtor and sue the debtor's insurers directly, rather than having its judgment left unsatisfied through the judgment debtor's insolvency. The 1930 Act, however, has proved cumbersome in operation because, before being able to pursue action directly against insurers, the claimant first has to pursue the defunct (insured) defendant to a successful outcome (establishing liability by agreement, award or judgment). Two separate sets of proceedings have therefore been needed. With the coming into force of the 2010 Act, however, while the statutory assignment device is retained, it will no longer be necessary to institute two separate sets of proceedings in order to benefit from it. Instead the claimant can simply sue the defendant's insurers directly, while at the same time seeking a declaration of the insured defendant's liability in that single set of proceedings. A more detailed discussion of the 2010 Act can be found here.
The European Union and the US—After months of criticism from various EU bodies and institutions, the much-anticipated EU–US Privacy Shield was approved by the European Commission on 7 July 2016, paving the way for self-certifying US organizations to legally transfer EU personal data across the Atlantic. The adoption of this new framework ends months of uncertainty for thousands of companies that relied on the Privacy Shield's predecessor, the Safe Harbor Program, to transfer EU personal data across the Atlantic. The terms of the Privacy Shield are expected to be published in the US Federal Register by mid-August 2016. Companies interested in self-certifying compliance with this new trans-Atlantic data-transfer framework can do so beginning 1 August 2016, when the Department of Commerce will begin accepting certifications. Now is the time for companies to consider whether certifying with the Privacy Shield is the best option for their business. A more detailed description of the Privacy Shield is available here.
Italy—Rules issued by the Italian securities market regulator (Commissione Nazionale per le Società e la Borsa) implementing new requirements for issuers of market-traded securities became effective on 1 July 2016. The new rules are intended to increase transparency in the ownership structure of Italian listed companies, mainly through a reorganization and simplification of the equity holding disclosure duties applicable to investors in Italian listed companies. As a result of the new regulatory framework, certain investors with equity holdings as of the effective date of the new rules may be subject to a one-time duty of disclosure, even in the absence of changes in their equity holdings, which must be complied with by 31 August 2016. A more detailed discussion of the new rules is available here.