One size doesn't fit all

The summer sees the Bribery Act 2010 finally coming into force on 1 July. The Act has not had a smooth road to implementation and met with delay after the original UK government guidance on it was criticised for being too vague.

With companies facing unlimited fines and management possible prison sentences for "failing to prevent" bribery, the only get out of jail free card is to show there were "adequate procedures" in place. Companies will be caught out by the actions of employees, subsidiaries and even third party contractors or agents, if they intended to benefit the company. Even companies formed outside the UK may be caught if they carry on part of their business in the UK, as the Act has wide extra-territorial jurisdiction. It isn't surprising then that there were calls from businesses for greater clarity and as a result the government's revised guidance was published in March this year.

Although companies should proceed with care with corporate hospitality, developing appropriate policies and monitoring compliance, the Act does not catch hospitality that is normal and proportionate. As stated by Kenneth Clarke, Secretary of State for Justice, in his statement on the Act:

"The guidance makes clear that no one is going to try to stop businesses getting to know their clients by taking them to events like Wimbledon, Twickenham or the Grand Prix."

The guidance is not prescriptive and companies will need to take a risk-based approach to compliance. One size will not fit all though and the guidance states that "small organisations are unlikely to need procedures that are as extensive as those of a large multi-national organisation". The level of risk to which the company is exposed will be a greater determining factor as to the adequacy of procedures than size.

If you haven't already made a plan, then you should do so now. For practical advice on the implications of the Act and what action you should be taking, please see our briefing The Bribery Act 2010: A practical checklist .

Early bird deals

In an effort to make it easier and cheaper for companies, particularly smaller companies, to raise capital in these straitened times, the government is pushing forward with the early implementation in the UK of two EU amendments to the Prospectus Directive. Member states actually have until 1 July 2012 to implement all the Prospectus Directive changes.

The effect of early implementation will be to enable companies to raise larger amounts of capital and offer securities to more persons, before needing to produce a prospectus, by:

  • doubling the total EU consideration threshold from €2.5 million to €5 million
  • increasing the number of persons to whom an offer can be addressed from less than 100 investors per member state, to less than 150

The government has proposed that the two measures come into force over the summer. With the UK being the early bird in implementing these measures, it does mean that other member states may not have implemented the same measures at the time of the offer. So on cross-border offers, an offer that is exempt in the UK may not be exempt in another member state.

A (fond?) farewell

Saying farewell to the summer could also mean saying farewell to deal protection and protracted virtual bids. The significant changes to the Takeover Code following the Panel's consultations, instigated by the fallout from Kraft's takeover of Cadbury, are expected to be brought in by the end of the summer.

Changes include a shortening of virtual bids with an automatic four week "put up or shut up" deadline and a ban on deal protection measures including break fees and exclusivity, which will hit certain takeover players hard, particularly private equity. There will also be enhanced disclosure requirements, such as the disclosure of fees for advisers by category and more detail on financing arrangements, parties will be held to statements of future intention and there are measures intended to recognise the interests of target employees.