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Law Firm News

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Ashurst LLP

Ashurst advised Goldman Sachs in relation to a €550 million CLO
Ashurst advised Goldman Sachs International in its capacity as initial purchaser and placement agent of a €550 million collateralised loan obligation (CLO). Wood Street CLO III B.V. is a multi-tranche CLO transaction secured by a portfolio of senior loans, mezzanine obligations and high yield bonds to be managed by Alcentra Limited as investment manager.

The team from Ashurst's securities and structured finance team was led by partner Erica Handling and comprised associates Shereagh Dunphy, Joanna Kay. Associate Paul Miller advised on tax aspects of the transaction. Stephanie Cayer, Ronald Langat, Hassan Javanshir and Jai Chavda acted for Alcentra Limited on loan due diligence.

McKee Nelson LLP advised Goldman Sachs on US law issues. Linklaters (Michael Canby) advised Alcentra Limited and Fried Frank (Sîan Withey) advised JPMorgan Corporate Services Limited as trustee.

07-03-2006

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Ashurst LLP

Ashurst advised Deutsche Bank in relation to a €506 million notes issue
Ashurst advised Deutsche Bank AG, London Branch in its capacity as arranger and initial purchaser of the issue by Avoca CLO V plc of €506 million multi-tranched notes secured on a portfolio of senior loans and mezzanine obligations. The portfolio is managed by Avoca Capital Holdings.

The team from Ashurst's securities and structured finance team comprised partner Fraser Wood and associate Vincent Chan advising Deutsche Bank AG, London Branch, as well as partner Richard Kendall with associate Callum Harper advising Deutsche Trustee Company Limited. Partner Ian Johnson with associate Alexander Cox advised on the English law tax aspects of the transaction.

Mckee Nelson advised Deutsche Bank on US law aspects. BCM Hanby Wallace and Matheson Ormsby Prentice advised Avoca Capital Holdings and Avoca CLO V plc respectively on Irish law aspects.

07-03-2006

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Ashurst LLP

Ashurst advised Bianchi Vending on the acquisition of Avendis, its French distributor
Ashurst advised Bianchi Vending International SA in relation to the acquisition of Avendis (SVDA), long-established French distributor of Bianchi Vending. The amount of the transaction remains confidential.

Benefiting from a global presence, the Italian-based Bianchi Vending group manufactures and distributes one of the most extensive ranges of vending machines for hot and cold drinks, sweets and snacks.

The Ashurst team was led by Emmanuel Vergnaud (corporate) assisted by Mickaël Lévi and Alexandre Jaurett, (employment).

Ernst & Young advised on financial due diligence.
Gilbert Antonini, owner of Avendis, was advised by CMS Bureau Francis Lefebvre in Lyon (Jean-François Clément and Marie-Elisabeth Authelain).

07-03-2006

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Allen & Overy LLP

Reciprocal enforcement of judgments: mainland China and Hong Kong draw closer
According to recent press reports, after years of discussions and consultation, an agreement on reciprocal enforcement of judgments is close to being reached between the mainland and Hong Kong. The timeframe is expected to be later this year.
The current proposal covers only money judgments given by a court in the mainland or Hong Kong exercising its jurisdiction pursuant to a valid choice-of-forum clause contained in a commercial contract.

Two features of the proposal deserve special attention:

the proposal covers mainland judgments not only from the Intermediate People's Court (and courts from a higher level), but also from certain Basic Level People's Court designated to have jurisdiction over foreign-related civil and commercial disputes; and
reciprocal enforcement will only apply to judgments from either Hong Kong or the mainland courts exercising jurisdiction pursuant to a valid choice-of-forum clause contained in commercial contracts, where the parties have agreed that courts from either or both places will have jurisdiction.
The mainland judiciary comprises four levels of courts that deal with civil and commercial cases: the Supreme People's Court in Beijing; the Higher People's Courts sitting on the provincial level; the Intermediate People's Courts sitting on the prefecture level; and also the Basic People's Courts in counties, towns, and municipal districts.

One major concern for the Hong Kong business and legal communities has been the consistency of quality across this broad range of mainland courts.

The Hong Kong government has assured our legislators that whilst there are more than 3,000 Basic Level People's Courts, only 42 are designated to have jurisdiction over foreign-related civil and commercial disputes, and that the designated courts are subject to stringent controls.

Together with the higher level courts, there are about 100 mainland courts whose judgments are proposed to be enforceable in Hong Kong by registration. It appears that this issue remains a cause for concern for some people.

07-03-2006

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Squire, Sanders & Dempsey, L.L.P.

What the New Hungarian Companies Act Means to You
The following summary sets out the most important changes to be introduced by Act IV of 2006 (the New Companies Act), effective as of July 1, 2006.
Some of the changes are mandatory; most are merely optional. Companies already registered in the relevant company registries must amend their respective founding documents at the first meeting of their supreme bodies (e.g., shareholders' meeting, members' meeting) following the July 1, 2006 effective date, but no later than September 1, 2007, to incorporate the mandatory changes. By the same token, a company may not take advantage of new, optional provisions until and unless the corresponding changes are incorporated into its governing documents.
1. General Rules – Optional Changes
The following general rules are applicable to both limited liability companies and companies limited by shares.
1.1
Scopes of Activity – Under the old Companies Act (Act CXLIV of 1997), all of the activities pursued by the company had to be listed in its founding document. Under the New Companies Act, however, only the main activity of the company must be indicated in the Articles of Association. The indication of other activities is no longer compulsory; however, it is not prohibited to list other activities of the company.
1.2
Termination of the Restriction of Further Association – Under the New Companies Act, a single member business association may also be a single member or shareholder of another business association.
1.3
""Conference General Meeting"" – Under the New Companies Act, the supreme body of the companies may hold their members' (shareholders') meeting via electronic telecommunications, i.e., without the actual presence at the same site of all of the shareholders/members. This liberalization may be exercised if the founding document of the company provides accordingly. Therefore, prior to the relevant amendment to the current founding document such easement may not be applied.
1.4
Declaration of Solvency (solvency test) – The deed of foundation may require the executive officers to provide a written declaration that a given payment does not jeopardize the solvency of the company or the assertion of the creditors' interests. For damages caused by payments in the absence of a so-called declaration of solvency, or by false declarations of solvency, the general provisions regarding executive officers' liability will apply.
1.5
Recognized and Actual Company Group – These definitions are introduced for companies preparing consolidated annual reports. Companies that are obliged to prepare consolidated annual reports (Dominant Company) and the company being consolidated (Controlled Company) may resolve to operate as a Recognized Company Group (RCG). Within an RCG, the Dominant Company maintains the economic independence of the Controlled Company, but establishes a company law control over the Controlled Company that would not be allowed if the RCG was not established. The other case in which the Dominant Company may control the Controlled Company is within the frame of an Actual Company Group (ACG), when the company group's operation and its members fulfill the following three conjunctive conditions: (i) at least three years of uninterrupted cooperation with each other; (ii) the operations of the respective companies are based on the same business concept; and (iii) the actual operation of the respective companies assumes the division of benefits and obligations arising from the operation as a Company Group. The Dominant Company within the RCG or ACG may instruct the management of the Controlled Company.

The establishment of an RCG or ACG is not mandatory. However, if the Dominant Company wishes to limit or exclude the items belonging to the exclusive competence of the Controlled Company's supreme body (e.g., shareholders' meeting or members' meeting) and pass resolutions on those items, it can do so only within the framework set out in the agreement signed by the Dominant Company and the Controlled Company.
1.6
Release – The main governing body of the company may certify that, in the period concerned, the executive officers performed their tasks taking into account the economic interests of the company.
1.7
Nonprofit Business Associations – The old Companies Act allowed the formation of public interest companies (közhasznú társaság) based on special legal authorization. By the end of a two-year transition period beginning July 1, 2007, the public interest companies established under the Civil Code must either transform their operation to another form or be terminated. Following July 1, 2007 new public interest companies may no longer be established. The New Companies Act creates the new category of nonprofit company (nonprofit gazdasági társaság) which may pursue business activities only as an ancillary activity and whose profits may not be distributed among its members.
2. General Rules – Mandatory Changes
The following rules are applicable to limited liability companies and companies limited by shares.
2.1
Supervisory Board – A supervisory board must be established:
2.1.1 if the company has a special function (e.g., operates public property);
2.1.2 for public companies limited by shares, if they do not operate under a unified management system (please refer to clause 5.3);
2.1.3 for private companies limited by shares if at least 5 percent of the minority shareholders so request;
2.1.4 in the interest of exercising the employees' control rights; and
2.1.5 at companies performing certain activities or established with certain purposes. Other companies have the option, but not the requirement, to establish a supervisory board. Members of the supervisory board may be appointed for an indefinite term. The provision regarding the decision maker supervisory board (which may operate at private companies limited by shares and limited liability companies and which may be authorized to elect, recall and establish the remuneration of the members of the board of directors and pass certain resolutions) was extended by the New Companies Act. Pursuant to an agreement made with the management of the company, the works council may waive its right to participate in the control of the operation of the company and its right to provide one-third of the members of the supervisory board.
2.2
Auditor – From the point of view of company law, only companies limited by shares are compelled to appoint an auditor. However, the Accounting Act may require – under certain circumstances – the auditing of a company's balance sheet. The New Companies Act sets forth the shortest possible term of the auditor's appointment, which is the period between the shareholders' meeting deciding on the appointment and the shareholders' meeting discussing the resulting report. Within 90 days of the appointment of an auditor the contract for services should be signed between the appointed auditor and the company. Otherwise the appointment becomes null and void.

Unlike the executives and members of the supervisory board, the auditor may be elected for a maximum definite term of five years.
2.3
Wrongful Trading – In situations threatening insolvency of the business association, the executive officers must consider the interests of creditors when fulfilling their duties.
2.4
Executive Officer – Under current law, the same person may not be the executive officer of more than three companies. The New Companies Act lifts that prohibition. Also, from July 1, 2006, the executive officer may not be an employee of the company, i.e., may not be in a Labor Code-governed employment relationship with the company. The executive officer may only work for the company under a Civil Code-governed civil law agreement (e.g., service agreement). If the founding document provides accordingly, executive officers may be appointed for an indefinite term.
3. Special Provisions for Limited Liability Companies (All Optional Changes)
3.1
Own Quota – The proportion of own quota is no longer connected to the equity of the company and it may remain in the property of the company for an unlimited time, if the articles of association so provide.
3.2
""Telemeeting of Members"" – Under the New Companies Act, except for the approval of reports mandated by the Accounting Act, members may adopt resolutions without holding a meeting and shall record such resolutions subsequently in writing or by other means suitable to serve as evidence for such legal declarations. By unanimous resolution, members may also retroactively adopt resolutions as lawful even if they were adopted at such a meeting of the main body that was not duly convened or held.
3.3
Capital Increase – The process of capital increases has become easier. From July 1, 2006 the registered capital of a limited liability company may be increased by a simple majority decision at one members' meeting, without the requirement of such an increase being confirmed at a second, later members' meeting.
4. Special Provisions for Companies Limited by Shares (Optional Changes)
4.1
Fractional Shares – Under the New Companies Act, the nominal value of a share may also be determined as a fraction of the share capital at all times (fractional share). The two methods for determining the nominal value may be applied simultaneously: a company limited by shares may have shares the nominal value of which is determined as a fraction of the share capital and, at the same time, shares the nominal value of which is a predetermined, fixed amount.
4.2
Ordinary Shares – The amount of the nominal value of ordinary shares issued by the company limited by shares shall, at all times, exceed 50 percent of the share capital of the company.
4.3
Preferred Shares – Depending on the form of the companies limited by shares, preferred shares – in general – may be issued up to a determined percentage of the registered capital.
4.3.1 Private companies limited by shares – inter alia – may issue preferred shares entitling the holder to appoint the executive officer or member of the supervisory board. If it is set forth in the deed of foundation, preferred shares that simultaneously embody more than one preferred right and shares granting preemption rights with respect to the shares issued by the company and to be transferred by sale and purchase transaction may also be issued.
4.3.2 Shares with voting preference issued by public companies limited by shares only grant priority voting rights in matters requiring simple majority (in matters requiring qualified majority they grant voting rights equal to their nominal value). Public companies limited by shares may not issue voting preference shares with rights entitling the holder to a veto.
4.4
Transformation of Shares – Private companies limited by shares may transform printed shares to dematerialized shares and dematerialized shares to printed shares.
4.5
In-Kind Contribution – The minimum share capital remains HUF 20 million, but the company may be established by using only in-kind contributions, i.e., without a cash contribution. The subject of the in-kind contribution may be any type of asset with pecuniary value, intellectual property rights or any other rights having pecuniary value, including claims acknowledged by the debtor or claims based on final and binding legal judgments.
4.6
Share Ledger – The standards of recording in the share ledger are now prescribed in a unified manner in the New Companies Act. Thus the New Companies Act sets forth which organizations may be assigned the task of maintaining the share ledger by the board of directors of the company, as well as the detailed rules for the reporting obligations of the securities account keeper (dematerialized shares) and the securities deposit agent (shares prepared by printing and deposited). Unless otherwise provided in the deed of foundation of the public company limited by shares, the name of the shareholder or the representative of the shareholder intending to participate at the general meeting shall be registered in the share ledger prior to the beginning of the general meeting. The deed of foundation may set forth the deadline by which the above registration may take place, which may not be later than seven business days prior to the beginning of the general meeting (the so-called record date).
4.7
Authorized Representative – The deed of foundation of private companies limited by shares may deviate from the main statutory rule that members of the board of directors, the chief executive officer, the managing director and employees of the company holding an executive position may not be authorized to represent shareholders.
4.8
Lack of Quorum – Under the New Companies Act, the deed of foundation may deviate from the provision that provides that it is necessary to have shareholders present representing more than 50 percent of the votes to have a quorum.
4.9
Adoption of Resolutions without Holding a General Meeting – The deed of foundation of a private company limited by shares may stipulate that the shareholders may adopt resolutions regarding questions falling within the competence of the general meeting without actually holding such a general meeting (except for the approval of the annual report pursuant to the Accounting Act). With respect to public companies limited by shares, the law continues to preclude the adoption of resolutions without holding a general meeting.
4.10
Convening the General Meeting – The general meeting is the main body of a company limited by shares and, as such, is entitled to make the most important decisions. It is a new rule that to those shareholders who so request, the invitation to the general meeting shall be sent electronically. The venue of the general meeting is usually the registered seat of the company; however, the deed of foundation or the board of directors may provide otherwise. The content of the invitation must now also indicate the manner of holding the general meeting and, in case of a conference general meeting, the name and contact information of the person authorized to vote.
4.11
Repeated General Meeting – The main rule is that at least three but no more than 21 days shall lapse between the general meeting and the repeated general meeting that is held due to the lack of quorum. However, the shareholders may provide otherwise in the deed of foundation, e.g., they may decide that following the inquorate general meeting the repeated general meeting can be held immediately in practice.
4.12
Meeting of the Board of Directors – For a private company limited by shares the rules of procedure of the board of directors may enable the members of the board to participate in the meeting of the board of directors not in person but via electronic telecommunications. In this case the detailed rules of holding such meeting shall be set forth in the rules of procedure.
4.13
Single Member Company Limited by Shares – The New Companies Act no longer prohibits the same person from being an executive officer or a supervisory board member of a sole member company in question and also of its sole shareholder.
5. Special Provisions for Companies Limited by Shares (Mandatory Changes)
5.1
Establishment of a Public Company – At the establishment of a public company limited by shares the subscriber of shares shall, prior to the opening of the founding general meeting, pay at least 25 percent (instead of the former 30 percent) of the nominal or issuance value of the shares subscribed by him.
5.2
Establishment of a Private Company – At the establishment of a private company limited by shares, the subscriber of shares shall pay at least 25 percent (instead of the former 30 percent and HUF 10 million minimum) of the nominal or issuance value of the shares subscribed by him. The nonfinancial contribution shall be made available only if its value reaches one-quarter of the share capital.
5.3
Board – Instead of the board of directors and the supervisory board, a single board implementing a unified management system may be established (if so provided in the deed of association). In this case the board shall perform the tasks of the board of directors and supervisory board set forth in the relevant laws. The board may comprise five to 11 members. In a public company limited by shares that function pursuant to the rules of unified management systems, it is not obligatory to elect a supervisory board. Therefore, it is not possible to facilitate the participation of the employees in the management of the company via membership in the supervisory board. Thus, pursuant to the deed of foundation, the board and the works council shall agree on the manner and conditions of exercising the rights of employees to control the management of the company.
5.4
Audit Committee– In a public company limited by shares an audit committee of at least three members shall be established, whose members are elected by the general meeting from the independent members of the supervisory board or the board of directors.
5.5
Issuance Below Nominal Value – For damages arising as a result of issuance below nominal value prior to the registration of the company, the founders of the company shall be jointly and severally liable.
5.6
Bearer Shares – Bearer shares may no longer be issued.

The provisions of the New Company Act discussed above are not the only provisions of such law.

If you have any specific questions about the New Company Act and how it impacts your company, or if you would like help incorporating implementing provisions into your company's governing documents, please contact Erös Ügyvédi Iroda/Squire, Sanders & Dempsey L.L.P.

07-03-2006

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Epstein Becker & Green, P.C.

Diversity in the Finance Industry
Recently, the Equal Employment Opportunity Commission (EEOC) issued a report titled "Diversity in the Finance Industry," the purpose of which was to examine the finance industry with respect to the employment of women, African Americans, Hispanics and American Indians/Alaskan Natives in management positions, i.e., as officials and managers.

07-03-2006

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Bingham McCutchen, LLP

Shall We Collude? Publicly Communicating About Your Pricing Strategies May Invite an FTC Charge
The Federal Trade Commission (the "FTC") has approved a consent order with Valassis Communications, Inc. ("Valassis") settling charges that Valassis violated Section 5 of the Federal Trade Commission Act (the "FTC Act"), 15 U.S.C. § 45, by inviting News America Marketing ("News America"), its only competitor in the United States, to collude in an effort to eliminate competition between the two companies.

07-03-2006

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