Alert: Brexit – Could this be good news for Shareholder Activists?
PUBLISHED ON: 07/11/2016
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Brexit has led to significant uncertainty in the UK market, which is likely to continue for a prolonged period. This uncertainty within the market may lead to a period of opportunity for shareholder activists looking to take a stake in or acquire UK listed companies. Brown Rudnick is well positioned to advise investors looking at potential opportunities in the UK on a broad range of legal and strategic matters in connection with those opportunities.
- Stock market volatility – uncertainty has led to stock market volatility that may continue for a prolonged period.
- 10%+ fall in the value of the British Pound against the Dollar – many assets and investments are significantly cheaper than they were prior to the Brexit vote.
- Bank of England’s planned cuts to interest rates in the UK - likely leading to further devaluation of the Pound and further downward pressure on asset values in the UK.
- Prospective cuts to corporation tax from 20% to 15% - which would give the UK one of the most competitive corporate tax regimes in the global market.
- Different regulatory environment in the UK – regulatory differences between the UK and the US may attract activist and other investors looking to take a stake in or acquire UK listed companies.
Regulatory Differences Between the US and the UK
- The regulatory regime in the UK is strict – certain transactions involving listed companies are governed by the Takeover Code (administered by the Takeover Panel) and there are extensive regulations relating to insider trading and market abuse.
- However, there are certain aspects of the UK regulatory regime that differ from the US and that may create a more attractive environment for investors, including shareholder activists, including:
- no poison pills;
- no staggered boards - flexibility for shareholders to remove any and all directors from the board;
- greater ability for shareholders to reject remuneration policies and executive compensation packages; and
- shareholders with only a 5% stake may be able to compel UK companies to convene a shareholder meeting and pass resolutions proposed by shareholders.
Why Brown Rudnick?
Brown Rudnick has dedicated shareholder activist teams in the US and London which can advise seamlessly on all aspects of activism and regulation in the US and the UK.
The Brown Rudnick team has deep experience representing both hedge funds and public companies in the US and the UK, enabling us to strategically advise clients on both sides of the activist negotiating table. We work with hedge funds to devise tactics that will assert the necessary influence and help achieve their investment goals. Our public company clients look to us to anticipate, prepare for and respond to activist campaigns.
Our activist experience includes a wide range of areas, such as:
- U.S. Securities Law
- NYSE, Nasdaq and OTC Markets
- London Stock Exchange (Main Board or AIM)
- Section 13 and 16
- Insider Trading Compliance and Advice
- Takeover Code
- M&A Regulations
- Proxy Contests
About Brown Rudnick
BROWN RUDNICK LLP, an international law firm with offices in the United States and Europe, represents clients from around the world in high-stakes litigation, international arbitration and complex business transactions. Clients include public and private corporations, multinational Fortune 100 businesses and start-up enterprises. The Firm also represents investors, as well as official and ad hoc creditors’ committees in today’s largest corporate restructurings, both domestically and abroad. Founded more than 60 years ago, Brown Rudnick has over 230 lawyers providing advice and services across key areas of the law. Beyond the United States, the Firm regularly serves clients in Europe, the Middle East, North Africa, the Caribbean and Latin America. With its Brown Rudnick Center for the Public Interest, the Firm has created an innovative model combining its pro bono, charitable giving and community volunteer efforts.
In the blur of mega firms, Brown Rudnick stands out as a “global boutique” and has in place a multi-disciplinary, international Brexit Team. We are monitoring and analysing the consequences and considerations for businesses and are ready to advise on the potential legal implications of Brexit. The Brown Rudnick Brexit Team is available to advise on the issues across a broad range of sectors within our areas of expertise. If you have any questions please call your usual contact at Brown Rudnick or one of the following lawyers:
FOR QUESTIONS OR MORE INFORMATION, PLEASE CONTACT: