COVID-19

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New legislation suspends contractual obligations for the next six months with related disputes subject to a separate dispute resolution system.

By Farhana Sharmeen and Marc Jia Renn Tan

On 7 April 2020, the Singapore Parliament passed the COVID-19 (Temporary Measures) Act (the Act) offering temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of COVID-19 and providing temporary amendments to bankruptcy and insolvency laws. The Act went into effect immediately.

In light of the extraordinary circumstances caused by COVID-19, the Act applies retroactively and covers contractual obligations to be performed on or after 1 February 2020 and contracts entered into or renewed before 25 March 2020. The measures under the Act apply for six months and may be extended for an additional six months (the Prescribed Period). The intention of the Act is not to absolve or remove parties’ contractual obligations but to suspend them for the Prescribed Period.

The package combines temporary policy interventions and existing options to help companies raise new share capital during the COVID-19 crisis.

By Chris Horton, James Inness, Rob Moulton, and Anna Lewis-Martinez

On 8 April 2020, the FCA published a Statement of Policy and related technical supplements aimed at helping companies to raise new share capital during the COVID-19 outbreak, while retaining an appropriate degree of investor protection.

Working Capital Statements

The FCA has provided clarity on working capital statements in prospectuses and shareholder circulars. Where an issuer would be required to give a qualified working capital statement that, absent the uncertainty relating to COVID-19, would otherwise be clean, the FCA will allow issuers to make a clean working capital statement and disclose the key assumptions in relation to the impact of COVID-19 in the prospectus or circular. Ordinarily, issuers are not permitted to include such assumptions, and this shift is expected to lead to more meaningful working capital disclosures. The FCA’s related technical supplement on working capital statements in prospectuses and circulars during the COVID-19 epidemic also contains a useful reminder of what can and cannot be disclosed in relation to working capital statements.

The three US federal banking agencies continue to take additional steps to promote the functioning of the financial system in the face of the pandemic.

By Alan W. Avery, Pia Naib, and Deric Behar

The three US federal banking agencies — the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) — have continued to take additional measures to support the public and private sectors as a result of the market volatility caused by the ongoing impact of COVID-19.  These latest economic and regulatory relief measures, which are intended to enhance the steps taken during the past month (discussed in our previous posts on March 19 and March 24), include the following:

The facility is expected to increase funding and liquidity for the program and should allow lenders to move PPP loans off their balance sheets.

By Alan W. Avery and Pia Naib

On April 6, 2020, the Federal Reserve announced its intention to facilitate lending to small businesses that receive a loan pursuant to the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) by establishing a facility to provide term financing backed by PPP loans.

The PPP is one of the…

The CMA recognises that businesses may need to cooperate to ensure supply of essential products and services during the COVID-19 outbreak.

By Rob Moulton, David Little, Gregory Bonné, and Anna Lewis-Martinez

On 27 March 2020, the FCA and Payment Systems Regulator (PSR) announced their support for the Competition and Markets Authority’s (CMA’s) guidance on its approach to business cooperation under competition law in response to COVID-19, published by the CMA on 25 March 2020.

Both the FCA and the PSR have said that they will take an approach consistent with that of the CMA in relation to their competition law enforcement activity in the financial services sector during the pandemic. That is, the agencies will not seek to take enforcement action against business-critical cooperation between financial services providers, which is required to ensure the supply and distribution of scarce products and/or services affected by the crisis. The agencies noted that “it is important that competition law does not impede firms from working together to provide essential services to consumers in the current coronavirus situation”. However, neither the FCA nor the PSR will tolerate conduct that seeks to exploit the situation and that harms consumers.

UK Regulators announce new measures after acknowledging firms affected by COVID-19 will need to keep their governance arrangements under review.

By Rob Moulton and Anna Lewis-Martinez

On 3 April 2020, the FCA and the PRA released a statement announcing several new governance measures for dual-regulated firms amid the COVID-19 outbreak under the Senior Managers and Certification Regime (SM&CR). The new measures provide for more flexibility, while acknowledging that firms will need to keep their governance arrangements under review.

The FCA sets out its approach on client identity verification, supervisory flexibility over best execution obligations and 10% depreciation notifications, and financial resilience.

By Rob Moulton and Anna Lewis-Martinez

On 31 March 2020, the FCA published a Dear CEO letter to firms providing services to retail investors about COVID-19. The FCA makes it clear that it expects firms to provide strong support and service to customers during this period and that firms should be clear and transparent.

The Dear CEO letter covers the following areas in order to help firms during the pandemic:

Seven of the largest systemically important UK deposit-takers to suspend dividends and share buybacks and to cancel payments of any outstanding 2019 dividends.

By Rob Moulton and Anna Lewis-Martinez

On 31 March 2020, the PRA published a statement on deposit takers’ approach to dividend payments, share buybacks, and cash bonuses in response to COVID-19. The PRA said that it “welcomes the decisions by the boards of the large UK banks to suspend dividends and buybacks on ordinary shares until the…

Proposed changes to UK insolvency laws aim to support companies under pressure due to COVID-19.

By Rob Moulton and Anna Lewis-Martinez

On 28 March 2020, the UK government announced a number of reforms to UK insolvency laws:

  • The temporary suspension of existing wrongful trading rules retrospectively from 1 March 2020 for three months, so that directors can continue to trade without the threat of personal liability.
  • The implementation of plans to amend the insolvency regime and to introduce new insolvency

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In three recent Client Alerts, Latham & Watkins lawyers examine how government measures to fight COVID-19 may affect French M&A transactions, key questions for French listed companies and high yield issuers, and how companies can respond to the impact on their current French law contracts.

By Latham’s Mergers & Acquisitions, Capital Markets, and Litigation & Trial Practices

Impact of COVID-19 on French M&A Transactions

On March 16, 2020, President Emmanuel Macron announced the implementation of unprecedented and extendable quarantine measures in order to limit the spread of the COVID-19 virus. Following this announcement, a new bill came into force on March 24, 2020, the purpose of which is to declare a state of health emergency and authorize the government to implement measures to support sectors of the economy impacted by this crisis. While further details on the content of such measures are yet to be provided, this Client Alert outlines key points to consider when carrying out a M&A transaction in France within the context of the COVID-19 outbreak.