UPDATES FROM OUR LONDON BRANCH 

Your source of financial, corporate and commercial law insights

Week of November 6, 2023

Greetings from the London office of Grimaldi Alliance!

We are excited to bring you the latest news and updates from the heart of the UK’s vibrant legal and business landscape. Our team of legal experts is at the cutting edge of corporate, financial, and commercial law, pioneering innovative and strategic solutions to our clients' most complex challenges. Below is a glimpse of our recent impact in London and across the UK.

Highlights from the London Office

Our firm has recently advised a client, world leader in its category of products, in relation to the termination of an agreement concerning a sophisticated and complex sale workforce. The agreement was complex and the advice involved aspects such as the definition of the scope of the exclusivity, the determination of a reasonable notice, and other crucial elements under English law. We have been working closely with our client  in order to understand their needs, to evaluate the pros and cons of the existing agreement and to identify the specific objectives that it was trying to achieve in the UK market. We have conducted a thorough review of English law on all relevant legal issues, which has enabled us to advise our client on the specific steps to take to terminate the agreement in a legally enforceable manner, and to reorganise their sale force in a manner better suited to the new market conditions. 

 Navigating Legal Waters 

Agency or Distribution: Key Characteristics  

Agency and distribution are two common channels to market for manufacturers. They both involve working with third parties to sell products to customers, but they have different legal structures and implications.

In an agency relationship, the manufacturer (principal) appoints the agent to represent them and sell their products. The agent acts on behalf of the principal and negotiates and/or concludes contracts with customers. The agent is typically paid a commission on sales. In a distribution relationship, the manufacturer sells products to the distributor, who then resells them to customers as an independent business. The distributor owns the products and has the contractual relationship with the customer. 
There are a number of key differences between agency and distribution, including: 1. In an agency relationship, the manufacturer owns the products until they are sold to the customer. In a distribution relationship, the distributor owns the products from the time they are purchased from the manufacturer. 2. In an agency relationship, the customer contracts with the manufacturer, even though they are dealing with the agent. In a distribution relationship, the customer contracts with the distributor, not the manufacturers. 3. Agents are typically paid a commission on sales, while distributors are typically paid a mark-up on the products they sell. 4. In the UK, commercial agents are entitled to compensation if their contract is terminated without serious breach. Non-commercial agents and distributors are not entitled to compensation unless the contract provides for it.
Which channel to market is best for a manufacturer will depend on their specific needs and goals. If the manufacturer wants to maintain control over the sales process and have direct contact with customers, then an agency relationship may be the best option. If the manufacturer wants to delegate more responsibility to a third party and focus on their core business activities, then a distribution relationship may be a better fit. It is important to note that courts will look at the actual relationship between the parties, not just the label of "distributor" or "agent." If a manufacturer has a close relationship with a distributor and gives them significant control over the sales process, then the court may find that the relationship is actually an agency relationship, even if the parties have labelled it as a distribution relationship.

Manufacturers should carefully consider their needs and goals before choosing a channel to market. They should also have a written agreement in place with any third-party partners to clarify the relationship and protect their interests.

UK financial authorities set out proposals for stablecoin regulation

The Financial Conduct Authority (FCA) and the Bank of England (BoE) have published discussion papers on the regulation of stablecoins, and a cross-authority paper explaining how UK authorities’ current and proposed regulatory regimes will interact. The Prudential Regulatory Authority (PRA) has also published a letter on how it expects deposit-takers to address the risks that arise from issuing multiple forms of digital money, while welcoming the benefits that could come from innovation in this area.The proposed regulatory approach put forward by the FCA, the BoE and the PRA looks to harness the potential benefits stablecoins could provide to UK consumers and retailers. The proposals aim to protect consumers, prevent money laundering, and safeguard financial stability. The regime(s) applicable to firms engaged in issuing different forms of money and money-like instruments and operating payment systems will depend on the purpose of their business, how it is conducted, and the risks it presents. As well as discussing how the PRA expects deposit-takers to address the risks that arise from issuing multiple forms of digital money, the PRA’s letter also sets out its broader expectations for banks regarding their use of digital money for retail or wholesale innovations, covering areas such as operational resilience; anti-money laundering and countering the financing of terrorism (AML/CFT); and liquidity and funding risks.

Financial Insights FRC publish policy update

In May 2023, the Financial Reporting Council (FRC) proposed 18 changes to the UK Corporate Governance Code (UKCG Code). After a consultation period, the FRC has decided to implement only a small number of these changes, in response to the government's withdrawal of draft legislation that would have added additional corporate reporting requirements.The main substantive change is to the proposals on internal controls. The FRC will merge the requirements of Principles C and O into one Principle, making the board responsible for both establishing and maintaining the effectiveness of the risk management and internal control framework. The annual report will include a declaration from the board on the effectiveness of the company's risk management and internal control systems, but the FRC has not yet provided details of the other supporting information that will be required.The FRC will not be taking forward some proposals, including giving the audit committee responsibility for monitoring the integrity of narrative reporting, and sustainability reporting and moving away from the current UKCG Code approach of specifying particular diversity characteristics that should support companies' appointments and succession plans. 

Committee launches inquiry into EU Entry/Exit and the UK border

The European Scrutiny Committee has launched a new inquiry into the EU Entry / Exit System (EES) and its potential implications for the UK's border.The EES is a new automated IT system proposed by the EU to replace manual passport stamping, which will allow to record when travellers enter and exit the Schengen Area. The EU stressed that this system will ensure that rules, such as the 90-day limit for travellers within a 180-day period, are followed. The aim is for this automated system to be operational by Autumn 2024. However, as the current plan for EES does not allow travellers to register remotely before their trips, this may cause disruption, in particular at UK ports operating 'juxtaposed' border controls, where EU checks are conducted on UK soil.The Committee invites experts to submit written evidence on several topics, such as the history and development of EES proposals, challenges that EU Member States may face in implementing EES, and the impact on third-country nationals and the potential disruptions resulting from the EES at UK ports. 

Parliamentary and Legal News AI safety summit at Bletchley Park

The UK hosted an AI safety summit at Bletchley Park, where experts from around the world discussed the risks and benefits of artificial intelligence. The UK, US, EU, Australia, and China have joined forces to warn of the potential dangers of artificial intelligence, in the first international declaration to address the rapidly developing technology. Twenty-eight governments signed the Bletchley Declaration on AI safety at the start of the AI safety summit hosted by the UK government. Rishi Sunak stressed the importance of implementing strong AI regulation to ensure safety for future generations. The EU is close to passing its AI Act, but UK officials have said that they don't think regulation is needed yet, or even possible, given how quickly the AI industry is developing.

However, most countries agree that international summits like this one are important, especially to help define the problem that different countries are trying to address.

Takeover of the week Tadweld Limited announces successful acquisition of AJAX Safe Access from Canal Engineering

Tadweld, a Tadcaster-based engineering and fabrication specialist, has acquired AJAX Safe Access from Canal Engineering, strengthening its position in the UK engineering sector. AJAX has a reputation for providing cutting-edge safe access solutions to a variety of industries, including warehousing, quarrying, mining, petrochemicals, and road tanker access. The addition of AJAX's well-established products, such as folding tanker access steps, roller step units, and various pallet gates, enhances Tadweld's already strong product offerings.

Tadweld Managing Director Chris Houston commented, "AJAX's innovative product range is a great complement to our existing portfolio of access solutions and walkways, and aligns perfectly with our commitment to quality and safety. We are eager to explore synergies and invest in the brand further." Canal Engineering Managing Director Gareth Bull expressed confidence in the acquisition, stating, "Tadweld's reputation and expertise assure us that the AJAX brand is in capable hands, poised for continued growth and innovation."The acquisition includes all finished and work-in-progress goods, drawings, and tooling of AJAX Safe Access. Additionally, Tadweld has welcomed Mike Godbert to the team as Business Development Manager. Godbert's 17 years of experience as AJAX's Technical Sales Manager will be invaluable in accelerating the integration of AJAX products into Tadweld's portfolio. Houston warmly welcomed Godbert, stating, "Mike's in-depth knowledge of AJAX's offerings and industry insights will be essential in ensuring a smooth transition and sustained innovation. We are excited about the expertise and energy he brings to the table." The acquisition has created three new jobs at Tadweld's Tadcaster site, and the first shipments of AJAX products have already been completed.

Weekly updates from our London branch

 Your source of financial, corporate and commercial law insights

Week of September 25, 2023       

Greetings from the London office of Grimaldi Alliance! 

We are excited to bring you the latest news and updates from the hearth of the UK’s vibrant legal and business landscape. Our team of legal experts is at the cutting edge of corporate, financial, and commercial law, pioneering innovative and strategic solutions to our clients' most complex challenges. Below is a glimpse of our recent impact in London and across the UK.

Highlights from the London Office

Our London office is currently engaged in the ongoing process of assisting a valued Italian client within the agricultural industry as they work towards acquiring the UK branch of a prominent distributor. This strategic endeavour showcases our steadfast commitment to providing comprehensive support to our clients in their international ventures. Our team of legal experts has been working diligently to facilitate a smooth and successful acquisition process. The advice covered all corporate and transactional aspects as well as real estate assistance for the negotiation of a commercial lease for the acquisition of an industrial unit. As this acquisition unfolds, it not only aims to strengthen our client’s presence in the UK but also stands as testament to our proficiency in guiding clients through intricate cross-border transactions.  

Navigating Legal Waters with our Experts

A Guide to Directors' Duties in the UK
Navigating the intricacies of directors' duties is essential for every director in the UK, as stipulated in the Companies Act 2006. This guide breaks down the seven key duties and sheds light on their practical implications: 
1. Duty to Act Within Your Powers: Directors must operate within the bounds of their company's constitution, encompassing the articles of association, resolutions, and agreements. Deviating from these powers can result in legal action. 
2. Duty to Promote the Success of the Company: Directors must make decisions that benefit all shareholders while considering long-term consequences, employees, business relationships, the environment, community, and maintaining fairness among shareholders. The focus is on holistic success, not just profits.
3. Duty to Exercise Independent Judgement: Directors must act independently and not be influenced by third parties, although they can seek expert advice as long as they exercise independent judgment. 
4. Duty to Exercise Reasonable Care, Skill, and Diligence: Directors are held to a standard of competence, taking into account their general knowledge and any specific expertise. Falling below this standard can lead to breaches of duty. 
5. Duty to Avoid Conflicts of Interest: Directors should steer clear of situations where their interests conflict with those of the company. Seeking authorisation from independent directors can mitigate such conflicts. 
6. Duty Not to Accept Benefits from Third Parties: Directors should refrain from accepting personal benefits from third parties connected to their role as a director, as it can be seen as a breach of duty. 
7. Duty to Declare an Interest in Transactions: Directors must declare any interest, including indirect ones like family connections, in transactions involving the company. Consequences of breaching these duties vary, ranging from repaying profits, compensating the company for losses, returning misappropriated property, to facing injunctions against certain actions.In particular, directors are encouraged to maintain a thorough understanding of these duties and seek guidance when in doubt. Compliance not only ensures ethical governance but also safeguards against potential legal repercussions. We encourage you to reach out to our London team should you require further guidance on this topic.  

Financial Insights UK

Inflation and Interest Rates: Current Developments Unveiled
In a recent Bank of England meeting, an unprecedented decision was made to maintain the policy interest rate at 5.25%, marking the first halt in rate hikes since November 2021. This comes as consumer price inflation for the year ending August was at 6.7%, slightly down from July's 6.8%. While this dip in inflation hints at a potential shift, the decision not to raise interest rates suggests that the ongoing cycle of monetary tightening may have reached its peak. UK inflation, well above the 2% target, could keep interest rates above 5% in the medium term, impacting both savers and the broader economy with higher mortgage rates and limited investment opportunities due to costly borrowing. Forecasts from both the Bank and the National Institute of Economic and Social Research (NIESR) indicate a gradual easing of inflation, with the consumer price index (CPI) expected to remain above the 2% target beyond 2024. The intricate link between inflation and interest rates, along with the role of monetary policy in managing inflation, remains crucial in understanding these developments. Multiple factors, such as supply shocks, geopolitical events, Brexit, and a tight labour market, contribute to the UK's high inflation, exacerbated by its dependence on imported goods and services. While a gradual decline in inflation is anticipated, its timeline remains uncertain, contingent on global and domestic factors, making ongoing economic resilience and inflation persistence key factors in future monetary policy decisions.  

City of London’s Ambitious Post-Brexit Financial Vision
The City of London has unveiled a strategic proposal to reinvigorate the UK's financial sector after Brexit. The plan aims to boost the economy by £225 billion ($281 billion) by 2030, with a focus on enhancing global competitiveness. To achieve this, a new council is proposed, chaired by the finance ministry and composed of industry experts and regulators. This initiative comes as London grapples with the relocation of key financial activities to the EU post-Brexit. The report emphasises the need for a systematic, forward-looking strategy akin to rival financial hubs like Singapore. The plan's success hinges on the adoption of eight key "big moves," including regulatory reforms to free up capital. Discussions with political parties ahead of an upcoming general election aim to gather broad support. If realised, these measures could catapult London's financial sector to unprecedented success. 

Takeover of the week UK
Regulator Approaches Approval for Microsoft's Activision Blizzard Buyout
The UK's competition regulator has expressed optimism about Microsoft's revised takeover proposal of Activision Blizzard, signalling that it "opens the door to the deal being cleared." This comes after the initial $69 billion transaction was blocked earlier due to concerns about potential competition restrictions in the emerging cloud gaming sector. In its revised offer, Microsoft has proposed divesting cloud rights for existing and future Activision PC and console games to French game publisher Ubisoft Entertainment. While the regulator acknowledges some residual concerns, Microsoft's proposed remedies have been provisionally accepted to address these issues. The regulator’s consultation on the matter will end on October 6. Microsoft and Activision both welcomed the positive development and are working towards final approval, with a deadline set for October 18. The UK's regulatory response is part of a broader investigation into the acquisition, which has also faced scrutiny from European and U.S. authorities.

Weekly updates from our London Branch

Your source of financial, corporate and commercial law insights

Week of September 25, 2023       

Greetings from the London office of Grimaldi Alliance! 

We are excited to bring you the latest news and updates from the hearth of the UK’s vibrant legal and business landscape. Our team of legal experts is at the cutting edge of corporate, financial, and commercial law, pioneering innovative and strategic solutions to our clients' most complex challenges. Below is a glimpse of our recent impact in London and across the UK.

Highlights from the London Office 

Our London office is currently engaged in the ongoing process of assisting a valued Italian client within the agricultural industry as they work towards acquiring the UK branch of a prominent distributor. This strategic endeavour showcases our steadfast commitment to providing comprehensive support to our clients in their international ventures. Our team of legal experts has been working diligently to facilitate a smooth and successful acquisition process. The advice covered all corporate and transactional aspects as well as real estate assistance for the negotiation of a commercial lease for the acquisition of an industrial unit. As this acquisition unfolds, it not only aims to strengthen our client’s presence in the UK but also stands as testament to our proficiency in guiding clients through intricate cross-border transactions.  

Navigating Legal Waters with our Experts

A Guide to Directors' Duties in the UK

Navigating the intricacies of directors' duties is essential for every director in the UK, as stipulated in the Companies Act 2006. This guide breaks down the seven key duties and sheds light on their practical implications: 

1. Duty to Act Within Your Powers: Directors must operate within the bounds of their company's constitution, encompassing the articles of association, resolutions, and agreements. Deviating from these powers can result in legal action. 

2. Duty to Promote the Success of the Company: Directors must make decisions that benefit all shareholders while considering long-term consequences, employees, business relationships, the environment, community, and maintaining fairness among shareholders. The focus is on holistic success, not just profits. 

3. Duty to Exercise Independent Judgement: Directors must act independently and not be influenced by third parties, although they can seek expert advice as long as they exercise independent judgment. 

4. Duty to Exercise Reasonable Care, Skill, and Diligence: Directors are held to a standard of competence, taking into account their general knowledge and any specific expertise. Falling below this standard can lead to breaches of duty. 

5. Duty to Avoid Conflicts of Interest: Directors should steer clear of situations where their interests conflict with those of the company. Seeking authorisation from independent directors can mitigate such conflicts. 

6. Duty Not to Accept Benefits from Third Parties: Directors should refrain from accepting personal benefits from third parties connected to their role as a director, as it can be seen as a breach of duty. 

7. Duty to Declare an Interest in Transactions: Directors must declare any interest, including indirect ones like family connections, in transactions involving the company. Consequences of breaching these duties vary, ranging from repaying profits, compensating the company for losses, returning misappropriated property, to facing injunctions against certain actions.In particular, directors are encouraged to maintain a thorough understanding of these duties and seek guidance when in doubt. Compliance not only ensures ethical governance but also safeguards against potential legal repercussions. We encourage you to reach out to our London team should you require further guidance on this topic.  

Financial Insights UK Inflation and Interest Rates: Current Developments Unveiled

In a recent Bank of England meeting, an unprecedented decision was made to maintain the policy interest rate at 5.25%, marking the first halt in rate hikes since November 2021. This comes as consumer price inflation for the year ending August was at 6.7%, slightly down from July's 6.8%. While this dip in inflation hints at a potential shift, the decision not to raise interest rates suggests that the ongoing cycle of monetary tightening may have reached its peak. UK inflation, well above the 2% target, could keep interest rates above 5% in the medium term, impacting both savers and the broader economy with higher mortgage rates and limited investment opportunities due to costly borrowing. Forecasts from both the Bank and the National Institute of Economic and Social Research (NIESR) indicate a gradual easing of inflation, with the consumer price index (CPI) expected to remain above the 2% target beyond 2024. The intricate link between inflation and interest rates, along with the role of monetary policy in managing inflation, remains crucial in understanding these developments. Multiple factors, such as supply shocks, geopolitical events, Brexit, and a tight labour market, contribute to the UK's high inflation, exacerbated by its dependence on imported goods and services. While a gradual decline in inflation is anticipated, its timeline remains uncertain, contingent on global and domestic factors, making ongoing economic resilience and inflation persistence key factors in future monetary policy decisions.  

City of London’s Ambitious Post-Brexit Financial Vision

The City of London has unveiled a strategic proposal to reinvigorate the UK's financial sector after Brexit. The plan aims to boost the economy by £225 billion ($281 billion) by 2030, with a focus on enhancing global competitiveness. To achieve this, a new council is proposed, chaired by the finance ministry and composed of industry experts and regulators. This initiative comes as London grapples with the relocation of key financial activities to the EU post-Brexit. The report emphasises the need for a systematic, forward-looking strategy akin to rival financial hubs like Singapore. The plan's success hinges on the adoption of eight key "big moves," including regulatory reforms to free up capital. Discussions with political parties ahead of an upcoming general election aim to gather broad support. If realised, these measures could catapult London's financial sector to unprecedented success. 

Takeover of the week UK Regulator Approaches Approval for Microsoft's Activision Blizzard Buyout

The UK's competition regulator has expressed optimism about Microsoft's revised takeover proposal of Activision Blizzard, signalling that it "opens the door to the deal being cleared." This comes after the initial $69 billion transaction was blocked earlier due to concerns about potential competition restrictions in the emerging cloud gaming sector. In its revised offer, Microsoft has proposed divesting cloud rights for existing and future Activision PC and console games to French game publisher Ubisoft Entertainment. While the regulator acknowledges some residual concerns, Microsoft's proposed remedies have been provisionally accepted to address these issues. The regulator’s consultation on the matter will end on October 6. Microsoft and Activision both welcomed the positive development and are working towards final approval, with a deadline set for October 18. The UK's regulatory response is part of a broader investigation into the acquisition, which has also faced scrutiny from European and U.S. authorities.