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	(263938,25559,'ReportText','&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" />Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignright wp-image-7998\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/shutterstock_589011317-1024x446.jpg\" alt=\"\" width=\"686\" height=\"299\" />Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>|<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignleft size-full wp-image-7996\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/June-July-2018.jpg\" alt=\"\" width=\"1249\" height=\"287\" /></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Introduction</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">An initial public offering (\"IPO\") is a process by which a company offers its shares, for the first time, to the public by virtue of drafting and publishing a prospectus on the company and carrying out a public subscription of its shares, after submitting required documentation to the relevant governmental authorities and obtaining their approvals in relation thereto.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under the laws and regulations of the United Arab Emirates (\"UAE\"), in order for a company to offer its shares to the public, the said company must be or take up the legal form of a public joint stock company. Accordingly, a company wishing to execute an IPO will be either a newly incorporated public joint stock company, or a company assuming the legal form of a private joint stock company or a limited liability company that undergoes a conversion process to become a public joint stock company.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Introducing a brief on the history of IPOs in the UAE, there have only been a few IPOs in the past few years, only two of which have been executed in 2017 after the issuance of the new UAE Federal Law No. 2 of 2015 concerning Commercial Companies (\"Companies Law\"). We envisage that, in 2018, the market appetite will uphold the trend of one to two IPOs a year.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It is also worth noting in this regard that the companies that have undergone IPOs in the period between 2014 until 2017 operated in fundamental yet diversified industries such as the real estate, investment, leisure and entertainment, and oil and gas sectors.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally speaking, companies that choose to go public in the UAE and offer their shares in an IPO usually seek to raise their capital in global markets. This is supported and facilitated by the local regulators and the regulatory schemes set by the governmental authorities.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">It should be noted that, for the purposes of this chapter, any reference to the UAE (which includes the Emirates of Abu Dhabi, Dubai and the five other emirates making up the UAE) excludes the geographical areas of the Dubai International Financial Centre (\"DIFC\") and the Abu Dhabi General Market (\"ADGM\"). The civil and commercial laws of the UAE (including the UAE’s securities market laws and regulations discussed in this chapter) are not applicable to the DIFC or ADGM and vice versa.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In the UAE, there are three financial exchange markets, two of which are onshore, being the Abu Dhabi Securities Exchange (\"ADX\") and Dubai Financial Market (\"DFM\"), while the third financial market is located within the jurisdiction of the DIFC, being NASDAQ Dubai. ADX and DFM are subject to the supervisory authority of the UAE Securities and Commodities Authority (\"SCA\"), while the Dubai Financial Supervisory Authority regulates NASDAQ Dubai in its capacity as the securities supervisory authority within the DIFC. As at the time of writing, there is no financial market that is located in the ADGM.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><span lang=\"EN\">This chapter excludes any regulations applicable to NASDAQ Dubai and any of the below regulations are applicable only to ADX and DFM where the text allows for the same.</span></p>\r\n<p dir=\"LTR\" align=\"LEFT\">ADX and DFM are governed and regulated by SCA, which has the authority to impose laws, regulations and standards with which both ADX and DFM must comply. ADX and DFM work proactively with SCA to protect investors and provide optimum trading platforms for securities trading.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Both ADX and DFM operate as a securities exchange market for trading securities including shares issued by public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The IPO process: steps, timing and parties and market practice</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Despite the fact that an IPO is a process carried out in a very similar manner across the globe, the mechanics of such procedure differ from one country to another in terms of the applicable laws and regulations, required documentation, governmental approvals, and timeline of its procedures.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The IPO process in the UAE slightly varies according to the business and structure of the company undergoing the IPO process, i.e. whether the company is a newly established public joint stock company or a company undergoing a conversion process to become a public joint stock company, in which emirate the company has its place of business and on which market the company will be listed. Accordingly, we have set out below two different procedures and series of steps for each company structure as detailed hereunder.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly established public joint stock company</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>First stage: initial approvals</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Generally, greenfield (i.e. newly established) public joint stock companies require additional approvals from SCA to go through the route of the IPO. Some of these requirements include: (i) a special approval from the board of directors of SCA for incorporating the greenfield company; (ii) there is sufficient working capital for the twelve (12) months post the incorporation; and (iii) the offered shares are limited to qualified institutional investors and high-net-worth individuals for amounts that are no less than AED 5 million.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee of the new company (to be established) must refer to the Department of Economic Development (\"DED\") to obtain initial approval to establish the company as a public joint stock company in accordance with the provisions of Article (113) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After obtaining the approval of the DED, the founders committee must apply for the preliminary approval of SCA for the establishment of the public joint stock company, accompanied by all the necessary documents; namely, the memorandum of association (\"MoA\"), articles of association (\"AoA\"), an economic feasibility study for the venture, the SCA application form requesting incorporation of a public joint stock company, a draft prospectus, a subscription application form, and evidence of payment in respect of subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If the company has shares issued in-kind, the value of the in-kind shares will be assessed by one or more financial advisors chosen by SCA from those accredited by it, or those with technical and financial expertise in the subject of evaluation who are approved by SCA. SCA then considers the application for incorporation and notifies the founders committee of its observations within ten (10) working days from the date of submission of the application in full.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee completes any deficiencies or makes the amendments deemed necessary by SCA to complete the application for incorporation within fifteen (15) working days from the date of notification. Otherwise, SCA may consider this a waiver of the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA sends a copy of the documents to the DED after they have been completed. (The period of SCA’s review is ten (10) working days from the date of completing the application.)</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A meeting is then held between SCA and the DED to study the application for incorporation and its documents. The meeting must be held within ten (10) working days from the date of the submission of documents by SCA to the DED.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In case there are any comments made by the DED, SCA informs the founders committee. The amendments are be made within ten (10) working days from the date of informing the founders committee.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">SCA ensures that the application and all documents and observations are completed and that the amended versions are sent to the DED. No particulars may be amended in the application after submitting it to the DED during any stage of incorporation either in respect of the capital of the company or its objectives or the names of its founders or any other data in the application for incorporation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">On approval of the incorporation application, the DED then issues a decision to license the incorporation of the company, which is announced in the official gazette at the expense of the founders.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Second stage: pre-subscription period</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee attest the MoA and AoA before a notary public.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Third stage: public subscription/public offering</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The founders committee must then commence the subscription process, as per the template provided by SCA, for the shares within fifteen (15) days from the date of issuance of the above-mentioned decision. The founders shall subscribe for not less than thirty percent (30%) and not more than seventy percent (70%) of the issued capital of the company, prior to the invitation to public subscription and offering for the remaining percentage of the share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">N.B.: Prior to such step, the founders committee must provide SCA and the DED with a bank certificate evidencing payment of the value of their shares in accordance with the above-prescribed percentages. Additionally, they must submit an undertaking, as per the template provided by SCA, to deposit the proceeds generated from the subscription of the total shares to the account of the company under incorporation as well as refunding the surplus funds to subscribers within fifteen (15) days from the date of the subscription closure, if any.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Once SCA’s approval of the prospectus is obtained, the prospectus is then published in two local Arabic daily newspapers at least five (5) days prior to commencement of the subscription. This is the invitation to the public offering.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The subscription must be kept open for no less than ten (10) days and no more than thirty (30) days, open to extension by an additional period of ten (10) days subject to SCA and the DED’s approvals.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A company issuing its shares in accordance with the share book-building mechanism shall enter into a contract with a financial advisor in order to carry out the IPO and for them to supervise the same. Such financial advisor shall have a number of roles, including presenting the company’s business to investors and ultimately setting the price of shares in the final prospectus after analysing the data from the book-building.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Companies issuing shares in an IPO process, and wishing to use the book-building process, must comply with the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">An application will be submitted to SCA using the form prepared for such purpose in order to obtain approval on book-building.</li>\r\n 	<li dir=\"LTR\">The company shall neither announce nor disclose, by any means whatsoever, its intention to issue or sell shares through the book-building process before obtaining SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Not less than twenty percent (20%) of the subscription shares shall be offered to retail investors, and not less than sixty percent (60%) shall be offered to qualified investors, excluding newly established companies, in which case the subscription is restricted to qualified investors only.</li>\r\n 	<li dir=\"LTR\">Allocate to qualified investors, based upon the subscription applications submitted by them, any shares not subscribed by retail investors.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">The price set for retail investors may be discounted compared to the one set for qualified investors in accordance with disclosures made in the final prospectus.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Retail investors shall pay the full value of their subscribed shares upon subscription. Qualified investors may pay the value of their subscribed shares after allocation.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The allotment of shares and refund of the surplus funds must be made within five (5) working days from the date of the subscription. In the event that the subscription applications exceed the number of shares offered, the shares shall be distributed to subscribers proportionally to their subscribed amounts or as determined in the prospectus and approved by SCA, and the distribution shall be made to the nearest whole share.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">After the allocation has been made, the company must send the shareholders register to the UAE financial market (i.e. ADX or DFM) on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The entities receiving the subscription keep the payments made by subscribers; in this regard any returns gained in relation thereto are for the account of the company under incorporation. The receiving entities will not deliver such amounts to the board of directors until the incorporation certificate has been issued and the company is registered before the commercial registrar at the DED.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em><img class=\"alignright wp-image-7998\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/shutterstock_589011317-1024x446.jpg\" alt=\"\" width=\"686\" height=\"299\" />Fourth stage: incorporation announcement</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company must announce an invitation to the subscribers to attend the constitutive general assembly meeting (after obtaining approval of SCA) to be held within fifteen (15) days from the date of the subscription closure. The agenda of the first constitutive general assembly must include certain matters prescribed by the SCA.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">If a quorum has not been met at the first meeting, the meeting must be held within five (5) to fifteen (15) days from the date of the first meeting, and the second meeting will be deemed to satisfy the legal quorum regardless of the number of the attendees.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Within ten (10) days from the date of the constitutive general assembly, the founders will submit an application to SCA, for issue of the incorporation certificate, and will enclose the documents stipulated under Article (133) of the Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Afterwards, SCA issues the incorporation certificate within five (5) working days.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Fifth stage: registration before the competent authorities and SCA</em></p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The board of directors of the newly incorporated company must complete the registration procedures before DED in anticipation of its listing in the financial market within ten (10) days from the date of issuance of the incorporation certificate.</li>\r\n 	<li dir=\"LTR\">The DED must then register the company before the commercial registrar and issue the company’s trade licence within five (5) working days.</li>\r\n 	<li dir=\"LTR\">Afterwards, the chairman of the board of directors of the newly incorporated company must, within five (5) working days from the date of issuance of the company’s trade licence, provide the AoA, MoA and company licence to the company registrar to register the company in the companies register.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Sixth stage: listing on UAE financial markets</em></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The board of directors of the newly incorporated company must, within fifteen (15) working days from the date of the company’s registration before the commercial registrar, list its shares on any of the UAE financial markets (i.e. ADX or DFM) and revert to such financial market with a listing request in accordance with the listing regulations adopted by SCA and the financial market on which the shares will be listed.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Newly converted public joint stock company</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Existing companies wishing to convert into public joint stock companies follow the same rules and steps applicable to newly established public joint stock companies except in relation to the following:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Companies wishing to convert into a public joint stock company are required to fulfil, amongst others, the following requirements:\r\n<ul dir=\"ltr\">\r\n 	<li dir=\"LTR\">the value of the issued shares of the company wishing to convert has been paid in full;</li>\r\n 	<li dir=\"LTR\">the completion of at least two fiscal years prior to the application;</li>\r\n 	<li dir=\"LTR\">the company has realised, within the two financial years preceding the approval on the conversion application, net operational profits that are distributable to shareholders of no less than ten percent (10%) of the company’s capital as an average; and</li>\r\n 	<li dir=\"LTR\">a special resolution (depending on the legal form of the company and its constitutional documents, this should be passed by no less than three quarters of either: (i) the share capital of the company; or (ii) the shares being represented in a general assembly meeting) issued by the shareholders of the company approving its conversion into a public joint stock company.</li>\r\n</ul>\r\n</li>\r\n 	<li dir=\"LTR\">The founders may sell by way of IPO up to thirty percent (30%) of its share capital. In this regard, the founders may not subscribe to the shares offered for public subscription.</li>\r\n 	<li dir=\"LTR\">The founders committee (to be established by way of a shareholders’ resolution) of the existing company that wishes to convert to a public joint stock company must draft a letter to SCA requesting a listing window reservation and confirming eligibility.</li>\r\n 	<li dir=\"LTR\">Afterwards, the founders committee applies to SCA for a public joint stock conversion accompanied by its shareholders’ resolution approving such conversion.</li>\r\n 	<li dir=\"LTR\">Simultaneously, the said company appoints, approves and forms the said founders committee.</li>\r\n 	<li dir=\"LTR\">Subsequently, the founders committee files with SCA the first draft of the local prospectus as well as the shareholders’ resolution of the existing company approving the conversion, a final draft of the IPO MoA and AoA, a business plan review, and a final real estate valuation report.</li>\r\n 	<li dir=\"LTR\">SCA will examine the conversion application and filed documents and produce a decision on the request within a period of ten (10) working days.</li>\r\n 	<li dir=\"LTR\">In case of approval of the conversion by SCA, the founders committee must announce the conversion and notify its shareholders and creditors (if any) of such conversion via written notice within a period of five (5) working days from the date of SCA’s approval.</li>\r\n 	<li dir=\"LTR\">Shareholders and/or creditors of the company are given a period of fifteen (15) working days to object to the conversion.</li>\r\n 	<li dir=\"LTR\">Afterwards, the company files with SCA a copy of the resolution and confirmation that the opposition period has expired. SCA forms a committee to evaluate the company assets. The process of this evaluation process is thirty (30) working days.</li>\r\n 	<li dir=\"LTR\">A meeting between SCA and the DED is then held to examine the conversion application and its documents. The time for such procedure is five (5) working days.</li>\r\n 	<li dir=\"LTR\">In case of final approval of the conversion application, SCA issues a licence to the company and such licensing decision is then published in the official gazette at the expense of the company founders.</li>\r\n 	<li dir=\"LTR\">The company then proceeds with the IPO and listing in the same manner as a newly established public joint stock company.</li>\r\n</ul>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Regulatory architecture: overview of the regulators and key regulations</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The key regulators in the UAE in respect of the IPO process are the Securities and Commodities Authority (SCA) and the Department of Economic Development (DED). Additionally, and depending on the nature of the company’s business, the company may be required to obtain the approval of other relevant governmental authorities or regulators such as the Central Bank or the Insurance Authority in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Other than the key regulators mentioned above and as part of the IPO process, the company is required to liaise with ADX or DFM for the listing of its shares and their offering to the public.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">In addition to the Companies Law, one of the important regulations in respect of an IPO are the Companies Law, and the Chairman of SCA’s Resolution No. (11/R.M.) of 2016 governing public offering and issuance of shares of public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Public company responsibilities</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are subject to a more refined governing structure in comparison to other legal forms of companies. The main differences manifest in the ‘corporate governance’ and the ‘disclosure and transparency’ regulations applicable to public joint stock companies.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Disclosure and transparency regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Post the IPO, the company and its shareholders have additional disclosure and transparency obligations, which include restrictions on dealing with the securities of the company, notification obligations in relation to material developments affecting the company, restrictions on publishing certain data relating to the company and to provide SCA with copies of certain documents including financial reports, and details of general assemblies and resolutions.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Corporate governance regulations</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Public joint stock companies are obliged to follow separate regulations for corporate governance in addition to those specified in the Companies Law. Such set of corporate governance regulations can be found in SCA’s Resolution No. (7/R.M.) of 2016 concerning the standards of institutional discipline and governance of public joint stock companies (\"CGR\"). These include, amongst other obligations (i) that the company is obliged to obtain approval from its shareholders and maintain records of transactions that take place with related parties, (ii) all shares issued in the company must be in the same class with equal rights attached to them, (iii) the AoA and internal by-laws of the company should include controls to protect shareholders’ rights, and (iv) the company must have internal control systems to ensure compliance with corporate governance rules.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The company is also obliged to issue a ‘Corporate Governance Report’, which has to provide details of all remuneration and compensation paid to the board; such report must be available to the shareholders prior to the annual general meeting.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Potential risks, liabilities and pitfalls</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Given that the IPO is a simple and straightforward process, there should be no potential legal risks, liabilities or pitfalls with regards to undertaking the IPO process should the above-mentioned procedures be thoroughly followed and all governmental approvals obtained. This is notwithstanding any risks, liabilities and pitfalls related to the business of the company itself or any market risks occurring during the IPO process. However, any negligence on the part of the company or its advisors may expose the company and its founders to risk. The IPO is a lengthy and detailed process that needs to be dealt with by advisors who are experienced in the field of IPOs, in order for them to handle the requirements and ensure compliance with all regulations in an efficient manner and minimise any risk to the company and its founders.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><em>Acknowledgment</em></p>\r\n<em>The authors would like to thank Sarah Tomy and Anna Robinson for their invaluable assistance in the preparation of this chapter.</em>'),
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	(263999,25565,'PostTitle','Now Coming to the DIFC: The Infinitely Flexible and Versatile Corporate Scheme of Arrangement'),
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	(264006,25565,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264007,25565,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264008,25565,'MetaLink','content'),
	(264009,25565,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(264010,25565,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-7968 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"487\" height=\"324\" />The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\">This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" />Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264056,25569,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></strong></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264057,25569,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264059,25569,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(264060,25569,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></strong></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>');

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	(264117,25574,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264118,25574,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></strong></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264121,25574,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></strong></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\">Benefits to companies incorporated in the DIFC</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264149,25577,'PostTitle','Now Coming to the DIFC: The Infinitely Flexible and Versatile Corporate Scheme of Arrangement'),
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	(264151,25577,'PostType','law_update_articles'),
	(264152,25577,'PostDate','2018-08-01 07:43:04'),
	(264153,25577,'PostUrl','http://localhost:8888/tamimi/law-update-articles/now-coming-to-the-difc-the-infinitely-flexible-and-versatile-corporate-scheme-of-arrangement/'),
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	(264155,25577,'MetaKey','content'),
	(264156,25577,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264157,25577,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264158,25577,'MetaLink','content'),
	(264159,25577,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(264160,25577,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264206,25581,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264207,25581,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264208,25581,'MetaLink','content'),
	(264209,25581,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(264210,25581,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264256,25585,'MetaValueNew','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"224\" height=\"414\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264257,25585,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
	(264258,25585,'MetaLink','content'),
	(264259,25585,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7937&amp;action=edit'),
	(264260,25585,'ReportText','<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignleft\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"182\" height=\"336\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>|<p dir=\"LTR\" align=\"LEFT\">The new DIFC Companies Law is expected to come into force in August / September 2018. The new law will make a number of major changes to the rules governing DIFC-established companies, including:</p>\r\n\r\n<ol>\r\n 	<li dir=\"LTR\">the removal of the category of limited liability companies (as an option to the company limited by shares) and the introduction of differing regulatory requirements imposed on private and public companies respectively; and</li>\r\n 	<li dir=\"LTR\">the introduction of more detailed and explicit provisions imposing and regulating directors’ duties.</li>\r\n</ol>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignright size-large wp-image-7968\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/13-1024x681.jpg\" alt=\"\" width=\"640\" height=\"426\" />This article concerns the most innovative feature of the new law, the introduction of a legal framework for corporate schemes of arrangement.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">A scheme of arrangement is a process which empowers companies to enter an array of binding arrangements and agreements with its shareholders and/or creditors as classes. Where an arrangement is supported by 75% of the relevant classes of creditors or shareholders, the Court has power to sanction it and to bind all the stakeholders, including any dissenting minority. Schemes of arrangement are used extensively in England and in other common law jurisdictions, so it is a welcome innovation for DIFC companies.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The legal process for schemes of arrangement was originally developed in England but the new DIFC provisions are closely modelled on Jersey law, which is less detailed and prescriptive than the legislation now applying in England and Wales. The DIFC provisions relating to compromises and arrangements can be found in Articles 124 to 126 of the new Companies Law.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>How are Schemes Commonly Used?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Schemes of arrangement are extremely flexible and the legislation does not restrict the form or content of the compromise or arrangement. Here are a number of examples of how schemes have been employed successfully in the UK:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\"><strong>Reducing debt and carrying out debt for equity swaps</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Sometimes, a scheme of arrangement can be used to reduce the value of claims from both secured and unsecured creditors. Debt reduction can occur as part of a compromise, where creditors agree to accept a pro-rated percentage of the total debt so the company can continue to be viable. Often, in these circumstances, a creditor will ‘swap’ some of its debt in the company for equity in a new holding company. This reduces the debt of the operating company, allows it to continue trading and provides for a cash injection into the new holding company.</p>\r\n<p style=\"padding-left: 60px;\"><em>For example, in the Countrywide plc case, the company had issued senior secured loan notes worth £470 million which were reduced to £175 million and the holder of the senior secured loan notes agreed to inject capital into a new holding company in return for 35% of the equity in that company. In addition, it was agreed to convert unsecured loan notes worth £170 million to 5% of equity in the new holding company. The proposal was supported by the majority of the loan note holders and so the court approved the agreement.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>An alternative to liquidation</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\"><em>Schemes can also be used as an alternative to a formal liquidation process. The terms of the scheme will prescribe a distribution of the company’s assets between the creditors. This can be helpful when there are a number of contingent claims which may be difficult to quantify and would delay the liquidation process or where assets of a group of companies are difficult to identify as owned by a particular member of a group.</em></p>\r\n\r\n<ul>\r\n 	<li><em><strong>Where the company seeks to assure future solvency by \"ring fencing\" contingent claims</strong></em></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In <em>Re Cape plc &amp; Ors</em>, Cape plc and its subsidiary companies called a meeting of creditors to approve a solvent scheme of arrangement.</p>\r\n<p style=\"padding-left: 60px;\">Cape plc’s group business was asbestos mining and the manufacture, distribution and installation of asbestos products. The company was solvent, but faced many future contingent claims due to its employees’ past exposure to asbestos dust. Given the slow emergence of medical problems caused by exposure to asbestos, it was clear that the company would face claims in the future, but at the time of proposing the scheme noone could quantify the value of these claims with precision.</p>\r\n<p style=\"padding-left: 60px;\">The scheme of arrangement was designed to protect the group’s ongoing businesses from the asbestos claims, whilst at the same time diverting a percentage of its earnings into a sinking fund for the payment of those claims. The Court approved the proposed scheme, thereby allowing Cape plc to create a subsidiary company to deal with all present and future claims, effectively ring-fencing the rest of the Cape group from the disruptive effect of the claims.</p>\r\n\r\n<ul>\r\n 	<li><strong>Takeovers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">Schemes of arrangement are used in the UK as an alternative way to implement a company takeover rather than following the City Code on Takeovers and Mergers Takeover Regulations (\"UK Takeover Regulations\"). Consent is only required from 75% of the shareholders for all shareholders to be bound and liable to compulsory acquisition; whereas 90% of the shareholders are required to consent under the UK Takeover Regulations to achieve a ‘squeeze-out’.</p>\r\n<p style=\"padding-left: 60px;\">An example of this in practice is the case of TDG plc. There the company applied for an order under the Companies Act 2006 sanctioning a scheme of arrangement, the object of which was to facilitate the acquisition of shares in the company by a buyer. A minority shareholder opposed the approval of the scheme. The scheme was approved by the court as reasonable so all shareholders were bound to transfer their shares to the acquiring company.</p>\r\n<p style=\"padding-left: 60px;\">The provisions of the old DIFC Companies law in respect of takeovers contain the same threshold to that of the UK Takeover Regulations (consent of 90% of the shareholders). The introduction of the New Law will enable all shareholders to be bound by the arrangement with only the consent of 75% of the shareholders. This is likely to facilitate takeovers in the DIFC, particularly in circumstances where there are dissenting or ‘lost’ shareholders. The provisions can also be used to implement a ‘squeeze-out’.</p>\r\n\r\n<ul>\r\n 	<li><strong>Demergers</strong></li>\r\n</ul>\r\n<p style=\"padding-left: 60px;\">In the case of BGEO Group plc the applicant company applied for the court to sanction a scheme of arrangement to split its investment business from its banking business. The scheme involved the insertion of a new holding company and, once the scheme had taken effect, the demerger of the group’s two businesses. The new holding company would undertake a swap reduction of capital for the purpose of demerging the investment business. The shareholder agreed to swap their shares in the applicant company for shares in the new holding company on a one-for-one basis.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><img class=\"wp-image-8072 alignright\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/08/DIFC.jpg\" alt=\"\" width=\"224\" height=\"414\" /></p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Benefits to companies incorporated in the DIFC</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The new provisions will open up wide range of flexible options for restructuring debt or equity. In certain scenarios, additional requirements of the DIFC companies law will also need to be taken into account, in particular the rules governing any return of capital to shareholders, so there may need to be parallel compliance.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>What types of compromises or arrangements will be approved?</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subject to the required formalities and approvals, schemes can be used to bind all shareholders of the relevant class(es) of creditors and/or shareholders to almost any type of reorganisation. Nothing in the new law limits the subject matter of a scheme. In theory a scheme could be a compromise or arrangement between a company and its creditors or shareholders about anything which they can properly agree amongst themselves.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">However, a scheme must be a ‘genuine’ and ‘effective’ arrangement or compromise. This means that the shareholders and creditors of the company which participate in the scheme must obtain some advantage in compensation for the scheme’s alteration of their pre-scheme rights entitlements.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>The procedure</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">For a company to obtain a sanctioned compromise or arrangement in accordance with the New Law, the following steps will need to be undertaken:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">The person proposing the scheme of arrangement must seek a court order to convene creditor and/or shareholder meetings (as relevant) in order to vote on the proposed scheme;</li>\r\n 	<li dir=\"LTR\">The notice calling for the meeting whether by letter or advertisement, must include a statement containing details of; (i) the effect of the proposed compromise or arrangements, (ii) material interests of the directors of the company in the arrangement, (iii) if any debentures have been issued by the company how the arrangement or compromise would affect the rights of the debenture holders; and (iv) any other matter which would have a material impact on the company, its creditors and shareholder.</li>\r\n 	<li dir=\"LTR\">Compromise or arrangement schemes require approval by at least 75% in value of each class of the creditors who vote on the compromise or arrangements or the holders of 75% of the voting rights of the shareholders or class of shareholders, as the case may be, present and voting either in person or by proxy at the meeting;</li>\r\n 	<li dir=\"LTR\">After the scheme has been approved by the shareholders or creditor, it must then be sanctioned by the court;</li>\r\n 	<li dir=\"LTR\">Any interested shareholder or creditor can be represented when the court considers the application to sanction the scheme, and may argue for or against the sanctioning of the scheme.</li>\r\n 	<li dir=\"LTR\">A copy of the court order must then be sent to the Registrar and the Registrar will ensure that a copy of the court order is included in the company’s articles of association.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">Applications for a scheme of arrangement can be made by the company, a creditor or shareholder or in the case of a company being wound up its liquidator.</p>\r\n&nbsp;\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Conclusion</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The introduction of schemes of arrangement in the DIFC paves the way to greater flexibility in implementing a range of sophisticated deals within the DIFC from equity swaps, to demergers, to corporate turnarounds.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate and Commercial team regularly advises on restructuring and take over arrangements. For further information please contact Anna Robinson, a.robinson@tamimi.com or Richard Catling, r.catling@tamimi.com.</em>'),
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	(264267,25586,'PostTitle','Now Coming to the DIFC: The Infinitely Flexible and Versatile Corporate Scheme of Arrangement'),
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	(264321,25591,'PostTitle','UAE continues to lead the way for Foreign Investment'),
	(264322,25591,'PostStatus','publish'),
	(264323,25591,'PostType','law_update_articles'),
	(264324,25591,'PostDate','2018-08-01 07:41:42'),
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	(264328,25591,'MetaValueNew','<img class=\"size-full wp-image-8001 aligncenter\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" /></p>\r\n\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
	(264329,25591,'MetaValueOld','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>'),
	(264330,25591,'MetaLink','content'),
	(264331,25591,'EditorLinkPost','http://localhost:8888/tamimi/wp-admin/post.php?post=7938&amp;action=edit'),
	(264332,25591,'ReportText','<p dir=\"LTR\" align=\"LEFT\"><img class=\"alignleft size-full wp-image-8001\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" />Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>|<img class=\"size-full wp-image-8001 aligncenter\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/16.jpg\" alt=\"\" width=\"6449\" height=\"2173\" />\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">The United Arab Emirates (UAE) has long been described as a business-friendly country in the mainstream media and in widely followed surveys of competitiveness. The last couple of months have seen a wave of official measures and initiatives that aim to make Dubai and Abu Dhabi more cost effective (and easier) places in which to live and to run businesses.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Even more open for business</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 20 May 2018, the Cabinet of the UAE announced two major changes, both of which were highlighted in tweets by HH Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of Dubai and the Prime Minister of the UAE:</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>1. Long Term Residency Visas</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">Under a new visa regime, 10-year residency visas will be available for ‘specialists in medical, scientific, research and technical fields, as well as for all scientists and innovators’. The new visa regime will also include five-year residency visas for students who are studying in the UAE and up to 10 years for ‘exceptional students’.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>2. 100% Foreign Business Ownership</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">In a strategic move to boost the economy and attract global investments, it was announced that the UAE will allow foreign investors in specific sectors to wholly own their businesses by the end of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Currently, the only way that foreigners could own up to 100% of a business was through one of the various Free Zones in the UAE; otherwise, the ceiling for foreign ownership in mainland UAE was 51%.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Whilst it has not yet been decided as to which sectors will benefit from the announcement, we believe that the decision will be linked to factors such as job creation and significant investments relating to advanced technology and artificial intelligence.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">From these breakthrough decisions, it is clear to see that the UAE governments are working hard to maintain their title of global leader and the \"business hub\" for foreign investment. It is well documented that the UAE never does things by half and therefore not surprisingly, the exciting announcements did not stop there…</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>More Action to Reduce Business Costs</strong></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Waiver of Corporate Fines</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">On 29 May 2018, Dubai’s Department of Economic Development (\"DED\") drew attention to Decree No. 20 of 2018, which exempts companies that operate in the Emirate from paying all fines imposed on them, and which facilitates the renewal of licences. HE Sami Al Qamzi, the Director General of Dubai’s DED, noted that ‘[the Decree] will add to the financial benefits of the owners of expired business licenses, restore legal records and licenses, and help the business community in Dubai enhance their competitiveness.’</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Subsequent press reports from 9 June 2018 indicated that the waiver of fines applies to fines that have been issued before 14 April 2018. Businesses that have received fines since then can pay the amounts owing in instalments by arrangement with the DED. The press reports also noted that businesses have until the end of 2018 to renew their licences to operate in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Abu Dhabi’s DED announced similar exemptions ‘for establishments whose licences have expired for more than 24 months from paying the delayed and accumulated fees’. HE Mohammed Munif Al Mansoori, the Chief Executive of Abu Dhabi Business Centre, emphasised that the exemptions apply to all establishments regardless of their size or type. The exemptions are valid in all three of the main regions of the Emirate - Abu Dhabi, Al Dhafra and Al Ain.</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Going the Extra Mile</strong></p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>3 Year AED 50bn Stimulus Package</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">The Executive Committee of the Abu Dhabi Executive Council discussed a three-year AED50 billion (US$13,624 million) economic stimulus initiative.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Sheikh Mohammed bin Zayed announced the plans for the project, which aims to support Abu Dhabi’s economic development by introducing ten key initiatives; some of which are detailed below:</p>\r\n\r\n<ul>\r\n 	<li dir=\"LTR\">Abu Dhabi Office Space Exemption: All new business enterprises that register in the Emirate of Abu Dhabi will be exempt from the requirement of having an office or workspace in the Emirate for two years.</li>\r\n 	<li dir=\"LTR\">Boosting Growth and Competitiveness: There will be a variety of new public-private partnerships in the Emirate of Abu Dhabi: ‘The initiatives marked for 3Q18 also include encouraging and organising local production and supporting SMEs to boost their competitiveness locally and regionally, in addition to the issuance of dual licenses for companies in Abu Dhabi Free Zones to enable them to work outside the free zones and to participate in government tenders’.</li>\r\n 	<li dir=\"LTR\">Instant Licences: ‘During the last quarter of 2018, the Executive Committee will roll out its plan for the implementation of instant licensing systems in most commercial license types and all services provided by the Government, in addition to the review of building regulations for the infrastructure, residential properties, commercial and industrial sectors, as well as the developmental requirements and community facilities of other residential areas in Abu Dhabi, Al Ain and Al Dhafra’.</li>\r\n</ul>\r\n<p dir=\"LTR\" align=\"LEFT\">As expected, these initiatives have created a huge media buzz in the country, with all sorts of opinions and questions being asked about what it all means for the future. While this largely remains to be seen, what really matters is that the governments are now acting decisively to address the biggest problem for most establishments in the UAE.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">This is at a time that the high costs of doing business in Dubai and Abu Dhabi have been boosted by the introduction of Value Added Tax (VAT) from the beginning of 2018.</p>\r\n<p dir=\"LTR\" align=\"LEFT\"><strong><img class=\"alignright wp-image-8000\" src=\"http://localhost:8888/tamimi/wp-content/uploads/2018/07/15-1.jpg\" alt=\"\" width=\"571\" height=\"449\" /></p>\r\n\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\">Hype and Hard Numbers: the UAE was already a competitive country</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">These announcements are remarkable for two reasons. One is that so many of them have been made in a short period of time by the governments of the UAE, namely in Abu Dhabi and Dubai. The other is that conventional wisdom already sees the UAE as having a (very) competitive business environment in both a regional and a global context. A lot of positive publicity has, for instance, been generated by Expo 2020, which will take place in Dubai.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The hype is supported by hard numbers. In May 2018, the Lausanne-based Institute for International Management Development (IMD - a leading business school) published its 2018 World Competitiveness Ranking. The UAE is currently in seventh place overall (between Denmark and Norway), having been in 10th place in 2017. The UAE is ranked second of the 63 countries assessed in terms of business efficiency (after Hong Kong), third in terms of economic performance (after the United States and mainland China), and fourth for government efficiency (after Hong Kong, Switzerland and Singapore). The UAE is also the only GCC country whose ranking in terms of the Global Competitiveness Index (GCI) calculated by the World Economic Forum (WEF) has clearly improved over the last five years. In 2012-13, the UAE was ranked at 24/144. In 2017-18, the country’s position had advanced to 17/137</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>Addressing the main problem, and ensuring a legacy beyond Expo 2020</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">A clue as to why the UAE’s governments are taking these steps now comes from that part of the WEF’s research, which deals with the most problematic factors for doing business, in the opinion of the various companies that were surveyed. In most of the Gulf Cooperation Council (GCC) countries, the key challenges are restrictive labour regulations and lack of access to finance. Lack of finance was the most serious problem in the UAE. However, inflation – a minor challenge in the other GCC countries - came in as a close second.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">The impact of inflation depends on two factors. One is the rate of change of prices in the basket of goods and services that is being considered. The other is the base from which prices are rising. In the case of the UAE, that base is already high by global standards. In the Cost of Living survey compiled by consultancy Mercer in mid 2017, Dubai and Abu Dhabi were, respectively, the 19th and 22nd most expensive cities for expatriates. The survey covered 209 cities. The UAE’s two main cities are, for expatriates, about as costly as San Francisco (21st) and more expensive than London (29th).</p>\r\n&nbsp;<p dir=\"LTR\" align=\"LEFT\"><strong>To watch</strong></p>\r\n<p dir=\"LTR\" align=\"LEFT\">While it is fair to say that the particulars of the announcements are not yet known; what we can rely on is the fact that the UAE has an excellent track record of following through in delivering their promises, meaning that investors and talented individuals alike should expect positive news in the near future.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">We believe that the key measure of success of the initiatives will be linked to the number of new enterprises that are incorporated in Dubai and Abu Dhabi in the future. With the array of incentives such as long term visas and reductions in set-up fees, it is hard to see why people would not jump at the chance of doing business in the region.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">For now, observers in the rest of the world will focus on the UAE like never before when Expo 2020 comes to Dubai. The latest announcements should have a positive impact on perceptions and the realities of the UAE’s economy.</p>\r\n<p dir=\"LTR\" align=\"LEFT\">Over the long-term, the governments will do whatever it takes to maintain the competitiveness of Dubai and Abu Dhabi in a regional, and indeed global, context. The UAE’s economy should continue to flourish and diversify long after Expo 2020.</p>\r\n<em>Al Tamimi &amp; Company’s Corporate Structuring team regularly advises on new changes taking place. For further information please contact Samer Qudah, s.qudah@tamimi.com.</em>');

