Walkers Asset Recovery

Fifteen Walkers lawyers were recognised in the 2017 Who's Who Legal Asset Recovery guide. This is more than any other global law firm worldwide.

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'Band One'

Walkers has been ranked as a Band One 'Global-Wide' provider of offshore legal services in Chambers and Partners' 2017 Global Guide.

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Brexit

Following the recent result in the United Kingdom's EU referendum, Walkers has created a Brexit page dedicated to providing our clients relevant information about the jurisdictions in which we practice.

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Dubai Award

Walkers (Dubai) has been awarded Best Offshore Law Firm 2017 at the MENA Fund Manager Fund Awards.

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Walkers is a leading international law firm. We advise on the laws of Bermuda*, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey.
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Scholarships2017

Legal Internships, Scholarships and Articles of Clerkship

Walkers is pleased to announce that it has opened the application process for its 2017 legal scholarships, internships and Articles of Clerkship programmes.

 

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Protection of Dissenters’ Rights - Appointment Of Forensic Experts

In the matter of Qihoo 360 Technology Co Ltd (Unreported, Mangatal J, 24 July 2017)

In a recent application made before the Grand Court of the Cayman Islands (the “Court”), Walkers, along with Robert Levy QC as leading counsel, has successfully argued that the Court does have the power to order the appointment of an independent forensic information technology expert to conduct a forensic information technology audit of a party’s discovery in proceedings commenced under section 238 of the Companies Law (2016 Revision) (the “Law” and “Fair Value Proceedings”), provided the circumstances of the case are exceptional.

In this case, the dissenting shareholders, which are all funds managed by Hong Kong based fund manager Maso Capital (the “Dissenters”), had their shares cancelled as part of a management buy-out that was completed by way of statutory merger under Part XVI of the Law and exercised their statutory right to dissent from the merger. In the first case of its kind in Fair Value Proceedings, the Court was asked, inter alia, in a contested matter to order that Qihoo 360 Technology Co. Ltd. (the “Company”) and the Dissenters jointly appoint an independent forensic technology expert to conduct an audit of the Company’s information technology systems and electronic devices to ascertain the Company’s compliance with its discovery obligations.

Mangatal J. held, after considering various authorities, that “this Court does have the inherent jurisdiction to order discovery to be carried out by a forensic information technology expert who will perform a forensic audit. It is also in keeping with the overriding objective of dealing with cases justly, in a way which is proportionate to the amount of money involved, the importance of the case, and the complexity of the issues, to give that flexible interpretation to the GCR set out in Order 24 as to discovery” [110].

Mangatal J. considered that the case was an ‘exceptional’ one, “not only because of the central importance of discovery in section 238 proceedings and the Company’s role in the process, but also because of the Company’s inconsistent and cavalier approach to discovery resulting in insufficient discovery under previous orders” [112].

As such, Mangatal J. confirmed that “the circumstances of the case warrant the Court granting orders in relation to the appointment of a forensic expert to carry out a forensic audit. This is necessary to avoid a denial of justice to the Dissenters, as well as to allow the Court to properly carry out the function which it will have to carry out at the end of the day, namely appraising the fair value of the Dissenting Shares. Whilst the Order is undoubtedly intrusive, it is justified in this case” [113].

 

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Ireland - Companies (Accounting) Act 2017

The Companies (Accounting) Act 2017 (the “Act”) came into force on 9 June 2017 in order to bring the Companies Act 2014 (the “CA 2014”) into line with the latest EU accounting rules and remedy certain unintended consequences of the CA 2014. The Act is the most significant piece of companies’ legislation in Ireland since the CA 2014. We have set out some of the key changes made by the Act in the advisory below.

 

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New Regulation Governing Benchmarks and Investment Funds

Regulation (EU) 2016/1011 (the “Benchmark Regulation”) will apply from 1 January 2018 introducing a new regime governing the use of certain indices considered to be benchmarks. The aim of the Benchmark Regulation is to put in place a common EU framework under which benchmarks are produced and used by financial institutions. It applies to all published indices that are used to reference the price of financial instruments or contracts, or to measure the performance of an investment fund.

While the Benchmark Regulation primarily impacts entities that have control over the provision of benchmarks (“Benchmark Administrators”) and entities that contribute or input data to benchmarks, it also regulates certain entities that use benchmarks (“Supervised Entities”), which include UCITS and alternative investment fund managers (“AIFMs”).

The Benchmark Regulation introduces a new authorisation and supervision framework for Benchmark Administrators which will require all EU Benchmark Administrators to be authorised and registered on a public register maintained by the European Securities and Markets Authority (“ESMA”). The Benchmark Regulation also permits non-EU Benchmark Administrators to use their benchmarks in the EU where they can satisfy the equivalence requirements set out in the Benchmark Regulation, which include registration and the establishment of cooperation arrangements with ESMA, or alternatively, where the particular benchmark has been endorsed for use in accordance with the Benchmark Regulation.

Supervised Entities can only use benchmarks that are provided by an authorised Benchmark Administrator or that appear on the ESMA register. Consequently UCITS and AIFMS will need to review their use of benchmarks. UCITS will also need to ensure that any prospectus which references a benchmark includes prominent information stating whether the benchmark is provided by a Benchmark Administrator included on the ESMA register. Furthermore, Supervised Entities, such as UCITS and AIFMs, must have “robust written plans” setting out the steps to be followed should a benchmark materially change or cease to be produced.

National competent authorities will have the power to impose a range of penalties, including fines and non-financial penalties (such as cease and desist orders), for infringement of the Benchmark Regulation or failure to cooperate with an investigation.

Benchmark Administrators which were already providing a benchmark on 30 June 2016 have until 1 January 2020 to apply for authorisation or registration. Accordingly, under the transitional provisions, these Benchmark Administrators can continue to provide an existing benchmark until 1 January 2020. Consequently, UCITS and AIFMs may continue to use the existing benchmark during that period unless the Benchmark Administrator has applied to its regulator to become authorised or registered and that application has been refused. UCITS approved prior to 1 January 2018 must update the prospectus to include the necessary disclosures on the first occasion or at the latest within 12 months after that date.

 

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Increasing Numbers of “De-envelopings” Set to Continue

This bulletin is an update to our previous circular dated 25 October 2016 as regards the UK government’s previous confirmation that non-doms who hold residential property via an offshore company will be subject to inheritance tax from 6 April 2017. In light of this change to inheritance tax for non-doms, we were actively assisting clients de-envelope their UK residential properties prior to this deadline.

 

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A Focus on Expense Allocations - Wells Fargo Prime Services

Ingrid Pierce discusses expense allocations on page nine of the Wells Fargo Prime Services, Business Consulting Group's Industry and Regulatory Update Quarterly, dated July 2017.
 
"There has for some time been regulatory focus on both the manner in which fees and expenses incurred by investment advisers are allocated and the level of disclosure provided to investors regarding the nature and allocation of such expenses and potential conflicts of interest relating thereto. We have seen the majority of investment advisers pay close attention to this issue and develop detailed policies, procedures and internal controls to review and manage what has become an increasingly complex area. However, it remains a challenge in the industry and one that is not going to get easier to manage without significant infrastructure or external support.

The U.S. Securities and Exchange Commission has brought several cases against US investment advisers for alleged violations of the U.S. Advisers Act and has long expressed its concern regarding the proper allocation of expenses and in particular disclosure of conflicts of interest when entering into arrangements with affiliates that benefit them at the expense of fund clients. Private equity advisers have also been receiving a lot of attention of late, on the theory that in certain circumstances investors do not have sufficient transparency into how fees and expenses are charged to portfolio companies or the funds. Regulatory actions have concentrated on one or more of the following overlapping areas: undisclosed fees and expenses received by the adviser; shifting or misallocating expenses and failing adequately to disclose conflicts of interests arising from fee and expense issues..."

 

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This report is originated, owned and edited by Wells Fargo Prime Services, Business Consulting Group and is provided for general informational purposes. Walkers involvement was as a guest contributor and must not be relied on for, accounting, legal, regulatory, tax, business, financial or related advice or investment recommendations. ©2017 Wells Fargo. All Rights Reserved.

 

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