- Home
- >
- Our Thinking
- >
- Trending Topics
- >
- Navigating the NEXT.
- >
- Global Dealmaking & the Supply Chain
Navigating the NEXT.
Global Dealmaking & the Supply Chain
As dealmaking surges in most parts of the world, investors and companies are jockeying for new market positions. The dramatically different landscape of how people work, where they travel, and what they buy in a global economy still recovering from a major public health crisis has brought both opportunity and challenge. Assets for individual and company consumers may be tough to come by as international supply chains and trade restrictions remain in flux. Morgan Lewis lawyers from around the globe address these issues by offering insight into merger and acquisition trends, international trade and sanctions, and the global supply network.
Insights
FDA recently entered into domestic mutual reliance (DMR) agreements with the states of California, Florida, Utah, and Wisconsin to help ensure the safety of domestic food production and distribution systems. FDA’s goal is to coordinate efforts with these states to help decrease human foodborne illness outbreaks, avoid duplication of regulatory oversight, and increase public health protection. Erik Mettler, assistant commissioner for partnerships and policy in FDA’s Office of Regulatory Affairs, noted that the agency is using these partnerships to “improve industry compliance with applicable food safety requirements.”
The Biden-Harris administration plans to lift travel restrictions on visitors from most European countries, including the United Kingdom and Ireland, and other countries that have been in place since the start of the coronavirus pandemic.
The Hong Kong Stock Exchange (HKEx) has issued the much-anticipated consultation paper on creating a listing regime for special purpose acquisition companies (SPACs).
Severe weather events are causing catastrophic damage and business interruption losses to businesses each year around the world. The energy industry is particularly vulnerable, including entities in the exploration, development, transportation, generation, and/or distribution business. Leveraging all available insurance coverage and pursuing claims are critical first steps in recovery.
In this conversation with partner Steve Cohen and Linda Wellbrock, the CEO and founder of Leading Women Entrepreneurs (LWE) and named a Force for Change (FFC), a variety of venture capital and emerging business topics is covered. Included among the discussion was how COVID impacted the start-up landscape which is known for being a disruptive market, and how women and people of color are making advances in the market and securing additional capital.
The Singapore Exchange has launched special purpose acquisition company (SPAC) listings in Singapore with a new framework on governing SPACs.
It is a common misconception, particularly among multinational businesses, that the European design protection system is nearly identical to the design patent system in the United States.
The European Commission and the European External Action Service issued Guidance on Due Diligence for EU Businesses to Address the Risk of Forced Labour in Their Operations and Supply Chains (Guidance) on 12 July as a guide for European companies to implement effective human rights due diligence practices.
A recent US Securities and Exchange Commission (SEC) settled enforcement action that found that a hedge fund acted as an unregistered “dealer” has blurred the traditional line between dealers and traders.
The US Securities and Exchange Commission (SEC) approved new disclosure rules on August 6 regarding board member diversity of Nasdaq-listed companies. Nasdaq’s new rules require most companies to tell shareholders how many of their board members are diverse in terms of race, gender, and LGBTQ+ status and, if they do not have at least two diverse directors, they must explain to shareholders why by August 2022.
The year 2020 saw a wave of healthcare activity in the Asia Pacific region. Buyouts rose to a record high of 156 deals in 2020, up from 68 in 2019. Disclosed value reached a new peak of $16.9 billion compared with $11 billion the year earlier . This is attributed to macroeconomic trends such as aging populations and increasingly affordable healthcare, and favorable government policies encouraging local manufacturing and development of healthcare products.
The UK government announced on 20 July that the National Security and Investment Act will enter into force on 4 January 2022. This act introduces mandatory filings for certain investments raising national security concerns, grants the UK government extensive call-in powers for up to five years for completed transactions, and has retrospective application for transactions closing between 12 November 2020 and 3 January 2022.
The recent reform of the German transparency register affects almost all companies in Germany and greatly expands the reporting obligations for German entities.
The Federal Trade Commission (FTC) recently issued a final rule that marks a major shift in the regulatory landscape for labeling that has already begun to impact other regulatory bodies—namely, the US Department of Agriculture (USDA). The FTC’s new rule adds teeth to its longtime policy to prevent deceptive “Made in USA” (MUSA) claims, codifies its informal 1997 Enforcement Policy Statement on U.S. Origin Claims, and enables it to seek civil penalties of up to $43,280 for each violation of the rule.
Companies doing businesses in the European Union should note an important development that could introduce a duty of care for companies. On 10 March 2021, the EU Parliament approved an outline proposal for an EU Directive on Mandatory Human Rights, Environmental and Good Governance Due Diligence (Directive).
With reports of a continued increase in the volume of mergers and acquisitions—a growth of nearly 160% in just the first half of 2021 alone—and no signs of a slowdown, it remains important for companies and investors to consider the scope of IP diligence appropriate for their targets, and how representation and warranty insurance (RWI) may affect the diligence effort.
The rule changes mostly reflect those proposed in the April 2021 consultation. The key change is that the new regime will apply to SPACs which raise a minimum amount of £100 million at IPO (as opposed to a £200 million threshold proposed in the original consultation).
A recent judgment by the High Court of England and Wales in the case of Jamp Pharma Corp v. Unichem Laboratories Limited has held that agreements reached as part of contract negotiations for contracts governed by English law may be impliedly “subject to contract” without the need to expressly state that the discussions and documents are “subject to contract” prior to a formal executed agreement.
On July 7, 2021, the Japan Ministry of Finance (MOF) published an updated list of classifications of companies listed on Japanese exchanges requiring prior notifications of inward direct investment under the Foreign Exchange and Foreign Trade Act (FEFTA).
The UK’s Financial Conduct Authority (FCA) published its 2021/22 Business Plan on July 15, setting out its future role, priorities, and how it intends to deliver them. The FCA’s website contains a summary and full copy of the business plan.
The proposed guidance also identifies principles that are applicable to each stage of the third-party risk management life cycle, including: (1) developing a plan that outlines the banking organization’s strategy, identifies the inherent risks of the activity with the third party, and details how the banking organization will identify, assess, select, and oversee the third party; (2) performing proper due diligence in selecting a third party; (3) negotiating written contracts that articulate the rights and responsibilities of all parties; (4) having the board of directors and management oversee the banking organization’s risk management processes, maintaining documentation and reporting for oversight accountability, and engaging in independent reviews; (5) conducting ongoing monitoring of the third party’s activities and performance; and (6) developing contingency plans for terminating the relationship in an effective manner. The proposed guidance provides extensive details on all the above identified principles.
Changes to complex commercial contracts are inevitable. These contracts, such as large outsourcing agreements, typically include a master services agreement (MSA) and a high number of exhibits and attachments describing the scope, performance standards, financials, and other contractual requirements in detail. Some deals can end up containing over 50–75 documents (or more!) in total. Given their strategic importance, these agreements often require numerous amendments as the relationship evolves over time and changes need to be formally documented.
The UK Financial Conduct Authority (FCA) announced on July 9 that, while changes to the scope of the UK commodity position limits regime are being consulted on, it will not take enforcement action against firms that breach position limits on cash-settled commodity derivative contracts unless the underlying is an agricultural commodity. However, the FCA will keep its stance under review, and reconsider if there are indications of market abuse.
The still evolving US sanctions (as well as the EU and now also separate UK sanctions) continue to challenge Russia-related business. The sanctions frameworks are complex, changing, and, at times, inconsistent as well as overlapping. Navigating this complex global framework is made even more difficult by the ongoing unpredictable and reactionary geopolitical environment as the Biden Administration gets underway.
The United Kingdom’s Department for Digital, Culture, Media & Sport (DCMS) is requesting views on supply chain cybersecurity, which it will look to incorporate into its new National Cyber Security Strategy.
Congress has enacted and President Joseph Biden has signed a joint resolution of disapproval under the Congressional Review Act (CRA) of the Office of the Comptroller of the Currency’s (OCC’s) “true lender” rule, which, as we previously discussed, had provided that a national bank is as a matter of law the lender on any loan for which it is the named lender or for which it provides the loan funding.
Our healthcare team recently launched a publication series highlighting the global impact of COVID-19 on healthcare transactions. Around the globe, the healthcare industry has faced similar issues from the unprecedented pandemic, prioritizing their operational response to COVID-19. Now, as countries begin to reopen, healthcare entities may refocus on planning for long-term transformation of their business models. In this series, we will explore how the pandemic impacted healthcare transactions in specific regions and what we can expect in a post-pandemic world.
After a sluggish year in 2020 for mergers and acquisitions among hospitals and health systems, 2021 has shown renewed vigor and is poised for considerable transactional activity.
Last year was a record-breaking one for capital raising in life sciences, and 2021’s first quarter was robust for special purpose acquisition company (SPAC) transactions. Now, after a second-quarter SPAC and initial public offering (IPO) slowdown, the outlook for summer SPACs has rebounded just in time for the Morgan Lewis Global Public Academy program, Going Public Through a SPAC: Current Issues for SPAC Sponsors and Private Companies 2021. Our panelists will discuss some of the most important legal issues for companies considering going public through a SPAC and for SPACs seeking an acquisition target. Topics covered will include the use of private investments in public equity (PIPEs), obtaining shareholder approval for a merger, and the required SEC filings and review process.
The new executive order continues the policy of prohibiting US persons’ transactions in the publicly traded securities of select Chinese companies, but expands the scope to include both Chinese companies that operate or have operated in the defense and related materiel sector and those in the surveillance technology sector of the economy of the People's Republic of China.
The UK National Security and Investment Act 2021 (NSI Act) received royal assent on 29 April 2021. Expected to come into force in late 2021, the NSI Act will introduce a standalone UK foreign direct investment and national security screening regime, replacing the current regime that links national security screening with UK merger control.
The State of New York has enacted a new law that should ease the transition away from US dollar LIBOR for legacy financial contracts that are governed by New York law but do not contain modern benchmark fallback provisions. A similar federal law is in the works, which if passed would apply nationwide.
The Financial Services Agency of Japan (FSA) recently submitted a bill to the National Diet of Japan including certain amendments to finance-related laws for purposes of strengthening Japan’s financial system and financial stability in response to social and economic changes caused by the COVID-19 pandemic. Among these measures, this LawFlash addresses the proposed amendments to the Financial Instruments and Exchange Act (FIEA) for purposes of promoting foreign asset managers’ entry into the Japanese market.
The UK Prudential Regulation Authority (PRA) published a policy statement (PS7/21) and a supervisory statement (SS2/21) on clarifying and modernizing regulatory expectations of outsourcing and third-party risk management on March 29. The expectations in PS7/21 and SS2/21 are relevant to banks, PRA-designated investment firms, insurers, and branches of overseas banks and insurers and apply not just to “outsourcing” but also non-outsourcing material or high-risk service arrangements. The expectations apply at a legal entity level rather than at a group level (save for expectations on intragroup arrangements).
The Singapore Exchange has launched a consultation on proposed rules governing special purpose acquisition companies.
China recently amended its primary regulation governing medical devices, the Regulation on Supervision and Administration of Medical Devices (2021 RSAMD), which will replace its previous 2014 version and become effective on June 1, 2021. While the 2021 RSAMD largely follows the structure of the 2014 version, it does introduce a few important changes of which medtech companies interested in marketing in China should be aware.
The president of the Republic of Kazakhstan signed Law No. 399-VI, On Amendments into Certain Labour-Related Legislative Acts of the Republic of Kazakhstan (the Amendment Law), on January 2, 2021. The Amendment Law entered into force on January 16 and amended a number of legislative acts of the Republic of Kazakhstan, including the Civil Code, the Budget Code, and the Entrepreneurial Code as well as the Law of the Republic of Kazakhstan on Public-Private Partnership (PPP), No. 379-V, dated October 31, 2015 (the PPP Law). This LawFlash summarizes the most important new elements introduced into the PPP Law through the Amendment Law.
With special purpose acquisition companies increasingly being used in initial public offerings and the commercial insurance market continuing to harden, captive insurance could be a solution for offering directors and officers protection against increased shareholder scrutiny and resulting derivative lawsuits.
With special purpose acquisition companies increasingly being used in initial public offerings and the commercial insurance market continuing to harden, captive insurance could be a solution for offering directors and officers protection against increased shareholder scrutiny and resulting derivative lawsuits.
France’s highest Court (Cour de Cassation) recently ruled that an acquiring entity, in this case Iron Mountain, could be found criminally liable for violations committed by the target, here Recall France, before the transaction. The November 25, 2020 decision, which reversed French case law, foreshadows serious concerns for future acquirers in M&A transactions.
The Financial Market Integrity Strengthening Act includes a large number of innovations aimed at strengthening confidence in the German financial market by placing more comprehensive obligations on auditors when auditing companies of public interest. In addition to optimizing balance sheet control and further regulating the auditing of financial statements, the innovations also affect corporate governance at companies.
All initial public offerings (IPOs) must be paperless from July 5, 2021 and documents put on display by issuers to support listings and transactions must be made available online from October 4, 2021.
Mexico’s Federal Consumer Protection Agency (Procuraduría Federal del Consumidor (PROFECO)) on February 26 announced its new voluntary Ecommerce Ethics Code (Código de Ética en Materia de Comercio Electrónico), which may be adopted by entities doing online business in Mexico. Although the adoption of the Ecommerce Ethics Code is voluntary, it signals the authority’s baseline expectation for market participants, and sets forth the parameters and guidelines for suppliers of goods and services that operate through digital platforms or virtual salesrooms.
The Biden administration has vowed to invoke the Defense Production Act (DPA) to increase domestic production of essential supplies needed to respond to the COVID-19 pandemic. In this Insight, we address key features of the DPA, guidance for companies that may receive a rated order, financing incentives offered by the DPA, and how we anticipate the Biden administration will use the DPA over the next year.
The German Act on the Further Development of the Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz – SanInsFoG) took effect on January 1, 2021, transforming the European Restructuring Directive of June 20, 2019 ((EU) 2019/1023) and introducing a self-administrated restructuring option outside the standard insolvency proceeding.
The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) published final rules on January 15, 2021, implementing the sanctions put in place by Executive Order 13936 (EO 13936) and the Hong Kong Autonomy Act of 2020 (the Act or HKAA). In EO 13936, then President Donald Trump found that Hong Kong was no longer sufficiently autonomous to justify differential treatment in relation to the People’s Republic of China (PRC), largely in response to the imposition of China’s national security legislation on Hong Kong by the PRC government. This finding and the HKAA authorize the Department of the Treasury to issue new regulations to implement the change in status.
Recent sanctions imposed by the European Union, United Kingdom, and the United States on Turkey and certain Turkish persons will be of interest to European and American investors in Turkey’s defense and energy sectors. The following update contains a summary of each regime.
When negotiating a service agreement there are many terms and conditions to be mindful of, but it’s important to review and consider the acceptance requirements.
The Consumer Financial Protection Bureau (Bureau or CFPB) on January 13 issued a Statement Regarding the Provision of Financial Products and Services to Consumers with Limited English Proficiency (Statement), which is intended to provide compliance principles and guidelines to inform and assist financial institutions in their decisionmaking related to serving limited English proficiency (LEP) consumers in non-English languages.
Recent proposed changes to the Singapore Electronic Transactions Act would allow for the digitalization of cross-border trade documents and other important legal documents.
China’s Ministry of Commerce (MOFCOM) published the Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (the Blocking Statutes) on January 9. The rules, which consist of only 16 articles, became effective upon publication.
The Japanese government announced on January 13 that it has added seven prefectures—Osaka, Kyoto, Hyogo, Aichi, Gifu, Tochigi, and Fukuoka—as areas subject to the Second Declaration of a State of Emergency (SDSE) from January 14, 2021. The decision expands the number of areas subject to the SDSE to eleven prefectures. In the current plan, this measure will be continued until February 7, 2021.
New changes to UAE corporate and foreign ownership laws will abolish longstanding foreign ownership restrictions and remove substantial barriers to doing business in the UAE.
Despite the challenges of an unprecedented global pandemic, cartel enforcement activity in 2020 increased in many leading enforcement jurisdictions. Corporate fines, for example, more than doubled from 2019 in the United States, Mexico, South Korea, and Taiwan.
In the News
Partner Georgia Quenby authored an article for RECOVERY Magazine discussing the capability of English law to handle security in different forms under the Corporate Insolvency and Governance Act 2020 and Finance Act.
Morgan Lewis recently assisted the U.S.-U.A.E. Business council, of which Morgan Lewis is a Founding Member, to update its guide to doing business in the United Arab Emirates (UAE).
Partner David Glazer, who was named a Dealmaker of the Year by New Jersey Law Journal for having “left an indelible mark on the legal community in New Jersey and beyond through their unwavering dedication to the profession,” was featured in a Q&A by the publication.
Lesli Ligorner discusses China’s Blocking Statute with Lexology PRO. The Blocking Statute authorizes government entities in China to take substantive measures, including issuing prohibition orders declaring foreign sanctions unenforceable, penalizing Chinese persons for violating the prohibition orders, and allowing Chinese persons to seek damages from entities that comply with the foreign sanctions.
Welcome to the one hundred and ninth edition of our outside publication on developments in national competition laws released in Wirtschaft und Wettbewerb (WuW), a periodical for German and European competition law professionals published by Handelsblatt Fachmedien.
Partner Shannon Donnelly and associate Jennifer Connolly authored an article for Law in Sport discussing the UK immigration landscape for the sports industry. With more events taking place within the context of restricted travel, the article provides key considerations for sports professionals and those who work in the industry.
In this Law360 article, partners Bernard Lui and Vanessa Ng discuss new legal considerations for participants in healthcare mergers and acquisitions with entities in Singapore and throughout the Asia-Pacific region as the COVID-19 pandemic continues.
Tsugumichi Watanabe, Mitsuyoshi Saito, and Masaki Ichimura contributed the discussion of attorney-client privilege in Japan in the most recent update of the widely used handbook, International Corporate Practice: A Practitioner’s Guide to Global Success, published by Practicing Law Institute (PLI).
Partner Chris Dlutowski spoke with FundFire for an article on a growing interest among hedge funds to invest in private companies leveraging a variety of options. The article addresses the questions this may be raising among the investor community.
Partner Giovanna Cinelli, who leads the firm’s international trade and national security practice, told World ECR she has seen no slowdown in Chinese investments in US technology companies despite countries’ fortification of investment regulations.
Morgan Lewis partner and co-leader of the firm’s SPAC task force Alec Dawson spoke with The Deal for its “Drinks with The Deal” podcast.
Partners Daniel Nelson, Kate Habershon, and Kathryn Hambrick and associates Meghan McCarthy, Alexios Hadji, and Grace Tan co-authored an article for the Journal of Investment Compliance regarding tax-related issues in the private wealth fund investment area. The article dives into regional tax considerations for sovereign wealth funds that are looking to ramp up investments post-pandemic.
Leonidas Theodosiou was quoted in a Global Competition Review article regarding the United Kingdom’s new Subsidy Control Bill that was introduced in Parliament.
Fund Management 2021, published by Lexology’s Getting The Deal Through (GTDT), gives a high level overview of the key considerations for the fund management industry and predictions for the year ahead.
Partners Mark Geday and Edwin Luk and of counsel Jeffrey Letalien co-authored an article for Law360 looking at current trends across the international special purpose acquisition company (SPAC) market.
Partner Tom Cartwright provided insight ahead of the Medtech Investing Europe Forum on the outlook for life sciences industry amid COVID-19.
Motonori Araki co-authored "The Impact of the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures (Order of the Ministry of Commerce of the People’s Republic of China 2021 No.1) Japanese companies at the mercy of trade conflict between US and PRC" in Japanese for the Journal of the Japanese Institute of International Business Law.
Morgan Lewis partner Todd Liao authored an article for Medtech Insight about China’s amended regulation governing medical devices. The update of the Regulation on Supervision and Administration of Medical Devices, which came into effect on 1 June 2021, introduces important changes that medtech companies should be aware of.
London-based partners Georgia Quenby and Victoria Thompson consider how the new Restructuring Plan under English law interacts with intercreditor agreements which have voting restrictions and other contractual prohibitions on creditor actions.
Morgan Lewis partner Mark Geday authored an article for IFLR looking at current deal making trends and considerations in the context of a challenging market.
Morgan Lewis partner Jeffrey Raskin was quoted in Business Insurance in an article about how insurance policies can protect special purpose acquisition companies (SPACs).
Partner Sandra Vrejan spoke with Bloomberg Law about a shift from the Small Business Administration regarding bankrupt companies’ eligibility for Paycheck Protection Program (PPP) loans. In the piece, Sandra noted that the guidance doesn’t address a key issue—whether bankrupt companies are eligible for PPP loans. “At the end of the day, the thumbnail conclusion is that it hasn’t changed all that much,” she said.
Morgan Lewis partner Jeffrey Raskin and associate Lauren Burke authored an article for Law360 about how captive insurance policies can protect special purpose acquisition companies (SPACs) from lawsuits and scrutiny from shareholders.
Partners Rob Mailer and Oli Rochman and associate Funke Omisore authored a column for Private Equity International which provides practical and commercial considerations for first-time fund managers.
Recorded Webinars
Copyright © 2021 Morgan, Lewis & Bockius LLP. All rights reserved.