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Tuesday 22 April 2014

MH Corporate

MH advises Coms plc on acquisition of Redstone Converged Solutions Limited

Marriott Harrison LLP acted for AIM-listed integrated VOIP provider Coms plc on its acquisition of Redstone Converged Solutions Limited (“Redstone”) from Redstone plc for a consideration of £9.5 million. Completion was conditional upon approval of the transaction by Redstone plc shareholders, which was obtained at a Redstone plc general meeting held at the end of 2013.

Private Equity update: BVCA publishes revised model documents for consultation

The British Private Equity & Venture Capital Association (“BVCA”) has recently published for consultation amended drafts of its model subscription and shareholders’ agreement and articles of association for use in early stage investments, for the first time since 2010. Marriott Harrison’s corporate partner, Andrew Wigfall, was invited to join the working group responsible for the revisions in recognition of his wide experience in VC transactions.

The intention of the revised drafts is to bring these template documents up to speed with current market practice. Final versions are expected to be released in April.


High Court Ruling on Capital Maintenance

The recent High Court decision in Abbar v SEDCO and others [2013] EWHC 1414 (Ch) is an important reminder to investors of the potential difficulties involved in seeking the return of their investment where expectations of the investment vehicle are not attained.

The decision highlights that an award for damages for breach of contract will not be made where the contract can only be performed in a manner that offends the well established capital maintenance principle, whereby a limited company cannot return capital to its shareholders except in certain circumstances allowed under statute (namely, a reduction of capital, the redemption or purchase of shares, or a distribution in a winding up). This principle exists primarily for the benefit of the company’s creditors.

It’s a Penalty!

A recent Court of Appeal decision has provided clarity on the modern law of penalties and guidance on the structuring of certain provisions in commercial agreements.

In Talal El Makdessi v Cavendish Square Holdings BV [2013] EWCA Civ 1539, a seller (the “Seller”) sold a part of his shareholding in a company (the “Target”) to a purchaser (the “Buyer”). Under the terms of the share purchase agreement (the “SPA”) (i) the Seller retained 20% of the shares in the Target (the “Retained Shares”), (ii) the Buyer was to be (partly) paid in instalments (the “Deferred Consideration”), (iii) the Seller retained a right to sell the Retained Shares to the Buyer at a certain price (the “Put Option”), and (iv) there was a restrictive covenant prohibiting the Seller from competing with the Target following the sale of the part of Seller’s holding in Target (the “Restrictive Covenant”).




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