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Prof. mr. B.J. van Ettekoven, senior rechter Rechtbank Utrecht en hoogleraar Bestuursrecht Universiteit van Amsterdam Prof. mr. dr. I.N. Tzankova, bijzonder hoogleraar Comparative mass litigation Universiteit van Tilburg, advocaat BarentsKrans N.V. en mr. C.M. Verhage, advocaat BarentsKrans N.V. Prof. mr. G.T.M.J. Raaijmakers, hoogleraar Ondernemings- en Effectenrecht Vrije Universiteit Amsterdam, advocaat NautaDutilh N.V. Prof. mr. F.T. Oldenhuis, universitair hoofddocent aan de vakgroep Privaatrecht en Notarieel Recht van de Rijksuniversiteit Groningen Prof. mr. F.W.J.M. Schols, hoogleraar Privaatrecht, in het bijzonder notarieel recht, Radboud Universiteit Nijmegen, estate planner Prof. dr. M.B.M. Loos, hoogleraar Privaatrecht Universiteit van Amsterdam Prof. mr. J.G.J. Rinkes, hoogleraar Privaatrecht Open Universiteit, bijzonder hoogleraar Europees Consumentenrecht Universiteit Maastricht, raadsheer-plaatsvervanger Hof Arnhem, rechter-plaatsvervanger Rechtbank Rotterdam, adviseur Paulussen advocaten Prof. mr. M.M. van Rossum, hoofd Wetenschappelijk Bureau Deterink Advocaten en Notarissen, bijzonder hoogleraar Privaatrecht Open Universiteit Heerlen Prof. mr. M.E. Koppenol-Laforce, hoogleraar Faculteit Rechtsgeleerdheid, Instituut voor Privaatrecht, Ondernemingsrecht, Universiteit Leiden, advocaat Houthoff Buruma Prof. mr. drs. M.L. Hendrikse, bijzonder hoogleraar Handelsrecht en Verzekeringsrecht Open Universiteit (JPR advocatenleerstoel), directeur UvA Amsterdam Centre for Insurance Studies (ACIS), opleidingsdirecteur Master Verzekeringskunde UvA Amsterdam Business School, universitair hoofddocent Privaatrecht Universiteit van Amsterdam, rechterplaatsvervanger Rechtbank Utrecht, lid geschillencommissie Kifid (verzekeringskamer) Prof. mr. G.C.C. Lewin, bijzonder hoogleraar Bijzondere aspecten van het Privaatrecht Universiteit van Amsterdam, raadsheer Hof Amsterdam Prof. mr. CH. E.F.M. Gielen, hoogleraar Intellectueel Eigendomsrecht Universiteit van Groningen, advocaat NautaDutilh N.V. Prof. mr. A.H.N. Stollenwerck, hoogleraar Notarieel en Fiscaal Recht Vrije Universiteit Amsterdam, raadsheerplaatsvervanger Hof Den Bosch Prof. mr. C.A. Schwarz, hoogleraar Handels- en Ondernemingsrecht Universiteit Maastricht Prof. mr. J.M. Hebly, hoogleraar Bouw- en Aanbestedingsrecht Universiteit Leiden, advocaat Houthoff Buruma Prof. mr. G.K. Sluiter, hoogleraar Internationaal Strafrecht Universiteit van Amsterdam, advocaat Bรถhler Advocaten Prof. mr. M.W. Scheltema, hoogleraar Enforcement issues in Private Law Erasmus Universiteit Rotterdam, advocaat Pels Rijcken & Droogleever Fortuijn N.V. Prof. mr. P. Vlaardingerbroek, hoogleraar Familie- en Personenrecht Universiteit Tilburg, raadsheer-plaatsvervanger Hof Den Bosch, rechter-plaatsvervanger Rechtbank Rotterdam Prof. W.H. van Boom, hoogleraar Privaatrecht Erasmus School of Law, Erasmus Universiteit Rotterdam Prof. mr. dr. G.J. Zwenne, professor Faculteit Rechtsgeleerdheid, Instituut voor Metajuridica, eLaw@Leiden, Universiteit Leiden, advocaat Bird & Bird LLP Prof. dr. S. Perrick, bijzonder hoogleraar Universiteit van Amsterdam, advocaat Spinath & Wakkie Prof. dr. K.F. Haak, hoogleraar Handelsrecht Erasmus Universiteit Rotterdam, rechter-plaatsvervanger Hof Arnhem Prof. W.D. Kolkman, hoogleraar Privaatrecht Rijksuniversiteit Groningen, raadsheer-plaatsvervanger Hof Arnhem Prof. mr. dr. M.G.C.M. Peeters, bijzonder hoogleraar Derivatenrecht Universiteit van Amsterdam, advocaat NautaDutilh N.V. Prof. mr. E.P.M. Vermeulen, hoogleraar Business & Financial Law Universiteit van Tilburg Prof. mr. dr. W. Burgerhart, hoogleraar Rijksuniversiteit Groningen, estate planner Prof. mr. dr. M. Heemskerk, bijzonder hoogleraar Pensioenrecht Radboud Universiteiten Nijmegen, advocaat Onno F. Blom Advocaten Prof. dr. H.B. Winter, bijzonder hoogleraar Toezicht Rijksuniversiteit Groningen Prof. mr. B. Barentsen, bijzonder hoogleraar Albeda leerstoel Universiteiten Leiden Prof. mr. dr. R.F.H. Mertens, bijzonder hoogleraar Zakelijke Rechten Open Universiteit Heerlen, advocaat Paulussen Advocaten

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Inhoudsopgave Sprekers Mr. Dr. E.M. Vermeulen, advocaat NautaDutilh Mr. Ing. M. Mouthaan, advocaat NautaDutilh

Jurisprudentie 

Hof Arnhem 18 februari 2003, JOR 2003/267

p. 4

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HR 19 januari 2007, JOR 2007/166

p. 5

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HR 29 juni 2007, JOR 2007/198

p. 7

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HR 17 december 1982, NJ 1983, 480

p. 10

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HR 24 maart 1995, NJ 1995, 628

p. 12

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HR 22 december 2009, JOR 2011/19

p. 13

Literatuur 

M. Mouthaan en E.M. Vermeulen, The Netherlands - cross-border banking and finance guide, 2012 (A Lexis®PSL document produced in partnership with Mark Mouthaan and Erik Vermeulen of Nauta Dutilh N.V.)



p. 14

The City of London Law Society, A Guide to the questions to be addressed when providing opinion letters on English law in financial transactions, 2011,

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p. 25

D.A. Viëtor, ‘Toetsing van de rechtmatigheid van opzegging van krediet door een bank’, TFR 2011, p. 341-348

p. 40

Bijlage 

Voorblad, gezamenlijk verklaring en inhoudsopgaaf van modelkredietovereenkomst (LMA.MTR.06)

Aanbevolen literatuur 

E.M. Vermeulen, (Re)organisatie, fusie en overname, Financiering van overnames deel 1, Zutphen: Paris 2006, p. 41-70

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p. 48

Hof Arnhem 18 februari 2003, JOR 2003/267 » Samenvatting Of de opzegging van het bankkrediet i.c. het beoogde rechtsgevolg heeft gehad, moet worden beantwoord aan de hand van de redelijkheid en billijkheid in verband met de omstandigheden van het geval. Ook indien uit de aard van een specifieke overeenkomst zou volgen dat zij in beginsel zonder meer opzegbaar is, kunnen de eisen van redelijkheid en billijkheid in verband met de concrete omstandigheden van het geval meebrengen dat opzegging slechts tot een rechtsgeldige beëindiging van de overeenkomst leidt indien een voldoende zwaarwegende grond voor opzegging bestaat. Voor een bank geldt dat zij uit hoofde van de maatschappelijke functie van banken een bijzondere zorgplicht heeft, zowel jegens haar cliënten uit hoofde van de met hen bestaande contractuele verhouding, als ten opzichte van derden met wier belangen zij rekening behoort te houden op grond van hetgeen volgens ongeschreven recht in het maatschappelijk verkeer betaamt. De reikwijdte van die zorgplicht hangt af van de omstandigheden van het geval. Voor een kredietopzegging impliceert dit dat deze ten minste zal moeten voldoen aan de eisen van proportionaliteit en subsidiariteit. Voor de rechtsgeldigheid van de opzegging van een bankkrediet zal onder meer betekenis toekomen aan de in r.o. 4.31 opgesomde factoren. 4.31 Voor de rechtsgeldigheid van de opzegging van een bankkrediet zal onder meer betekenis toekomen aan de volgende factoren: - de duur, de mate van exclusiviteit, de omvang en de ingewikkeldheid en het verloop van de kredietrelatie, - een aanmerkelijke afname van de kredietwaardigheid en/of aanmerkelijke toeneming van het bancaire kredietrisico, waarbij met name van belang zal zijn of er voldoende dekking door zekerheid bestaat dan wel kan worden verleend en de mate van waarschijnlijkheid of en in welke omvang deze zal blijven bestaan (alles te stellen op de liquidatiewaarde), - het gedrag en de betrouwbaarheid van de kredietnemer alsmede de mate waarin en de tijdigheid waarmee deze de bank op de hoogte heeft gesteld en stelt van alle voor de kredietrelatie relevante omstandigheden, - of en in welke mate de kredietnemer toerekenbaar is tekortgeschoten (bij voorbeeld door (structurele en/of ruime) overschrijding van de kredietlimiet), - de kans dat de onderneming van de kredietnemer, al of niet na reorganisatie of doorstart, zal overleven en de mate waarin de kredietnemer een reorganisatie heeft opgestart, - welke termijn de kredietnemer krijgt om een andere (huis-)bankier te zoeken en welke ernstige financiële problemen voor de kredietnemer (zullen) ontstaan indien hij zijn financieringsbehoefte niet op korte termijn elders kan onderbrengen, - de wijze van besluitvorming van de bank voorafgaand aan de opzegging en de wijze waarop overleg is gevoerd met de kredietnemer en of en in welke mate de bank de kredietnemer tevoren heeft gewaarschuwd, - of de bank door eigen gedragingen (zoals toelating van overschrijding van de kredietlimiet) verwachtingen heeft gewekt, - andere maatschappelijke belangen (waaronder het voorbestaan van werkgelegenheid).

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HR 19 januari 2007, JOR 2007/166 » Samenvatting Het hof heeft tot uitdrukking gebracht dat voor het antwoord op de vraag welke zin partijen in de gegeven omstandigheden over en weer redelijkerwijze mochten toekennen aan de omstreden woorden in art. 8 onder b, SPA en wat zij te dien aanzien redelijkerwijze van elkaar mochten verwachten, in de door het hof genoemde omstandigheden, waaronder de aard van de transactie, de omvang en gedetailleerdheid van het contract, de wijze van totstandkoming ervan en in het bijzonder de ‘‘entire agreement clause’’ van art. 17.5 SPA, als uitgangspunt beslissend gewicht dient te worden toegekend aan de meest voor de hand liggende taalkundige betekenis van die woorden, gelezen in het licht van de overige, voor de uitleg relevante bepalingen van de SPA. Een en ander geeft niet blijk van een onjuiste opvatting aangaande de wijze waarop in een zaak als deze de Haviltex-maatstaf dient te worden toegepast. Het stond het hof in dat verband vrij, gelijk het kennelijk heeft gedaan, vooralsnog zonder een inhoudelijke beoordeling van de door Meyer Europe aangevoerde stellingen, te komen tot een – voor, zoals hierna zal blijken, tegenbewijs door Meyer Europe vatbaar – oordeel aangaande de uitleg van art. 8 onder b en die stellingen te beoordelen in het kader van het door Meyer Europe te leveren tegenbewijs. Het hof overweegt dat voor afwijking van de taalkundige betekenis van de bewoordingen van de SPA aanleiding bestaat, indien een partij gemotiveerd stelt en zo nodig bewijst dat aan de bewoordingen een andere betekenis toekomt. Vervolgens oordeelt het hof dat Meyer Europe zich heeft beroepen op een afwijkende gemeenschappelijke partijbedoeling – namelijk dat de tekst van art. 8 niet weergeeft wat tussen partijen is overeengekomen – en dat zij dan ook terecht is belast met het bewijs daarvan. Het hof heeft overwogen dat het, de SPA weggedacht en uitgaande van een – op wet, stilzwijgende overeenkomst en/of gewoonte gebaseerde – regresmogelijkheid voor Meyer Europe, aan PontMeyer is om feiten of omstandigheden aan te voeren, waaruit volgt dat zij niet tot betaling gehouden is. Het hof heeft aldus tot uitgangspunt genomen dat op PontMeyer de bewijslast rust ter zake van haar verweer. Het hof heeft overwogen dat PontMeyer zich ‘‘in dit verband’’, waarmee het hof klaarblijkelijk bedoelt: in verband met het staven van haar verweer, beroept op de vrijwaring in art. 8 SPA die volgens PontMeyer ook betrekking heeft op de vennootschapsbelasting over de periode vóór 1 april 1998. Gelet op de betwisting van die uitleg door Meyer Europe spitste het geschil zich toe op de reikwijdte van de in art. 8 onder b SPA gemaakte uitzondering op de door PontMeyer ingeroepen vrijwaring en meer in het bijzonder op de betekenis van de woorden ‘‘as of April 1, 1998’’. Aldus stond het hof in het bijzonder voor de taak de reikwijdte van deze uitzondering vast te stellen. Gekomen tot het voor PontMeyer gunstige oordeel dat de uitzondering op de vrijwaring geen betrekking had op de vennootschapsbelasting over de periode die aan 1 april 1998 voorafging en dat bijgevolg de vrijwaring ook op die belasting betrekking had, heeft het hof terecht geoordeeld dat het aan Meyer Europe was tegen de aldus vastgestelde inhoud van de overeenkomst tegenbewijs te leveren, waarbij het hof dit tegenbewijs nader heeft bepaald op bewijs van een andere gemeenschappelijke

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partijbedoeling dan uit de tekst van art. 8 onder b naar ’s hofs uitleg daarvan blijkt. Daarin ligt naar het kennelijke oordeel van het hof mede besloten het geval dat Meyer Europe onder de gegeven omstandigheden redelijkerwijs heeft mogen begrijpen dat de in art. 8 onder b SPA op haar vrijwaringsplicht gemaakte uitzondering mede betrekking heeft op de vennootschapsbelasting over de periode voorafgaande aan 1 april 1998 waarvoor een voorziening is getroffen in de Interim Accounts. Uit het voorgaande volgt dat de klacht berust op een verkeerde lezing van het bestreden arrest. Het hof heeft immers geenszins miskend dat Meyer Europe in beginsel recht had de door haar betaalde vennootschapsbelasting op PontMeyer te verhalen en dat PontMeyer de bewijslast droeg van de feiten waarop zij haar, in de visie van het hof kennelijk: bevrijdende, verweer baseerde – in dit geval de uitleg van art. 8 onder b SPA –, en het heeft evenmin miskend dat van Meyer Europe alleen tegenbewijs gevergd mocht worden. De klacht kan dus niet tot cassatie leiden. Opmerking verdient dat het hof ervan mocht uitgaan dat de tekst van de overeenkomst duidelijk was, dat partijen daarover uitvoerig en met professionele bijstand hebben onderhandeld en dat van een afwijkende gemeenschappelijke partijbedoeling niet is gebleken, zodat reeds daarom de klacht faalt dat het hof de door Meyer Europe aangevoerde omstandigheden niet tegen deze achtergrond had mogen beoordelen. Het hof heeft voorts deze omstandigheden gewogen doch niet van voldoende gewicht geacht om tot een andere conclusie te komen. Daarbij heeft het hof, kennelijk en niet onbegrijpelijk, van belang geacht dat op grond van hetgeen daarover ten processe over en weer is gesteld, moet worden aangenomen dat over dit onderwerp geen aan PontMeyer te verwijten onduidelijkheid kan hebben bestaan. Het hof heeft ten slotte ook onder ogen gezien dat voor de vennootschapsbelasting in de tussentijdse balans een voorziening was opgenomen, doch daarin in verband met de wijze waarop de bepaling van de koopsom in een geval als dit totstandkomt, geen aanwijzing voor de juistheid van het standpunt van Meyer Europe gezien. Ook dit oordeel is niet onbegrijpelijk en kan voor het overige, verweven als het is met waarderingen van feitelijke aard, in cassatie niet op juistheid worden onderzocht.

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HR 29 juni 2007, JOR 2007/198 » Noot 1. Het arrest Derksen/Homburg laat zien dat de regel die de Hoge Raad heeft geformuleerd in HR 19 januari 2007, «JOR» 2007/166 (Meyer Europe/PontMeyer), dat een met zorg gesloten commercieel contract in beginsel taalkundig moet worden uitgelegd, geen eendagsvlieg is. 2. De onderhavige zaak betreft de uitleg van een vaststellingsovereenkomst die – huiselijk aangeduid – de Derksen-groep en de Homburg-groep hebben gesloten ter beëindiging van een geschil. De bepaling in de vaststellingsovereenkomst waarover partijen twisten is artikel 8a: ‘‘Indien de prioriteitsaandelen Uni-Invest NV [de Homburg-groep; RJT] zullen verlaten, zal [de Homburg-groep] ten behoeve van [de Derksen-groep] bedingen dat de verkrijger een bod doet op alle aandelen Uni-Invest NV die [de Derksen-groep] op dat moment direkt of indirekt in haar bezit heeft voor een prijs die gelijk is aan de prijs waarvoor de verkrijger gewone aandelen Uni-Invest NV van [de Homburg-groep] verwerft. [De Derksen-groep] doet afstand van haar recht op levering van 49% van de aandelen in [de rechtsvoorgangster van Uni-Invest Prioriteit] BV.’’ 3. Een consortium van investeerders heeft een openbaar bod uitgebracht op alle gewone aandelen Uni-Invest NV, die een notering heeft aan de Amsterdamse Effectenbeurs (nu: Euronext Amsterdam). Het consortium heeft ook de prioriteitsaandelen gekocht, zodat een geval als bestreken door art. 8a zich voordoet. De Derksen-groep heeft gesteld dat art. 8a van de vaststellingsovereenkomst inhoudt dat de Homburg-groep de ‘‘controlpremium’’ (de waarde die de aan de prioriteitsaandelen in Uni-Invest verbonden zeggenschapsrechten vertegenwoordigen boven de nominale waarde van die aandelen) met de Derksen-groep moet delen. De Homburg-groep betwist die uitleg op grond van de tekst van het contract. Het hof Arnhem («JOR» 2005/232) heeft geoordeeld dat de vaststellingsovereenkomst in beginsel taalkundig moet worden uitgelegd en dat bij die uitleg de interpretatie en de vordering van de Derksen-groep geen steun vinden in de overeenkomst. Artikel 8a houdt volgens het hof een (voorwaardelijke) ‘‘tag along’’bepaling in. Het hof heeft om processuele redenen de Derksen-groep niet toegelaten tot nadere bewijslevering. De Hoge Raad vernietigt het oordeel van het hof, niet omdat het een verkeerde uitlegnorm heeft toegepast, maar omdat het de Derksen-groep tot bewijs had moeten toelaten. 4. De kern van het arrest van de Hoge Raad is te vinden in overweging 4.1.3. Met een verwijzing naar het arrest Meyer Europe/PontMeyer heeft de Hoge Raad geoordeeld dat het hof op grond van de door hem genoemde gezichtspunten heeft mogen beslissen dat art. 8a van de vaststellingsovereenkomst op grond van een taalkundige uitleg voorshands een bepaalde betekenis heeft om vervolgens te beoordelen of de Derksengroep voldoende had gesteld om tot bewijs te worden toegelaten. 5. De factoren die de Hoge Raad noemt ter onderbouwing van zijn oordeel dat het contract in beginsel, behoudens tegenbewijs, taalkundig moet worden uitgelegd, zijn: (i) de aard van de overeenkomst (een vaststellingsovereenkomst inzake een zuiver commerciële transactie) en (ii) het feit dat partijen bij de totstandkoming daarvan werden bijgestaan door (juridisch) deskundige raadslieden.

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6. De factor ‘‘de aard van de overeenkomst’’ bestaat goed beschouwd uit twee onderdelen: het feit dat het om een vaststellingsovereenkomst gaat en dat het een zuiver commerciële transactie betreft. 7. Een vaststellingsovereenkomst is een overeenkomst die strekt ter beëindiging of ter voorkoming van een onzekerheid of geschil (art. 7:900 lid 1 BW). Een dergelijke overeenkomst is gericht op het verkrijgen van zekerheid en het voorkomen van onzekerheid. Voorkomen moet worden dat er ook over die vaststellingsovereenkomst spoedig een geschil kan ontstaan. Daarom stuit een beroep op dwaling ten aanzien van de desbetreffende onzekerheid af op de aard van de overeenkomst en zal een beroep op ontbinding van een vaststellingsovereenkomst minder spoedig worden aanvaard. Zie kort Asser-Van Schaick, nr. 280 e.v. Die aard van de vaststellingsovereenkomst brengt met zich dat groot gewicht moet worden toegekend aan de bewoordingen daarvan. In deze zin: A-G Verkade in zijn conclusie (onder 4.8) voor het onderhavige arrest, dezelfde in zijn conclusie (onder 5.8) voor HR 4 juni 2004, LJN AO5116 (Inexco/P.W. Holding) en H.M. Veenstra, NTBR 2007, p. 6. Zo ook Rb. Rotterdam 26 juli 2006, LJN AY6258 (KPN/Versatel) (r.o. 4.9), wiens oordeel is ontleend aan het arrest van het hof in de onderhavige zaak. 8. Bovendien wordt een vaststellingsovereenkomst in veel gevallen opgemaakt door een jurist, althans een juridisch deskundige, waarbij, meer nog dan bij een willekeurige andere overeenkomst, nauwkeurig wordt gelet op precieze formulering van de bewoordingen, juist om onzekerheden en nieuwe geschillen te voorkomen. Bij een vaststellingsovereenkomst mogen partijen over en weer dan ook verwachten dat de bewoordingen van het contract de bedoeling van partijen goed weergeven. 9. De omstandigheid dat het gaat om een zuiver commerciële transactie draagt volgens de Hoge Raad ook bij aan het oordeel dat de onderhavige overeenkomst als regel grammaticaal moet worden uitgelegd. Dit sluit aan bij het oordeel van de Hoge Raad in het arrest Meyer Europe/PontMeyer, waarin hij heeft beslist dat de aard van de aldaar aan de orde zijnde transactie (een overeenkomst tot verkoop en levering van aandelen in een BV) noopte tot een in beginsel grammaticale uitleg. Met deze twee arresten staat vast dat de omstandigheid dat het gaat om een commercieel contract een grammaticale uitleg rechtvaardigt. In het commerciële verkeer gaan ook partijen er van uit dat wanneer een geschil ontstaat een overeenkomst woordelijk wordt uitgelegd. Dit is in het bijzonder het geval in de internationale contractspraktijk waar het Anglo-Amerikaanse recht de overhand krijgt en waar tekstuele uitleg eveneens voorop staat. Een grammaticale uitleg zet bovendien een premie op het duidelijk verwoorden van de bedoeling van partijen in een contract. Bij commerciële contracten van enige financiële omvang zal het ook lonen die investering vooraf te doen in plaats van een investering achteraf te moeten doen in een eindeloze juridische procedure over een vaag beding. Commerciële partijen zijn in staat die kosten te dragen. Veelal zijn het ook repeat players, zodat de investering over een aantal transacties uitgesmeerd kan worden. 10. Tenslotte heeft de Hoge Raad voor een grammaticale uitleg relevant geoordeeld dat partijen bij de totstandkoming van de overeenkomst werden bijgestaan door (juridisch) deskundige raadslieden. Deze omstandigheid heeft de Hoge Raad ook reeds genoemd in het arrest Meyer Europe/PontMeyer. In een dergelijk geval mogen partijen over en weer verwachten dat zorg is besteed aan de precieze bewoordingen van het contract.

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11. Andere factoren die wijzen in de richting van een grammaticale uitleg die aan de orde kwamen in het arrest Meyer Europe/PontMeyer, maar niet in het arrest Derksen/Homburg, zijn de omvang en gedetailleerdheid van het contract alsmede de entire agreement clausule. De omvang en gedetailleerdheid van een contract zijn een indicatie dat aan het contract de nodige zorg is besteed, zodat verwacht mag worden dat hetgeen op papier staat de bedoeling van partijen goed weergeeft. De omstandigheid dat het contract een entire agreement clause bevat, geeft aan dat partijen hun rechtsverhouding geheel beheerst willen zien door de uiteindelijke schriftelijke versie van het contract, maar dit noopt niet zonder meer tot een taalkundige uitleg. Voor nadere uitleg verwijs ik naar mijn noot in «JOR» 2007/166. 12. Met het arrest Derksen/Homburg wordt bevestigd dat de Hoge Raad oog heeft voor de werkelijkheid en noden van de commerciële praktijk. R.P.J.L. Tjittes, advocaat bij Allen & Overy LLP en hoogleraar Privaatrecht aan de Vrije Universiteit

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NJ 1983, 480 Noot Naar boven Auteur: J.M.M. Maeijer 1 Art. 103K Ned. Antillen correspondeert met ons art. 47-oud K. Onder vigeur van deze laatste wetsbepaling werd reeds algemeen aangenomen dat de vertegenwoordigingsbevoegdheid van een bestuurder niet met externe werking kon worden beperkt door een besluit van de algemene vergadering van aandeelhouders. De formulering van art. 47-oud K: die tot uitdrukking brengt dat een dergelijke beperking alleen kan berusten op de statuten (en uiteraard ook op de wet) wijst hierop. De gesloten overeenkomst geldt derhalve als overeenkomst van de vennootschap, ook als de bestuurder in strijd handelde met een binnen de interne verhoudingen van de vennootschap krachtens een besluit van de algemene vergadering van aandeelhouders geldende regel: om de overeenkomst slechts te sluiten met toestemming van die algemene vergadering. Zie in dezelfde zin ten aanzien van de vertegenwoordigingsbevoegdheid van stichtingsbestuurder(s) (zonder dat hieraan een geldig bestuursbesluit ten grondslag ligt) onder vigeur van art. 8 van de oude Wet op Stichtingen: HR 5 jan. 1979, NJ 1979, 317. In het geval dat tot dit laatste arrest leidde, ging het overigens om een eenzijdige rechtshandeling van de rechtspersoon (een ontslag), en stelde niet de rechtspersoon maar de derde als getroffen benadeelde de rechtsgeldigheid van de vertegenwoordigingshandeling als rechtshandeling van de rechtspersoon ter discussie. De HR oordeelde toen dat het in geval van misbruik van bevoegdheid door de rechtspersoon tegenover de wederpartij, anders ligt, m.a.w. dat dan — bij wege van enige uitzondering — de gestelde vertegenwoordigingshandeling niet geldt als een rechtshandeling van de rechtspersoon. Zie mijn noot onder het laatste arrest, dat, zoals ik schreef, ook betekenis heeft voor het huidige recht. 2 In de onderhavige casus beroept niet de wederpartij doch de rechtspersoon zich op nietgebondenheid aan de gesloten overeenkomst. Ook dit beroep gaat niet op, zegt de HR. Hieraan doet in beginsel niet af dat de wederpartij met de — slechts intern werkende — bevoegdheidsbeperking op de hoogte was. Een uitzondering op de gebondenheid van de rechtspersoon bestaat alleen wanneer daarnaast bijzondere omstandigheden aanwezig zijn die zulk een uitzondering rechtvaardigen. Die uitzondering wordt dan bereikt doordat in zulk een geval het beroep van de wederpartij op de gesloten overeenkomst niet aanvaardbaar is: hij zou in strijd met de goede trouw handelen door zich dan op die overeenkomst te beroepen. Vgl. voor een dergelijke benadering: HR 19 mei 1967, NJ 1967, 261 (HBU-Saladin); 20 febr. 1976, NJ 1976, 486 (Van der Laan-Top). 3 Deze laatste zienswijze van de HR in het onderhavige arrest heeft ook betekenis voor het huidige recht, dat zoals bekend, een andere regeling van de vertegenwoordigingsbevoegdheid van bestuurder(s) van een rechtspersoon bevat. Uit lid 3 van de art. 2:45, 130, 240 en 292 BW volgt dat op andere (niet uit de wet)

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voortvloeiende beperkingen van de vertegenwoordigingsbevoegdheid dan de in de vorige leden van deze artikelen toegestane statutaire beperkingen, door of tegen derden geen beroep kan worden gedaan. Anders dan bij doeloverschrijdende handelingen (zie art. 2:6 BW) staat de wetgever aan de rechtspersoon niet de bevoegdheid toe de nietigheid van de rechtshandeling in te roepen, indien de wederpartij wist dat door bestuurder(s) beperkingen van de vertegenwoordigingsbevoegdheid als hier bedoeld, niet in acht waren genomen, of hiervan niet onkundig kon zijn. Zie overigens de gewijzigde redactie van al deze bepalingen in het ontwerp Invoeringswet Boeken 3–6 NBW, zesde gedeelte, 17 725, zitting 1982–1983. Vanaf de totstandkoming van de nieuwe wettelijke regeling is in discussie geweest in hoeverre een uitzondering kon worden toegestaan op de dwingendrechtelijke wettelijke regel dat beperkingen van de vertegenwoordigingsbevoegdheid als bedoeld in lid 3 van de genoemde art. 45, 130, 240 en 292, alleen interne werking hebben. Men spreekt over de onrechtmatige daad die gelegen kan zijn in het welbewust profiteren door de wederpartij van de wanprestatie die de bestuurder door de overschrijding van zijn vertegenwoordigingsbevoegdheid in verhouding tot de rechtspersoon pleegt. Zie bijv. Van der Heijden-Van der Grinten, Handboek nr. 235. Men spreekt ook over de minder gecompliceerde weg volgens dewelke onder bijzondere omstandigheden de goede trouw verhindert dat de wederpartij zich op de gebondenheid van de rechtspersoon aan de overeenkomst beroept. Het is deze laatste weg die blijkens het onderhavige arrest (reeds met betrekking tot het oude recht) de voorkeur heeft van de HR. Vgl. m.b.t. het huidig recht ook: Van Schilfgaarde, Bundel Rechtspersonen, Alg.Inl. par. 16 aant. 22. Welke zijn dan die bijzondere omstandigheden? Zoals wij zagen, is niet voldoende dat de wederpartij op de hoogte was van de bevoegdheidsbeperking. Wel kan — aldus de HR — mede van belang zijn dat hij zelf bij de tot stand koming van het besluit van de algemene vergadering van aandeelhouders waarbij de bevoegdheidsbeperking werd opgelegd, mede betrokken is geweest, en hij de n.v. toch ondanks het niet in acht nemen van deze bevoegdheidsbeperking aan de overeenkomst houdt. Blijkbaar kan de wederpartij in zulk een geval dan toch niet geheel op een lijn worden gesteld met een (eerste de beste) derde: zoals A‑G Franx betoogt. In de literatuur worden in dit verband de volgende omstandigheden genoemd: samenspanning met de bestuurder; uitlokking om te handelen in strijd met de bevoegdheidsbeperking; handelen van de wederpartij ten eigen profijte; bijzondere nadeligheid van de transactie voor de rechtspersoon. Zie o.a. Pitlo-Lowensteyn, Rechtspersonenrecht p. 143; Maeijer-Ronse, De Vertegenwoordiging van rechtspersonen, deel 16 Serie vanwege het Van der Heijden Instituut p. 32. De HR noemt dergelijke omstandigheden niet. Wellicht mag men hieruit afleiden dat de HR — ook met betrekking tot het huidig recht — de bijzondere omstandigheden waaronder een uitzondering op de gebondenheid kan worden aanvaard, niet zo eng wil begrenzen als in de literatuur meestal geschiedt. Hierdoor zou weliswaar een verfijning van de rechtspraak worden bevorderd: maar de rechtszekerheid (die het huidig lid 3 van de art. 2:45, 130, 240 en 292 BW juist beoogt te bevorderen) zou er minder door worden gediend.

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NJ 1995, 628 3.3 Het middel strekt ten betoge dat, anders dan het Hof heeft aangenomen, de schuldeisers onmiskenbaar in hun verhaalsmogelijkheden zijn benadeeld, alsmede dat hetgeen het Hof heeft overwogen ook overigens zijn oordeel dat de Curator de nietigheid van de betaling niet kan inroepen niet kan dragen. Het middel kan niet tot cassatie leiden. In het midden kan blijven of het Hof terecht heeft geoordeeld dat de schuldeisers alleen een voordeel is ontgaan, zonder dat hun enig nadeel is toegebracht; 's Hofs oordeel dat niet is voldaan aan de vereisten van art. 47F. is in ieder geval juist. Hetgeen het Hof heeft vastgesteld met betrekking tot de gang van zaken nadat IFN had ontdekt dat de schuld van IBM was voldaan op de rekening van de Vennootschap (hiervoor weergegeven in 3.1 onder iv), laat geen andere conclusie toe dan dat niet is voldaan aan het vereiste van overleg tussen de schuldenaar en de schuldeiser, dat ten doel had laatstgenoemde door de betaling boven andere schuldeisers te begunstigen. Het middel verdedigt, blijkens de daarop gegeven schriftelijke toelichting, de opvatting dat voor de aanwezigheid van voormeld overleg niet is vereist dat ook de schuldenaar de bedoeling had de schuldeiser met de betaling te begunstigen. Deze opvatting kan niet als juist worden aanvaard. Uit de Memorie van Toelichting bij art. 47 (oud), geciteerd in de conclusie van het Openbaar Ministerie onder nr. 7, komt naar voren, dat, aangezien het hier gaat om de vernietiging van de voldoening van een opeisbare schuld, niet spoedig mag worden aangenomen dat van bedoeld overleg sprake was. Voorts wordt in het Rapport aan de Koningin-Regentes nog opgemerkt 'dat het bewijs van het door het artikel gevorderde overleg om te begunstigen stellig moeilijker is te leveren dan het bewijs van bedrieglijke verkorting van de rechten der schuldeischers, dit wil zeggen van de wetenschap dat benadeeling van de medeschuldeischers het gevolg der handeling kan wezen' (Van der Feltz I, blz. 450). In het licht hiervan, brengt een redelijke, ook met de huidige eisen van zekerheid van het betalingsverkeer strokende, uitleg van art. 47 mee, dat voor de aanwezigheid van overleg als in dat artikel bedoeld, is vereist dat sprake is van samenspanning, dat wil zeggen dat niet alleen bij de schuldeiser, maar ook bij de schuldenaar het oogmerk heeft voorgezeten, door de gewraakte betaling deze schuldeiser boven andere te begunstigen. Reeds de omstandigheid dat, naar 's Hofs oordeel, de Vennootschap is gezwicht voor de druk van bedreiging met opzegging van het krediet en indiening van een strafklacht, sluit uit dat tussen de Vennootschap en IFN het in art. 47 bedoelde overleg heeft plaatsgevonden. Op het voorgaande stuit het middel in al zijn onderdelen af.

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HR 22 december 2009, JOR 2011/19 » Samenvatting Onderdeel 3.1 stelt aan de orde de reikwijdte van het begrip weten of behoren te weten dat benadeling van schuldeisers het gevolg van de rechtshandeling zal zijn als bedoeld in art. 42 Fw. Het onderdeel gaat kennelijk – en terecht – ervan uit dat van wetenschap van benadeling in vorenbedoelde zin sprake is indien ten tijde van de handeling het faillissement en een tekort daarin met een redelijke mate van waarschijnlijkheid waren te voorzien voor zowel de schuldenaar als degene met of jegens wie de schuldenaar de rechtshandeling verrichtte. Dit uitgangspunt brengt mee dat de faillissementscurator die op de voet van art. 42 Fw een rechtshandeling vernietigt, in beginsel de bewijslast draagt van feiten en omstandigheden die meebrengen dat het faillissement en een tekort daarin met een redelijke mate van waarschijnlijkheid waren te voorzien voor de schuldenaar en degene met of jegens wie hij de rechtshandeling verrichtte. Indien de zich in art. 43 lid 1 aanhef en onder 2° Fw bedoelde omstandigheden zich voordoen, brengt dat uitgangspunt mee dat, behoudens tegenbewijs, wordt vermoed dat de schuldenaar en degene met of jegens wie hij de rechtshandeling verrichtte, met een redelijke mate van waarschijnlijkheid het faillissement en een tekort daarin hebben kunnen voorzien. In het onderhavige geval lag het derhalve op de weg van de bank om tegenbewijs te leveren. Het hof heeft in zijn tussenarrest overwogen dat banken voorafgaande aan aanvullende kredietverlening aan noodlijdende bedrijven tegen het stellen van nieuwe zekerheden, een naar gelang van de omstandigheden toereikend onderzoek moeten doen teneinde vast te stellen of die kredietverlening verantwoord is. Dit uitgangspunt getuigt niet van een onjuiste rechtsopvatting, omdat het hof hiermee slechts tot uitdrukking heeft gebracht dat een bank die op verzoek van een in financiële problemen verkerende onderneming overweegt (aanvullend) krediet tegen zekerheid te verschaffen, de beschikbare financiële gegevens dient te analyseren met het oog op de vraag of een faillissement en een tekort daarin, en derhalve benadeling van de schuldeisers, met een redelijke mate van waarschijnlijkheid zijn te voorzien.

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The Netherlands - cross-border banking and finance guide A Lexis PSL document produced in partnership with Mark Mouthaan and Erik Vermeulen of NautaDutilh N.V. ÂŽ

July 2012

Loan market and developments 1. P rovide a brief overview of the current state of the loan markets in your jurisdiction and any significant recent market developments. Since the credit crunch and during the sovereign debt crisis the number and size of transactions in the Dutch loan market declined, particularly leveraged buy-out transactions. We generally see that Dutch banks remain in the Dutch loan market but that some foreign banks who used frequently to lend to Dutch borrowers generally appear to have less appetite to do so. More and more Dutch banks appear to extend credits as part of a club or syndicate where previously similar sized credits were extended on a bilateral basis. They are also perceived increasingly to aim to cross-sell when they lend. Borrowers are increasingly looking for alternatives to bank financing. Large companies do private debt placements, particularly in the US and some to Dutch institutional investors. Smaller companies look at other alternatives, eg small and medium enterprise, debt listings, credit unions and crowd-funding. Bank financing has, in our view, remained predominant.

2. P rovide a brief overview of forthcoming changes to the law or other matters that may affect the loan markets or the responses to the questions below. Several legislative initiatives are notable because these are generally expected to raise banks’ funding costs and, for this reason, to have an adverse effect on the availability of bank credit. Examples are the bill pending in parliament which would introduce a banking tax, the plans of the government to require banks to pre-fund the deposit insurance scheme instead of contributing to the fund after a pay-out occurred and the implementation of Basel 3. Civil and bankruptcy laws are not expected to change in the near future although it may be expected that the 19th century bankruptcy code will be modernised in the coming years. This is not expected to influence the Dutch lending market significantly unless perhaps secured lenders will be forced to share in the liquidation costs more than they normally do now. Time stamp registration is required for the creation of non-possessory rights of pledge on movables and of undisclosed rights of pledge on receivables. The method of time stamp registration of private deeds is expected to change. Now only hard copies of such deeds are eligible, and this task is entrusted by law to the Dutch tax authorities. It is expected that by 2015 this task will be transferred to the Royal Dutch Brotherhood of Notaries and that electronic filing will become possible. Two developments are notable in the field of Dutch company law. From 1 October 2012 several amendments will enter into force, including provisions which will abolish specific financial assistance restrictions in relation to private limited liability companies. Another amendment may enter into force during 2013 whereby conflict of interest between a member of the managing board of a Dutch public or private limited liability company will in principle no longer affect the ability of the members of the managing board to represent the company.

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Mark Mouthaan and Erik Vermeulen of NautaDutilh N.V.

Lending 3. I s it necessary to obtain any consents or licenses in order to lend in your jurisdiction or enforce rights under a loan agreement and if so what is the process for obtaining the consent or license? Are there any other restrictions on lending that foreign lenders should be aware of? Under Dutch law there are no licence, consent or registration requirements in relation to lending, except in the case of consumer credit. Sanction laws may prohibit lending to certain borrowers. Most sanctions are introduced by regulations of the Council of the European Union. Based on the Dutch Sanction Act 1977 and the Dutch Act on Economic Offences violation of such sanction regulations is punishable. Furthermore, the Dutch Act on the financing of decentralised governments (Wet financiering decentrale overheden) restricts the ability of certain public bodies to borrow. Other than such sanction and public finance laws there are no general regulatory restrictions under Dutch law in relation to lending.

4. A re there any taxes, duties or other charges associated with making loans to entities that are incorporated in your jurisdiction? There are generally no taxes, duties or other charges associated with making loans to unaffiliated entities incorporated in the Netherlands, and there is in principle no withholding tax on interest payments under loan agreements. Exceptions apply where a loan is recharacterised as equity for Dutch tax purposes or as an interest in real estate located in the Netherlands.

5. A re there any restrictions, controls, fees, taxes or charges on foreign exchange in your jurisdiction? No, except that in case of a payment transaction, payment service providers shall disclose to the payment service user, where applicable, the actual or reference exchange rate to be applied to the relevant payment transaction. This obligation is based on the EEA Payment Services Directive. Certain services rendered by agents appointed under a credit facility agreement or lenders participating in the syndicate may be categorised as payment services.

6. H ow is debt normally transferred in your jurisdiction? Normally a debt is transferred by disclosed assignment (openbare cessie). This requires a legal cause for transfer (eg sale), a deed of transfer and notice to the debtor. Since 2004 undisclosed assignment is possible as well but this is not frequently used in loan markets.

Security and guarantees 7. I s it possible to take security over each of the following types of assets in your jurisdiction (including future assets) and what form does that security usually take? In the Netherlands security is usually provided over assets in the form of a right of mortgage or a right of pledge depending on the type of asset. A security transfer or assignment is, in principle, not permitted under Netherlands law unless it categorises as a title transfer financial collateral arrangement in relation to certain eligible collateral (being cash), certain securities and certain credit claims (this exception transposes Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements, as amended). Sale-and-lease-back and hire-purchase arrangements are in principle permitted. A right of mortgage must be used to encumber registered goods (‘registergoederen’), such as real estate and rights in relation thereto (eg a right of ground rent or a right of superficies), but also registered ships or registered aircraft. A mortgage must be in the form of a registered mortgage.

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A right of pledge will generally be used for movables and receivables (including contractual rights). The pledge can either be possessory or non-possessory in the case of movables, and disclosed or undisclosed in the case of receivables. Receivables can only be pledged by means of an undisclosed pledge to the extent such receivables exist when the pledge is created or will arise under legal relationships existing at that time.

7.1 Land Lenders often take security over land (and similar rights, such as registered rights of ground rent and registered rights of superficies) and do so in the form of a registered mortgage.

7.2 Shares and other securities Lenders increasingly take security over (registered) shares in the form of a right of pledge to enable them to sell the shares in a forced sale without having to enforce collateral on the company’s assets separately. The share pledge is usually in addition to security over the assets of the company in which the shares are pledged. Pledgees often stipulate that they will acquire the voting rights attaching to the pledged shares upon the occurrence of an event of default and notice given by the pledgee. Provided the pledgee acquires sufficient voting rights in this manner, it will be able to replace the management of the company. Lenders are, however, generally reluctant to actually acquire the voting rights for fear of shareholder liability. In addition, if a fiscal unity exists between the pledgor and the company in which the shares are pledged, the fiscal unity will be breached if the lenders acquire the voting rights attached to the shares, which may have material tax consequences. A fiscal unity is a consolidated tax regime involving affiliated enterprises or bodies which are, for the purposes of Dutch value added tax or corporate income tax (depending on the type of fiscal unity), treated as one single tax payer. Unless the company’s articles of association provide otherwise, shares in the company are capable of being pledged, and the attached voting rights can be attributed to the pledgee. Both are subject to further conditions laid down in the articles of association and Dutch law. The articles of association of a public limited liability company cannot limit or restrict the right to pledge bearer shares. There are good arguments to conclude that a pledgor can validly grant a pledge on shares yet to be acquired by it, but there is no statutory law or published case law confirming this. Lenders can also take security on securities held in book-entry form in which case a security financial collateral arrangement is possible in certain situations providing certain benefits to lenders on enforcement. Repurchase agreements (repos) and securities lending transactions are uncommon for ordinary, non-interbank lending purposes.

7.3 C ash deposits in bank accounts A cash deposit or current account with a bank is normally pledged by means of a disclosed right of pledge. An undisclosed right of pledge would in principle only attach to the credit balance existing on the date the pledge is created. Lenders must be aware that Dutch bank accounts will, pursuant to general banking conditions, invariably be subject to a right of pledge in favour of the account bank and the relevant banking conditions may prohibit a pledge for another party. This right of pledge and restriction will need to be waived by the account bank in question in order to enable a lender to obtain a first ranking right of pledge.

7.4 R eceivables (non-contractual and contractual rights, including rights under insurance policies) Contractual rights in project or asset-based finance, rights under insurance policies, rights under share purchase agreements and intercompany rights are usually made subject to a disclosed right of pledge on receivables. Trade receivables are normally pledged by means of an undisclosed pledge whereby the pledgee stipulates the right to convert it into a disclosed right of pledge by notice to the debtor upon the occurrence of an event of default (as defined under the credit agreement), or simply whenever the pledgee desires to do so. When exercising this right a pledgee is advised to consider the possible harmful consequences to the perceived credit standing of the pledgor of disclosing a right of pledge. Dutch law only permits future receivables to be pledged by means of an undisclosed right of pledge, if these arise under a legal relationship which exists

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at the time of the registration of the deed of pledge. For this reason lenders generally stipulate that the pledgor shall pledge receivables arising under new legal relationships by a supplemental deed of pledge and that the pledgor authorises the lenders by power of attorney to sign a supplemental deed of pledge on a daily basis. Lenders make use of these stipulations on a daily basis. A recent judgment of the Dutch Supreme Court in principle validated this practice. An important aspect of Dutch property law is that Dutch law governed receivables are in principle transferrable and can therefore be made subject to a right of pledge. However, there are exceptions to this rule. The most important one is that it is possible to make receivables incapable of transfer by contract. In principle, this will render the receivable incapable of being pledged as well. Such a stipulation can be contained in general conditions. For example, if a bank takes a right of pledge on all receivables of its client while one of the customers of that client uses general purchase conditions containing a transfer blocking provision, the receivables out of sales in relation to that customer will in principle be incapable of being pledged.

7.5 Intellectual property In larger transactions, intellectual property rights are usually made subject to a right of pledge. Generally, the various kinds of intellectual property rights (ie copyrights, database rights, patent rights, trademarks and trade names etc) are governed by laws that specifically apply to that kind of intellectual property right, and, consequently, the legal basis for creation of a right of pledge on such intellectual property rights varies as well.

7.6 Tangible assets such as ships, aircraft, machinery etc Most financed ships and aircraft will be registered and lenders financing such assets will usually take a registered mortgage on such assets. Hire-purchase or sale-and-lease-back arrangements are used as well. However, such arrangements are uncommon in relation to inland waterway vessels; these are typically mortgaged because of restrictive laws on hire-purchase and sale-and-lease back arrangements in relation to inland waterway vessels. Machinery is more often made subject to hirepurchase and sale-and-lease bank arrangements.

7.7 Stock Lenders often take a non-possessory right of pledge on stock.

8. I n relation to each type of asset listed above: 8.1 W hat formalities are necessary or desirable to perfect the security and what is the effect of the formalities not being carried out? A mortgage requires an authentic (eg notarial) deed which is registered in the public registers. An undisclosed right of pledge on receivables requires a private deed which is time-stamped by the Dutch tax authorities or an authentic (eg notarial) deed. A disclosed right of pledge on a receivable requires a private deed and notice to the debtor of the pledged receivable. A non-possessory right of pledge on movables requires a private deed which is time stamped by the Dutch tax authorities or an authentic (eg notarial) deed. There are no formal requirements to create a disclosed possessory right of pledge on movables other than transferring possession to the pledgee or a third party acting for it, but it is advisable for evidentiary reasons to record the pledge in a private deed. A right of pledge on shares in a private or public limited liability company incorporated under Dutch law requires an authentic (eg notarial) deed unless these are shares in a public limited liability company and the shares are listed in which case a private deed suffices. Securities in book-entry form are usually pledged by creating a pledge on the securities account in which these securities are administered or in a segregated account created specifically for the right of pledge. If the securities account is held by an authorised bank or investment firm, a right of pledge is created by crediting the shares in the records of the account provider in the name of the pledgee. If the securities account is held by another entity, such as a special custody company, the account is categorised as a receivable and should be pledged accordingly.

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In principle, a right of pledge on most intellectual property rights requires a private deed, which, although generally not legally required, preferably is time stamped by the Dutch tax authorities. Recording the rights of pledge in the respective registers, such as the trademark register and the patent register, is required in order to obtain third party effect of such rights of pledge (meaning that a third party cannot maintain that it had no knowledge of the existence of the security right once the security right has been recorded in the register), and also to secure the priority of the rights of pledge. In the absence of relevant statutory laws and case law, it is not always certain that a valid right of pledge on intellectual property rights has been created (especially if a right of pledge is intended to be created on entitlements, applications or future intellectual property rights). There are no formal requirements to create a disclosed possessory right of pledge on bearer securities or other rights to bearer other than transferring possession to the pledgee or a third party acting for it (the provisions for bearer securities follow the regime applicable to movables), but it is advisable for evidentiary reasons to record the pledge in a private deed. A pledge of rights to order will only be effective upon proper endorsement in accordance with applicable legal requirements and transfer of the order instrument into the control of the pledgee or an agreed third party in accordance with the terms governing these rights. Generally, if the foregoing formalities are not carried out, no valid security right will have been created. Security (including rights of mortgages, pledge, guarantees or forms of quasi security) given by an individual who is married or who has a registered partner will typically require permission of the spouse or registered partner. The relevant rights of mortgage or pledge will not come into existence unless the respective formalities have been fulfilled. In the case where permission of a spouse or registered partner had not been given when required, the spouse or registered partner can in principle annul the security granted. A works council is intended to function as a body enabling employees to participate in the process of making certain decisions and must in principle be established when at least 50 persons work at an enterprise. If established (or in the process of being established) a works council has the legal right to advise on certain transactions, such as the giving of security or entering into a loan agreement. An employer must give the works council the opportunity to advise on any projected decision in respect of such transactions. The works council’s advice must be requested in writing together with a substantiated statement at such a time that the works council advice can have a material effect on the decision to be taken. Unless the employer’s decision is in conformity with the works council’s advice, the employer is obliged to suspend its implementation for a period of one month. During this period, the works council may lodge an appeal against the decision with the Enterprise Chamber of the Amsterdam Court of Appeal. Although it is debated in literature whether violating a works council’s advisory right will affect the ensuing transaction, it may in practice lead to social unrest within the relevant company, negative publicity and orders of the Enterprise Chamber of the Amsterdam Court of Appeal.

8.2 W hat costs are involved in taking security over each asset, including notarial fees, registration fees and taxes and are there any ways to minimize these costs? Notarial fees are not set by law and depend on the fee arrangement agreed with the notary (eg time spent or capped fees). Large law firms usually have in-house notaries. A time stamp by the Dutch tax authorities is free of charge. Registration fees for deeds of mortgage depend on the form of the deed offered for registration; 137 euro for hard copy, 120 euro for digital copy, and 96 euro or 72 euro respectively in case the digital copy enables the registry to process it electronically in part or in whole respectively. Registration of security rights on intellectual property rights with the relevant offices requires the payment of fees, the amount of which depends on a variety of circumstances, such as the kind of intellectual property right and the office.

9. D oes your jurisdiction recognize the concept of a trust? If not, is there an accepted method of ensuring all lenders get the benefit of security? Are there any limits on action a security agent could take on behalf of the secured parties? The Netherlands have ratified the Hague Convention on the Law Applicable to Trusts and their Recognition of 1985 but a trust cannot be established under (non-Caribbean) Dutch law. The Dutch Civil Code is not clear on whether or not a right of mortgage or pledge can be granted to a party other than the creditor of the claim to be secured and there is no published decisive case law of the Dutch Supreme Court on this subject either. Even though a growing number of legal authors accept the view that this should be possible, the parallel debt is still used invariably to avoid unnecessary uncertainty. The Dutch parallel debt is a contractual arrangement which, briefly put, typically provides that amounts equal to the amounts owed to the lenders are also owed to the security trustee (although this is not an actual trustee since there is usually not an actual trust within the meaning of, for example, English law); payment to any of the lenders reduces the parallel debt and payment to the security trustee reduces the debt owed to the lenders.

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10. W ill changes to the group of lenders adversely affect the security or require any steps to be taken as regards the security package in your jurisdiction? No, not if the parallel debt has been properly executed and provided that the security trustee remains the same.

11. H ow is security commonly released in your jurisdiction? Most deeds of mortgage or pledge afford the mortgagee or pledgee the right to cancel the security unilaterally. A release can then be documented by a relatively short release letter by which the secured party exercises its right of cancellation. If the security rights have been registered, also the relevant registers must be informed in order to cancel the security right. If debtors of receivables have been informed of a disclosed right of pledge, they should be informed of the cancellation, as well.

12. W hat forms of quasi-security are common in your jurisdiction? Guarantees are a common type of quasi-security (company or bank guarantees). Comfort letters are less common but are used from time to time. Set-off or netting arrangements are particularly relied on in case of zero-balancing and interest compensation arrangements offered by banks to their corporate clients but also in the form of cash collateral deposited in blocked accounts.

13. C an entities in your jurisdiction give guarantees? If so are there any restrictions or limitations on an entity incorporated in your jurisdiction granting such guarantees and are there any common ways of minimising the impact of these? Ultra vires Legal entities incorporated under Dutch law can in principle give guarantees. However, pursuant to Article 2:7 of the Dutch Civil Code, any guarantee given by a legal entity may be nullified by the legal entity itself or its liquidator in bankruptcy proceedings if the objects of that entity were transgressed by the giving of the guarantee and the other party to the transaction knew or should have known this without independent investigation. The Dutch Supreme Court has ruled that in determining whether the objects of a legal entity are transgressed, not only the description of the objects in that legal entity’s articles of association is decisive, but all (relevant) circumstances must be taken into account, in particular whether the interests of the legal entity were served by the transaction. This risk can be minimised (but not eliminated) by ensuring that the objects clause in the articles of association expressly permits the giving of guarantees and by procuring that the management board of the legal entity certifies that in their view the giving of the guarantee is in the best corporate interest of the legal entity and conducive to the realisation of its corporate objects.

Financial assistance Pursuant to Article 2:98c and Article 2:207c of the Dutch Civil Code a public limited liability company and a private limited liability company respectively may grant loans only in accordance with the restrictions set out therein, and may not provide security, give a price guarantee or otherwise bind itself, whether jointly and severally or otherwise with or for third parties with a view to the subscription or acquisition by third parties of shares in its share capital or depository receipts. This prohibition also applies to its subsidiaries. It is generally assumed that a transaction entered into in violation of Article 2:98c or Article 2:207c of the Dutch Civil Code is null and void. Article 2:207c of the Dutch Civil Code will be abolished as from 1 October 2012; this article prohibits financial assistance by private limited liability companies incorporated under Dutch law. (The prohibition on financial assistance in relation to public limited liability companies incorporated under Dutch law is expected to remain in force since it is based on Article 23 of the Second Council Directive 77/91/EEC as amended.) This risk can be minimised (but not eliminated) by procuring that the relevant transaction complies with the relevant provisions of the law and the articles of association. This will in certain cases require a lender to verify in the balance sheet of the relevant obligor whether or not there are sufficient freely distributable reserves.

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Conflict of interest If a legal entity incorporated under Netherlands law has a conflict of interest with any of its managing directors (bestuurders) with respect to the entering into of credit or security documents, all managing directors may (by law or the entity’s articles of association) not be authorised to represent the entity unless the general meeting appointed such managing directors as representatives nonetheless. It is expected that Article 2:146 and Article 2:256 of the Dutch Civil Code will be abolished in 2013. From then on, a conflict of interest will in principle not affect the authority of managing directors to represent the entity concerned. Lenders will normally ask the general meeting to appoint the relevant signatories as such special representatives just in case there is a conflict of interest. Such an appointment will minimise the risk in this respect.

Works council As with other security to be granted, the works council of the intended guarantor may have the right to advise on the giving on the guarantee (see above in relation to works councils).

14. W ould there be any concerns in terms of validity or enforceability for an entity in your jurisdiction to grant an English law guarantee as typically included in syndicated loan agreements governed by English law? No, such a guarantee would in principle be treated in the same way as a similar guarantee under Dutch law. This is because a Dutch court must recognise and give effect to a choice for English law in a contract subject to the limitations provided under the Rome I Regulation (No. 593/2008).

Enforcement 15. W hen in your jurisdiction would a lender be entitled to enforce its security or guarantees? In case of a first priority right of mortgage or a first priority right of pledge, a lender would normally be entitled to enforce upon the occurrence of an event of default as defined in the relevant credit agreement and notice having been given thereof by the lender, provided that a default (‘verzuim’) in the fulfilment of the payment obligations of the borrower has occurred under Dutch law, which would normally be the case. In principle, enforcement should take place by means of a public sale and appropriation of the mortgaged or pledged assets is not allowed. However, with approval from the pledgor, obtained after the moment that the pledgee may enforce, or from the interim relief judge, deviations from the sale in public are possible. A guarantee will in principle be enforceable in accordance with its terms, because a guarantee is in principle a contract which is subject to the freedom of contract. Under Dutch law, lenders will have a duty of care to, where reasonably possible and appropriate, take other proportionate measures before they accelerate a loan and enforce collateral.

16. I n brief, for each type of asset referred to in ‘Securities and guarantees’ above, what are the procedures for enforcing security and guarantees in your jurisdiction: 16.1 Inside insolvency There are three formal standard insolvency proceedings under Dutch law; (a) bankruptcy, (b) suspension of payments and (c) debt restructuring of individuals. Under Dutch law certain financial undertakings, such as a bank or insurance undertaking, cannot be granted suspension of payments. In relation to such undertakings a similar regime can be applied which are called emergency regulations. Banks and insurance companies can also be made subject to special measures under the Dutch Intervention Act which entered into force in 2012. Below we will only discuss the effects of the first three mentioned formal standard insolvency proceedings applicable to non-financial institutions.

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Within each of these insolvency proceedings a pledgee, mortgagee or lessor can in principle enforce or repossess as if there were no insolvency proceedings subject to the five following exceptions: –d uring bankruptcy proceedings the supervisory judge can declare a cooling down period of no more than four months including extension. During that time, a mortgagee, pledgee or lessor can in principle not enforce or repossess – t he bankruptcy trustee can set a reasonable term within which the mortgagee or pledgee must enforce failing which the bankruptcy trustee may sell the mortgaged or pledged collateral. The mortgagee or pledgee will in that case retain a preferred claim on the sale proceeds but will need to share in the bankruptcy costs and will have to wait for payment until a distribution list has been made up by the bankruptcy trustee and payments are being made by him; a share in these costs may be high or even as high as the sale proceeds of the collateral – i f receivables on which an undisclosed right of pledge has been created, are paid by the debtor to the pledgor in bankruptcy proceedings, then (similar to the situation described in the second exception) the pledgee has a preferred claim on these payments, but must share in the bankruptcy costs and wait for payment until the distribution list has been made up and payments are made by the bankruptcy trustee. In order to avoid this, debtors of the receivables on which an undisclosed pledge has been created, should be notified timely thereof by the pledgee. It should also be noted that, as a rule of thumb, a bankruptcy trustee may not within fourteen days following his appointment actively seek to collect receivables which are subject to an undisclosed right of pledge in favour of a bank. As a result, a bank pledgee is advised to provide notification of any pledges within that period of fourteen days to the relevant debtors or to at least notify the bankruptcy trustee within that period that the pledgee intends to notify the relevant debtors (the latter will however not prevent the relevant debtors from paying to the bankrupt pledgor) –a bankruptcy trustee may cause the release of the relevant collateral against payment of the secured obligations and the enforcement expenses of the holder of the security right, if any – t he bankruptcy trustee can annul security if the conditions for an action on the basis of fraudulent preference or conveyance have been met. It will generally be more difficult for a bankruptcy trustee to annul security if it has been given on the basis of a valid obligation to provide security (such an obligation is commonly referred to as a ‘positive pledge’ in the Netherlands) Furthermore, a pledge on an asset which is not owned by the pledgor at the time of creating a right of pledge will not come into existence if such asset is acquired by the relevant pledgor on (the ‘00.00 hours rule’) or after the day on which the pledgor has been declared bankrupt or been granted a suspension of payments under the Dutch Bankruptcy Code. To the extent such a future asset consists of claims with respect to payment of rent under a lease agreement, it should be noted that there is specific case law according to which under Dutch law, such claims are considered to arise only as the relevant use of the leased property has in fact been provided to the tenant unless the rent is prepaid. The cooling down period or the 00.00 hours rule does not affect a pledge in relation to collateral which is subject to a security financial collateral arrangement in relation to certain eligible collateral, being cash, certain securities and certain credit claims (this exception transposes Directive 2002/47/EC of the European Parliament and of the Council of 6 June 2002 on financial collateral arrangements, as amended). The cooling down period also does not affect the right of a central bank to have recourse or to repossess or, in connection with participating in a designated system, another participant of such system (this exception transposes Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems, as amended). A guarantee given for the debts of an insolvent party will normally (depending on the contract governing the guarantee) remain unaffected by the insolvency proceedings and be enforceable against the guarantor. A guarantee given by the insolvent party will normally not be enforceable in the sense that the beneficiary will not be able to have recourse to assets which are subject to the bankruptcy estate.

16.2 Outside insolvency Outside insolvency proceedings a pledgee, mortgagee or lessor can in principle enforce or repossess in accordance with Dutch law and the relevant deed of pledge or mortgage, or lease agreement. When foreclosing on a pledge of shares in a private or public company with limited liability incorporated under Netherlands law the share transfer restrictions included in the relevant Articles of Association will have to be observed. Additionally, the offering of shares in the context of enforcement could be prohibited without an approved prospectus being published and may also involve the rendering of regulated investment services.

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Outside insolvency a creditor can annul security if the conditions for an action on the basis of fraudulent preference or conveyance have been met. However, a security which had been provided on the basis of a valid obligation to provide security can in principle not be annulled. This is why also outside insolvency a positive pledge is generally useful. Lenders should be aware that certain assets (such as inventory but not stock) which are situated relatively permanently on premises controlled by the debtor will in principle be subject to a lien of the Dutch State for certain tax claims. This lien ranks ahead of a non-possessory right of pledge on such assets and will disregard any security retention of title arrangements or sale-and-lease-back arrangements. If the lenders remove such assets from the premises or gain exclusive control over such premises instead of the pledgor (before formal insolvency proceedings are opened or before the Dutch tax authorities have seized the relevant assets), the Dutch State will no longer have the above lien. That is why it could be important to act fast in such situations if the relevant assets have a significant value. Outside insolvency a guarantee will be enforceable in accordance with its terms. If a beneficiary is aware of any unencumbered material assets or encumbered assets with a material surplus value (ie where the value of the encumbered asset exceeds the debt secured by the encumbrance), such beneficiary could consider to arrest those assets with authorisation of a Dutch court if, for example, there is a realistic threat that these assets will be embezzled or encumbered or further encumbered. The arrested assets may in certain cases also be taken into custody by a third party. Transfers or encumbrances created during such arrest may in principle not be invoked against the arrestor. An arrest will however in principle lapse if the owner of the arrested asset is declared bankrupt or granted suspension of payments

Intercreditor issues 17. I n brief, how will security interests over the same asset (where the priority is not contractually regulated) rank as against each other in your jurisdiction? In principle ‘prior tempore potior iure’ applies. Consequently, the time of the creation of the right of mortgage or right of pledge determines the rank and not the time that the claim arises which is secured by such right of mortgage or pledge. An exception applies where the first created right of pledge is non-possessory if the pledgee of a later created possessory right of pledge in good faith at the time of the creation of his right of pledge believes there is no other right of pledge. Other exceptions apply in relation to certain statutory liens. Examples of the most common statutory liens are a repairer’s or contractor’s lien, the lien afforded to injured parties on claims under the liability insurance of the injuring party, liens attaching to the right of retention, the above discussed lien for certain Dutch tax claims or liens for certain other public charges.

18. W hat method(s) of subordination are commonly used in your jurisdiction? Structured finance transactions could include structural subordination. In more run-of-the-mill finance transactions contractual subordination is used, for example where shareholders or sponsors subordinate a loan to the claims of the lenders. A receivable can be subordinated by contract between the senior creditor and the junior creditor. Lenders sometimes stipulate that a tripartite agreement is made between the debtor, the junior creditor and the lenders, as senior creditors, so that the lenders, as senior creditors, can also stipulate covenants from the debtor.

19. W ill local courts in your jurisdiction give effect to the contractual terms of an English law governed intercreditor agreement (which may include limitations on enforcement, rights to receive payment and turnover clauses). Would an English law governed intercreditor agreement survive the insolvency of a borrower incorporated in your jurisdiction? A Dutch court must recognise and give effect to the choice of English law in an intercreditor agreement subject to the limitations provided under the Rome I Regulation (No. 593/2008). The insolvency of a borrower will in principle not affect an English law governed intercreditor agreement.

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Governing law and disputes 20. W ill a choice of English law as the governing law of the documents and the English courts as the jurisdiction for disputes be upheld in your jurisdiction? Would a judgment given by the courts of England and Wales be enforceable in your jurisdiction without a retrial of the merits of the case? A Dutch court must recognise and give effect to the choice of English law and English courts subject to the limitations provided under the EU Rome I Regulation (No. 593/2008) and the EU Enforcement Regulation (No. 44/2001), as amended, respectively. A judgment given by the courts of England and Wales in a commercial dispute will be enforceable in the Netherlands subject to the limitations provided under the EU Enforcement Regulation (No. 44/2001), as amended. However, if a judgment expressed in a foreign currency is enforced against a debtor’s assets located in the Netherlands and the proceeds of any such asset following enforcement are to be distributed among several creditors and a statement of distribution is made by a competent judge, any claim expressed in a foreign currency will be converted to the lawful currency of the Netherlands at the exchange rate prevailing at the time the statement of distribution is made.

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Produced in Partnership with

Mark Mouthaan and Erik Vermeulen of NautaDutilh N.V. NautaDutilh is an independent law firm in the Benelux. It is among the largest law firms in Europe, with over 400 lawyers, civil law notaries and tax advisers in offices in Amsterdam, Brussels, London, Luxembourg, New York and Rotterdam. Although NautaDutilh specialises mainly in corporate, banking and finance law, it is also known for expertise in the areas of tax, intellectual property, competition, telecoms and media, commercial property and insurance. Its partners have a long-standing tradition of public service and working in academia. NautaDutilh is ranked high by legal directories and has won various awards, such as Law Firm of the Year: The Netherlands (IFLR Europe Awards 2011 and 2012 and Chambers Europe Awards 2010). Mark Mouthaan and Erik Vermeulen are Senior Associate and Partner at NautaDutilh N.V. respectively. Mark specialises in banking and insolvency law concerning loan finance (asset based and structured finance) and restructuring transactions. In these areas he represents borrowers and financial institutions. His clients include, among others, ING Bank, ABN Amro Bank, NIBC Bank, Dutch ship owners and a large Dutch shipyard. Erik has a broad experience in acquisition finance, asset based finance, real estate finance and syndicated loans. He represents clients in a variety of large transactions, both domestic and crossborder. Erik has advised, among others, ABN AMRO, Deutsche Bank, Dexia, Fortis, GE Commercial Finance, ING, Rabobank and the Royal Bank of Scotland. Both Mark and Erik regularly lecture on aspects of banking and finance law.

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Mark Mouthaan and Erik Vermeulen of NautaDutilh N.V.

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A Guide to the questions to be addressed when providing opinion letters on English law in financial transactions Introduction The City of London Law Society ("CLLS") represents approximately 14,000 City lawyers, through individual and corporate membership including some of the largest international law firms in the world. These law firms advise a variety of clients from multinational companies and financial institutions to Government departments, often in relation to complex, multi-jurisdictional legal issues. The CLLS comments on issues of importance to its members through its 18 specialist Committees. A working party of the CLLS Financial Law Committee, made up of solicitors who specialise in financial law, has prepared this Guide to assist law firms practising in the City of London. The membership of the working party is set out on page 15 below. Purpose of this Guide 1.

Formal legal opinions are requested in numerous financial transactions. They can frequently involve considerable discussion and sometimes difficulty. The parties may have differing expectations as to who should give the opinion, in what terms and for whose benefit.

2.

This Guide suggests the questions which a law firm practising English law should consider addressing when seeking or providing an opinion letter under English law in a financial transaction, and explains the key considerations which might be relevant in answering them. It seeks to save time and costs for law firms and clients by explaining the issues and how they might be dealt with. It is not intended to lay down rules or a code of conduct. It is expressly recognised that it is entirely for each law firm to decide on its own policy for providing opinion letters and that the practice of individual firms varies and will continue to evolve.

3.

This Guide is concerned primarily with opinion letters delivered by a law firm to its client or, at its client's request, to a third party in relation to a financial transaction, with the intention that: (a)

the opinion is to be relied upon, or capable of being relied upon, by its client or the third party, for example, in satisfaction of a condition precedent to the completion of a financial transaction or the advance of funds; or

(b)

reference will be made to the opinion in a public document or to obtain a debt rating.

4.

This Guide does not extend to opinion letters on corporate or property transactions. Opinion letters requested in connection with an application for the listing of securities,1 the eligibility of a capital instrument as a tier two capital instrument2 or the criteria for

1

Paragraphs 2.9 and 2.10 of the UK Listing Rules or Rule 10(b) - 5 of the US Securities Act 1933. FSA Handbook GENPRU 2: Section 2.2.159.

2

25

-2contractual netting3 or credit risk mitigation by use of financial collateral,4 are outside the focus of this Guide. Certificates of title (and reports on title) relating to land, replies to auditor's enquiries and due diligence reports, also fall outside the scope of this Guide. Further, while many of the issues in this Guide will be relevant to in-house lawyers, additional factors may apply in relation to opinion letters requested from them5. 5.

This Guide relates to formal opinion letters of the type described above. There is an important distinction between a formal opinion letter and a letter of advice. A client may ask for an "opinion" when the client means a letter of advice (an "opinion" in the sense typically given by Counsel). Written advice to a client for its sole use on points of law or on its legal position also fall outside the scope of this Guide.

6.

This Guide takes into account the professional conduct rules which must be complied with by a law firm when considering whether to provide an opinion letter and, if so, in what terms. The professional conduct rules have the force of law and are an important factor in determining the approach to be taken when giving English law opinions.6

What type of opinion letters are covered and what is the general approach? 7.

Opinion letters in financial transactions vary in scope but typically address one or more of the following: (a)

Capacity and authority: for example, that a company is validly existing, that it has the necessary corporate power under its constitutive documents to execute and perform the transaction document to which the opinion relates, and that the necessary corporate action has been taken to authorise the execution of the transaction document by or on behalf of the company.

(b)

The legal effect of the transaction document: for example, that it creates valid, binding and enforceable obligations (which will usually require reservations).

(c)

Tax: for example, that the transaction document will not be subject to stamp duty.7

(d)

Governing law and jurisdiction: for example, that the law of the jurisdiction whose laws are selected to govern the transaction document has validly been chosen, that the submission by the relevant party to the courts of that jurisdiction is binding on it, and that a judgment obtained from such a court can be enforced or sued upon in the courts of the jurisdiction to which the opinion letter relates.

8.

It is appropriate to consider, before requesting another law firm to provide an opinion letter or to address an issue in an opinion letter, whether, if the roles were reversed, the requesting law firm would itself be prepared (and permitted under professional conduct rules) to give the opinion requested or address the relevant issue in any particular form or at all. This approach – sometimes called the "Golden Rule" – can avoid many of the difficulties which arise and so save costs. The law firm acting for the recipient of the opinion would not be expected to press the law firm providing the opinion for an opinion that it would not be prepared to give itself. It is undesirable for an opinion provider to be put in the dilemma of being asked to provide an opinion which goes further than is justified, particularly where, if the law firm declines to give the opinion, this would jeopardise completion of the transaction.

9.

If a law firm is instructed to seek an opinion which goes beyond what that law firm itself would be willing to say, it might explain to its client that this approach would conflict with the above principle, that it might give rise to issues under professional conduct rules (see paragraphs 14 to 23), that it is unlikely to assist the client in practice and could lead to

3

FSA Handbook, BIPRU, Sections 5.3 and 13.7. FSA Handbook, BIPRU, Sections 5.2.2 and 5.4.11. The form of opinion letter sought from in-house counsel may differ from that which an external law firm may be required to give, because in-house counsel may have a greater knowledge of the company or the documents on which he or she is asked to opine. See in particular paragraphs 14 to 23 below. Opinions on withholding tax are less frequently requested and are given mainly in the case of structured financial transactions or transactions involving the issue of securities.

4 5

6 7

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-3difficulty and greater costs. This could result in the scope of the opinion becoming part of the commercial negotiation which would rarely be appropriate. An attempt to press a law firm to provide a more robust opinion than it was comfortable to provide would not change the law and could make it harder for the recipient of the opinion to claim that it had relied on the opinion or that, in view of the opinion provider's reluctance, it was reasonable for it to do so. 10.

Whilst differences of approach can cause different expectations, particularly in cross-border transactions, it is suggested that difficulties can be minimised in relation to English law opinions if law firms address the following questions:8 (a)

what opinion letters are required, who should provide them and who may rely on them?

(b)

what professional conduct rules must be observed when deciding whether to provide an opinion letter and, if it is appropriate to do so, to whom should the opinion letter be addressed?

(c)

what issues need to be considered when a law firm is requested to provide an opinion letter to a third party?

(d)

what is the purpose of the opinion letter?

(e)

what is the proper role of the opinion provider?

(f)

what general considerations apply when preparing an opinion letter?

(g)

what approach should be taken in an opinion letter on factual issues?

(h)

what is the proper scope of the opinion letter on legal issues?

(i)

to what extent does the scope of the opinion letter differ in a cross-border transaction?

(j)

how should differences in opinions practice be reconciled in cross-border transactions?

(k)

to what type of legal entity does the opinion letter relate?

(l)

what is best practice when settling the form of an opinion letter?

These key considerations are explained below. What opinions are required, who should provide them and who may rely on them? 11.

The approach to giving opinion letters may vary from jurisdiction to jurisdiction, because legal practitioners in each jurisdiction are bound by their own separate professional rules and because the practice of giving opinion letters may have developed differently. In particular, there is a significant difference of practice as between the USA and England. The US approach is to expect more from the borrower's legal advisers than the lender's. A lender in a US financial transaction (whether domestic or cross-border) will often require the borrower (as a condition precedent to closing or drawdown) to provide a legal opinion for the benefit of the lenders from the borrower's legal advisers on the enforceability of the

8

For comparative purposes, useful articles on this subject include "Principles for giving opinion letters on English law in financial transactions" by Geoffrey Yeowart, Butterworths Journal of International Banking and Financial Law, May 2003; "It's Time To Streamline Opinion Letters" by Donald W. Glazer, Business Law Today, November/December 1999. "Opinion Letters: An English Viewpoint" by Martin Read, City Solicitor (circa 1990); "Legal Practice - Share Acquisitions", The Law Society's Gazette, 30 June 1993; "Opinion Letters: Practical Hints" by a Joint Working Party of the City of London Law Society's Banking and Company Law Sub-Committees, The Law Society's Gazette, 7 September 1988; "City Comment" by Jonathan M. Lewis, The Law Society's Gazette, 18 November 1987; "And If You Want My Opinion‌." by Richard Youard, Euromoney, September 1982; "Legal Opinions in Business Transactions An Attempt to Bring Some Order Out of Some Chaos" by James J. Fuld, The Business Lawyer, April 1973. 27

-4financial documentation (a “third party opinion").9 This is contrary to the English practice where the opinion is normally given by the lender's own legal advisers. 12.

English law opinions practice is based on the expectation that, under the normal solicitor client relationship, a law firm acting for one party will not be requested to provide an opinion letter to the other party to the transaction where that party is being separately advised. The other party's own legal adviser will be responsible for advice on legal issues affecting that party and third party opinions are warranted only in limited circumstances. Even if a party is not currently employing an English law firm, it may often be best for it to obtain full independent advice from an English law firm on matters affecting its position rather than expect them to be dealt with in an opinion letter from the law firm acting for the other side. This is generally in the client's interests as it avoids any confusion arising from inconsistent responsibilities. The client's law firm is likely to owe duties to its client which go well beyond what is stated in the opinion letter.

13.

Exceptions to this general expectation may occur where it is convenient and saves costs or where market practice has adopted a different approach10 and, in each case, where giving the opinion would be consistent with professional conduct rules. There are differing views as to the extent of the exceptions. One exception recognised by some (but not all) law firms is that, if one party requires an opinion letter only on the capacity and authority of the other party to enter into the transaction documents, it may in certain cases be most cost efficient for the law firm acting for the other party (or its in-house lawyer) to provide the opinion letter. An example is where the party requesting the opinion letter is incorporated overseas and has no English legal advisers of its own (see paragraph 27). Exceptionally, circumstances can also arise where it may sometimes be recognised as appropriate for the law firm that drafted certain types of document to opine on their validity in order to avoid disproportionate costs otherwise involved if another law firm had to do so.

What professional conduct rules must be observed when deciding whether to provide an opinion letter and, if it is appropriate to do so, to whom should the opinion letter be addressed? 14.

A law firm must comply with applicable professional conduct rules and consider whether the giving of an opinion letter to a third party is in the best interests of its client and whether it would involve a conflict of interest or a breach of confidence.

15.

The Handbook and Code of Conduct introduced by the Solicitors Regulation Authority in October 2011 (the "Code") require, inter alia, that a solicitor will act with integrity and in the best interests of each client. The Code also requires that a firm of solicitors must not act where: (a)

a firm's duty to act in the best interests of a client in relation to a matter conflicts, or there is a significant risk that it may conflict, with that firm's own interest in relation to the same or a related matter ("own interest conflict"); or

(b)

a firm owes separate duties to act in the best interests of two or more clients in relation to the same or related matters and those duties conflict, or there is a significant risk that those duties may conflict ("client conflict").

A firm may not act for both clients in the case of a client conflict, except in the limited circumstances referred to in paragraphs 3.6 and 3.7 in chapter 3 of the Code. The Law Society has stated that it is important that a firm of solicitors always exercises caution when acting in accordance with these exceptions.11 These duties are mandatory. 16.

The Code also provides that a firm of solicitors has an on-going duty to keep the affairs of clients and former clients confidential except where disclosure is required or permitted by law or by the client (or former client).

9

Sometimes referred to as an "across the table" opinion. It is not appropriate to list examples as market practice may vary from market to market and may change with the passage of time. The Law Society's Practice Note on Conflicts of Interest (September 2011), paragraph 3.5.

10

11

28

-517.

Individual lawyers have a duty to disclose to a client all information of which they are aware and which is material to that client's matters regardless of the source of the information, subject to the above duty of confidentiality to another client or former client. If these duties conflict, the duty of confidentiality takes precedence. However, that does not prevent a breach of the duty to disclose. Accordingly, individual lawyers should not act on matters which give them conflicting duties. Other members of the same firm may be free to act, although in some cases they may only do so with information barriers and informed client consent.12

18.

A solicitor is also subject to the general law protecting confidential information, under which a person who receives information in circumstances where he or she has notice that it is confidential can be restrained from disclosing it or from making use of it.

19.

Care must therefore be taken that the giving of a third party opinion is in the client’s best interests and would not of itself give rise to a possible conflict of interest. In addition, the opinion must not disclose any information confidential to the client without the client’s consent. An opinion should be given to a third party only where it is possible to do so in compliance with the Code.

20.

The scope and content of the proposed third party opinion is an important factor in determining whether its delivery is in a client’s best interests. The circumstances of the transaction may sometimes be such that the opinion may not be in the client’s best interests, unless it is limited to matters of capacity and authority and possibly governing law and jurisdiction. Difficulties are most likely to arise where an opinion is sought from a law firm on the validity of the transaction documents against its own client. If, for instance, the opinion letter extends to the legal effect of a document, this might result in the opinion having to identify deficiencies or risks affecting the other party which it would not necessarily be in the client's interest to reveal.

21.

A law firm should also consider whether the delivery of a third party opinion could affect its ability to act for its own client in the event of a dispute arising between the client and the third party under the agreements to which the opinion relates. For example, a third party opinion might compromise the law firm’s ability to raise particular arguments on its client’s behalf in any such dispute (or may be perceived as doing so). Whether the delivery of a third party opinion might create a conflict of interest in the future or otherwise inhibit the law firm’s ability to act is another important factor to be taken into account in determining whether the law firm should deliver such an opinion.

22.

If a law firm does provide an opinion letter to a third party, it may want the opinion to record that it has not advised the third party on its specific position or rights and obligations under the relevant documents (or on the contents of the opinion) and owes no duty of care or other responsibility to the third party except in relation to matters expressly covered by the opinion. Permitting a third party to rely on an opinion letter does not imply a wider responsibility in relation to the transaction and its commercial and financial implications.

23.

Where copies of an opinion letter may be made available by the addressee to third parties such as its auditors, a body regulating the conduct of its business or any rating agencies, the opinion provider will need to decide whether or not reliance by a non-addressee is permitted and, if so, to what extent. It may typically be sufficient for the auditors, regulatory authority or rating agencies to know that the addressee has obtained the opinion and to be aware of its contents. In such cases a law firm typically states in the opinion letter that its contents may be disclosed to such recipients for information only and may not be relied upon by them.

What other issues need to be considered when a law firm is requested to provide an opinion letter to a third party? 24.

If a law firm is asked to prepare a third party opinion, the following issues must be borne in mind so that the law firm's opinions do not go farther than appropriate:

12

Chapter 4 of the Code of Conduct. 29

-6(a)

applicable professional conduct rules must be observed where, for example, a request for a third party opinion may give rise to a possible conflict between the law firm's duty to its own client and the responsibilities assumed by it to the recipient of the opinion (see paragraph 20 above);

(b)

the opinion must adequately reflect the reservations expressed by the law firm orally or in correspondence to its own client (prior to the conclusion of the transaction) to ensure that the law firm does not accept a greater responsibility to the non-client addressee in the opinion letter than to its own client13;

(c)

the giving of the requested opinion letter may have the effect that responsibility for advising the addressee in relation to certain features of the transaction is transferred inappropriately from the law firm acting for the addressee to the opinion provider (being the law firm acting for the other party); and

(d)

the third party recipient of the opinion will not necessarily be bound by any limitations on the scope and extent of the law firm's responsibility which are contained in the opinion provider's letter of engagement with its own client14.

The greater the number of parties permitted to rely on an opinion letter, the greater the consideration that needs to be given by the opinion provider to the question of its responsibility, particularly if the opinion letter is addressed to a class of persons who cannot be identified at the time that the opinion is given. 25.

It should be borne in mind that, if the law firm issuing the legal opinion to the non-client and that non-client's own law firm are both negligent, issues of contribution may arise as to any loss arising from that negligence.

26.

Where two law firms are involved in a financial transaction, it is unusual in England for the lender to ask for an opinion letter on the same legal questions from the borrower's solicitors in addition to the opinion letter that it would expect to receive from its own solicitors. If a law firm is requested to provide a "parallel" opinion to a third party, it may do so only in compliance with the professional conduct rules (described above at paragraphs 14 to 23).

27.

Law firms may be asked to provide opinion letters on separate legal questions. For example, where an English borrower or guarantor is a party to documents governed by foreign law but no other English law firm is involved, it may be appropriate for the English law firm acting for a borrower or guarantor to deliver to the lender an opinion on the borrower's or guarantor's corporate capacity and (assuming the authenticity of board minutes and other documents supplied to it) the authority of relevant persons to execute the document on its behalf. If the law firm is asked to go further and opine on registrability of the documents, non-violation of law, effectiveness of the choice of law, reciprocal enforcement of court judgments, withholding tax and/or stamp duty, it may wish to consider whether it is appropriate for it to do so or whether the lender can take independent legal advice on these issues instead. A third party opinion limited to capacity and authority is accepted as sufficient in most such cases. Opinions dealing with the legal effect of a document may give rise to difficulty and a conflict of the kind referred to in paragraph 20 above.

28.

A third party opinion may sometimes be requested in a transaction where the opinion relates to legal aspects which are peculiarly within the knowledge of the law firm acting for one party and which cannot be dealt with by the law firm acting for the other party without undue inconvenience and expense. So, for example, it may be appropriate to request from the law firm acting for a private equity investor or manager an opinion letter as to the constitution and powers of its client's investment fund where this is a limited partnership, trust or other non-corporate vehicle or where the constitutive documents include

13

The opinion provider will rarely know to what extent the third party's own legal advisers have raised these issues with their own client. There may be a risk that the opinion provider's own client may ask or expect that certain issues not to be revealed or that, if they are revealed, they be treated in a minimalist way. An engagement letter may, for instance, include a proportionality provision to the effect that, where a client has a right to claim from the law firm and other advisers but its claim against the other advisers is subject to a limitation on liability, that will not increase the amount it can recover from the law firm.

14

30

-7information which is not publicly available. There are differing views on the practice to follow. What is the purpose of an opinion letter? 29.

The primary purpose of an opinion letter is to state conclusions of law as to the ability of a party to enter into and perform its obligations under an agreement and/or the legal effect of the agreement. An opinion letter often serves to confirm that the assumptions about the legal position made by a party in deciding to enter into an agreement are well founded. It may also confirm what contractual relationship will be created by the documentation. Most opinion letters are subject to at least some qualifications. A qualification serves as an aid to risk management by assisting a party in the evaluation of the legal risk or legal uncertainties in the transaction. If a major problem is identified, it may lead to the transaction being restructured so that the problem is avoided or it may lead to a commercial decision to proceed or not to proceed with the transaction.15

30.

An opinion letter often states conclusions of law without explaining the legal analysis leading to those conclusions. Closing opinions in financial transactions do not normally address the legal consequences if, for example, the contracting party covered by the opinion were to enter into insolvency proceedings. The possibility of a party entering into insolvency proceedings would involve complex legal issues. The time and expense involved in the analysis of these issues may be disproportionate in the context of the transaction in question. Thus, the opinion letter will include a qualification that any opinion is subject to all provisions of insolvency law and other laws affecting creditors' rights generally.

31.

An opinion explaining the legal analysis (a "reasoned opinion") may be requested in the case of securitisations or netting arrangements or otherwise to satisfy the requirements of rating agencies or regulators. A reasoned opinion may be required to address the impact of insolvency proceedings on the enforceability of contractual obligations, in which case specific qualifications will be necessary to identify the insolvency issues which may arise. A reasoned opinion may also be required to confirm that a transaction constitutes a true sale. A reasoned opinion will state not only conclusions of law but summarise the legal analysis supporting those conclusions.

What is the proper role of the opinion provider? 32.

The views contained in an opinion letter are expressions of professional judgment on the legal issues addressed and not guarantees that a court will necessarily reach any particular decision. The provider of an opinion letter may be liable to the addressee if the opinion is negligently given, but is not necessarily negligent merely because an opinion proves to be at variance with a decision ultimately reached by a court at a later date.

33.

The provider of an opinion letter is not an insurer against risks which may affect the parties. The recipient of the opinion should not regard the law firm providing the opinion as effectively an underwriter of its client's contractual rights or obligations. A legal opinion cannot rectify a deficiency in a transaction.

34.

The delivery of an opinion letter should not be regarded as an implied "representation" that the law firm is not aware of anything else which could be material to the transaction. The recipient of an opinion letter from a law firm should not regard the opinion as conferring that law firm's seal of approval on the legal aspects of the transaction. Equally, a recipient might be mistaken in assuming that a law firm would not give an opinion unless it was satisfied as to the legal aspects of the transaction or that there were no undisclosed potential problem areas. For example, the delivery of a legal opinion that a party's obligations under the transaction documents are "enforceable" does not mean that there can be no dispute as to their meaning.

15

In the case of an issue of securities, the legal opinion has an additional purpose. If the managers or underwriters of the issue were sued by an investor alleging negligence in their handling of the issue because of a legal problem, the fact that they had received advice or a legal opinion addressing the point in question should assist them in demonstrating that they had not been negligent in that regard, provided that they had relied on the opinion and that it was reasonable for them to have done so. 31

-835.

Where a law firm has been instructed by the arranger of a syndicated loan or the lead manager of a bond issue, it will be customary for the opinion letter to be addressed to the original lending syndicate or the co-managers of the issue. Often the identity of the lending syndicate or the co-managers may not be known until shortly before signing (and, where the loan is underwritten, it may even be the case that the identity of the lending syndicate is not known until after signing). The syndicate members or co-managers may, however, incorrectly assume that the law firm is acting for them and that a solicitor/client relationship has been created with the consequential wider duties and responsibility of the law firm arising from that relationship. In practice the law firm may have given advice on specific issues which have arisen in respect of the transaction solely to the arranger or lead manager and acted solely on their instructions. These issues may not have been discussed or raised with the syndicate members or management group. A law firm may therefore choose, without derogating from the contents of the opinion letter itself, to identify clearly in the opinion its client or the entity on whose instructions it has acted or, where that entity has multiple roles in a transaction, the role or roles in relation to which the law firm has advised.

What general considerations apply when preparing an opinion letter? 36.

In order to save time and costs, it is sensible for a law firm involved in a financial transaction to agree with its own client at an early stage the proper scope of the opinion letter to be given to the client and/or any third party by that law firm or, if appropriate, by the law firm acting for the other party. Experience shows that a failure to address this issue at the outset can lead to unnecessary complications later. The law firm from whom the opinion letter is requested should be given a reasonable opportunity to consider the questions on which it is to be asked to opine. The contents of the opinion letter should be thought out well in advance and not produced (and reviewed) under time pressure.

37.

As the issues involved are largely technical, the contents of the opinion letter can usually be settled between the opinion provider and an in-house lawyer or experienced officer of the client (or, where the opinion is being addressed to a third party, the law firm acting for it). While clients may wish to discuss the scope of an opinion letter, its contents and language are ultimately a matter for the opinion provider.

38.

Where completion of a transaction is conditional upon the delivery of a law firm's opinion letter, it is sensible for the terms of the opinion letter to be finalised as to all matters of substance before the contractual documents are signed. Failure to do this could well place the law firm in an invidious position if the delivery of its opinion is the only outstanding condition precedent and its refusal to give an opinion in the form required by the other party would lead to the collapse of the transaction.

39.

An opinion letter should be dated with the date of delivery. An opinion letter speaks as to the law at its date. An opinion letter provider has no obligation to update an opinion to cover subsequent events or legal developments.

What approach should be taken in an opinion letter on factual issues? 40.

An opinion letter should generally be given only on specific questions of law and not on questions of fact. The provider of an opinion letter is not a warrantor of factual matters. Similarly, in order to avoid the costs of investigating factual matters (which may often be disproportionate to the benefit), an opinion letter is invariably expressed to be based on relevant factual assumptions. Care should be taken that the assumptions are appropriate to the circumstances of the transaction.

41.

The distinction between law and fact is fundamental. Law firms should consider whether or not it is appropriate to provide an opinion letter in relation to matters of mixed fact and law or whether these should be more properly covered by assumptions in the opinion letter or warranties given by one party to the other in the transaction documents. For example, questions concerning title to assets or the status of shares, including whether they have been "validly issued" or are "fully paid", would usually be covered by warranties rather than a legal opinion. Equally, an opinion letter may contain an assumption as to

32

-9the centre of main interests16 of a party to the transaction documents. This may be supported by a warranty and/or an undertaking in the transaction documents. It would not normally be the subject of the opinion itself. Similarly, it is generally inappropriate for a law firm to be asked to give an opinion that a company is not engaged in litigation. In exceptional cases where an opinion as to litigation is given, it is usually limited to specific arbitration or court proceedings which the law firm is conducting on the company's behalf and, if appropriate, dealt with in a separate report. 42.

The provider of an opinion letter will not normally have personal knowledge of all factual information relating to its client and will not be expected to conduct a factual enquiry for the purpose of giving the opinion letter. If a law firm is willing to address mixed questions of fact and law, it will wish to consider what assumptions are necessary to ensure that its responsibility is limited to its opinions on matters of law.

43.

The practice of asking a law firm to give an opinion as to factual matters based on certificates or statements given to the law firm is not generally regarded as acceptable in England. If comfort is required on questions of fact by the party requesting the opinion, a common practice is for that party to seek a certificate from an authorised officer of the company or a certified copy of minutes of a board meeting of the company. The law firm acting for the company can advise its client on the form and content of the certificate or board minutes. If that law firm is itself asked to provide an opinion to the other party in reliance on a certificate or minutes from its client, the third party might wrongly assume that the law firm had itself verified the certificate or minutes. Moreover, it might be more difficult in those circumstances for the law firm independently to advise the company in relation to the certificate or minutes.

44.

Although it is for each law firm to decide its own policy, a law firm should consider whether or not it is appropriate to provide an opinion on factual matters even if this is expressly limited to facts within the law firm's actual knowledge of a client's affairs. The factual statements requested may require a degree of knowledge of the client's affairs which the law firm does not possess. An opinion "to the best of the knowledge of the firm" still imposes responsibility for actual and imputed knowledge.17 Further, except in a small law firm, such knowledge may be spread amongst many different partners and employees and it may not be practicable for them all to be consulted. If factual statements are to be included, it may also be necessary to carry out a detailed check of files covering a long period, perhaps involving offices in a number of jurisdictions; in such a case, the check could be time consuming and expensive and, at worst, impractical to perform.

45.

An opinion letter usually focuses on specific legal questions and does not express general opinions. A law firm should seriously consider whether or not it is appropriate to provide an opinion that, for instance, an agreement 'does not infringe or conflict with any other agreement, instrument or court order or decree binding the company'. This statement would, if given in unqualified form, require an investigation of all relevant contracts of the company and involve questions of fact such as whether a borrowing limit or financial ratio has been complied with. Such a legal audit would add considerably to the expense of providing an opinion. As a matter of English legal practice, any statement of this type could be given only in an exceptional case, where the agreements or instruments (for example, trust deeds) are specified in the opinion, where they are governed by English law and where the law firm is fully familiar with their terms.18

46.

The provider of an opinion letter in a transaction including a prospectus may be asked to confirm that certain sections of the prospectus relating to legal matters are an accurate summary. This is driven by the fact that issuers and managers may be liable to investors for misstatements in a prospectus. The opinion provider will normally wish to consider in

16

This is relevant for the purposes of the Regulation (EC) No 1346/2000 on Insolvency Proceedings and other legislation which uses the concept of COMI. The addition of the words "having made all reasonable enquiries" would be even more onerous, since it would extend to constructive knowledge. In the United States, such opinions are given only with respect to specified contracts (usually listed in the opinion), only state that the agreement 'will not breach or constitute a default under the agreement', and are based on a customary practice understanding that the opinion provider is reading and interpreting all such agreements in accordance with their 'plain meaning' as they would be interpreted under the law covered by the opinion (rather than the law under which the agreement would actually be interpreted).

17

18

33

- 10 each case whether it is appropriate for the opinion letter to give such confirmation, including whether the relevant sections deal only with matters of law, whether the sections can be said to be sufficient to constitute a "summary" and whether the law firm should accept responsibility for their accuracy. What is the proper scope of an opinion letter on legal issues? 47.

An opinion that an agreement creates legally binding and enforceable obligations lies at the heart of most opinion letters, except those which are limited to formal validity. 19 Although a legal opinion may state that an agreement is "enforceable", English law would not generally enable an opinion to be given that an agreement is enforceable "in accordance with its terms"20. One reason is that specific performance is an equitable remedy and an English court has a discretion whether to order specific performance or award damages instead. An opinion that an agreement is "enforceable", without more, does not imply a view as to how its terms would be interpreted by a Court, nor imply that any obligations would be specifically enforceable.

48.

It is often regarded as inappropriate for a law firm to give an opinion as to the nature and effect of security or its registrability, unless it has been or is responsible for preparing and, if applicable, registering the security documents. Even if a law firm has prepared the security documents, it may be unwilling to opine on priority, unless the legal position is capable of being established conclusively by priority searches at the relevant registry (as, for example, in the case of mortgages of registered aircraft or land). The priority of security can depend on whether such security is legal or equitable, whether it is fixed or floating, whether the party taking the security has notice of a negative pledge, whether notice of a charge over a debt (or other chose in action) has been given to the debtor, the nature and location of the assets secured and, where relevant, the time of its creation or registration. Whether security expressed to be fixed will be recharacterised as floating is a question of mixed law and fact and will not usually be the subject of an opinion, unless the factual matters are assumed. Equally, a law firm may be unwilling to give an opinion as to the ownership of charged assets, unless it has investigated title (which is only practicable in relation to certain types of asset).

49.

A statement that a company's obligations under a financial document will rank pari passu with its other obligations is generally made only with qualifications and is often not made at all. It is not appropriate where the opinion relates to secured obligations, since those obligations will, subject to certain exceptions in the case of floating charges,21 rank ahead of obligations owed to the general body of creditors (to the extent that those secured obligations are recoverable out of the relevant charged assets). In other cases, differing approaches may be taken. One approach is to give this opinion but qualified to the effect that the specified obligations will rank at least equally with the obligor's other unsecured and unsubordinated obligations except to the extent that those obligations are accorded preferential status by law and subject to applicable law relating to insolvency. These qualifications mean that the scope of the opinion is very limited.22 Another approach is not to provide a pari passu opinion (except perhaps in a reasoned opinion), because the question of ranking is relevant only if the obligor becomes unable to pay its liabilities and most opinion letters include a general insolvency qualification (see paragraph 30) and because many opinions will not express a view on questions of priority (see paragraph

19

A statement that an agreement is legally binding means that it must not be void or voidable because, for instance, it is ultra vires, or is unauthorised or improperly executed, or a necessary consent is lacking, or it conflicts with applicable law, or can be rescinded for misrepresentation, duress etc. A statement that an obligation is enforceable is generally accepted to mean that it is actionable before a court in the relevant jurisdiction. An agreement may be valid but not enforceable if, for instance, the agreement is stampable and has not been duly stamped. This is another example of the differences between English and US opinions practice. Under US practice a statement that obligations are "valid and binding" or "valid, binding and enforceable" is sometimes considered to be the equivalent of "enforceable in accordance with its terms". Opinion providers often choose to make clear that an English opinion letter does not have that meaning. Sections 176A and 176ZA and paragraph 99(3) & (4), Schedule B1, of the Insolvency Act 1986. For instance, the claims of an unsecured creditor of a company would rank behind claims of its preferential creditors and behind administration expenses or winding up expenses in the event of a company entering into an English administration or winding up. The claims of unsecured creditors of an English insurer would also rank behind the claims of policy holders in respect of "insurance debts". In addition, a pari passu opinion would need to be qualified if the relevant documents included limited recourse or subordination provisions or provided for money obligations which mature first to be paid first even after the occurrence of a default.

20

21 22

34

- 11 48). The question of ranking is often covered by a representation from a contracting party instead. 50.

The registrability of security requires to be carefully considered. For instance, in the case of an enforceability opinion, a failure to identify that a document is registrable and file prescribed particulars of it within the prescribed period23 would result in the security created by the document being void. If the subject matter of the security includes land, aircraft, ships or intellectual property rights, it may also be necessary to file particulars of the relevant document at other appropriate registries, in order to protect the priority of the security fully.

51.

The execution of documents involves a mixed question of fact and law. It is a legal question whether, if a document is executed on behalf of an English company by one or more authorised officers, it will have been validly executed. It is a factual question whether the relevant document has actually been signed by a person or persons authorised to do so in the board resolution produced to the opinion provider and whether the resolution was duly passed. It is normal practice to include in an opinion letter assumptions on these factual aspects. If an obligor is a foreign entity, it is usual for execution of the documents to be addressed in an opinion letter obtained under the law of the jurisdiction where the company is incorporated.

52.

A law firm will not normally be willing to opine that an individual is the person who he or she purports to be, since this would raise issues as to identification. This would be a role for a notary public. Even if the lawyer knows the signatory or sees the signatory’s passport, it is not possible to tell whether the signatory is the same person as that named (for example) in the relevant board resolution. An organisation may contain two people with the same name.

53.

Where the opinion letter relates to an individual, it is often appropriate to include in the opinion letter suitable assumptions as to the age, mental capacity and solvency of the individual and the absence of undue influence.

To what extent does the scope of an opinion letter differ in a cross-border transaction? 54.

In a cross-border transaction, the scope of an opinion letter on English law will depend on the extent to which English law is relevant to the transaction.

55.

Where the transaction documents are governed by foreign law but the company to which the opinion relates is incorporated in England, it is usual for an English legal opinion to address principally the questions of whether the company is incorporated and existing, whether it has the necessary corporate capacity to enter into the transaction, whether the necessary corporate action has been taken to authorise the execution of the documents and, if they include a security document, whether it is registrable in England24. The opinion may also deal with questions of whether the choice of foreign law to govern the documents will be recognised by the English courts and whether a judgment delivered in the foreign jurisdiction could be enforced in England. This should be sufficient in most cases. As the validity of obligations undertaken in an agreement governed by a foreign law will be determined by that law, an English law opinion cannot deal with the question of validity as such.

56.

The relevant law firm may be requested to opine on recognition of validity. The response to such a request may differ between law firms and may also depend on the foreign jurisdiction involved. Some law firms may be willing to say that, if the relevant agreement creates valid, binding and enforceable obligations under its governing law, such obligations will be recognised as valid and binding under English law (except to the extent

23

Section 860 of the Companies Act 2006 (where the chargor is an English incorporated company), or Part 9 of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (where the chargor is a limited liability partnership), or section 344 of the Insolvency Act 1986 (where the chargor is an individual or a partnership consisting of individuals) or the Bills of Sale Acts 1878 to 1890 (where the chargor is an unincorporated trader). The Companies Act requirement for registration of charges by overseas companies with a registered UK establishment has ceased to apply in relation to charges created on or after 1st October 2011. Where the document has been executed under a power of attorney granted by an English obligor, the opinion may also address the authorisation, execution and delivery of the power of attorney.

24

35

- 12 that they are incompatible with applicable mandatory rules or public policy25). Other law firms may simply opine that, if there is an express governing law clause by which the parties choose a foreign law to govern the agreement, then English law will generally recognise that choice of law. This subject involves conflict of law questions which are outside the scope of this Guide. 57.

An opinion provider may sometimes be asked to opine on whether any provision of the relevant documents is contrary to English public policy. Public policy is a changing and illdefined concept on which it is not possible to opine with certainty. It may also overlap with any opinion expressed as to recognition of the foreign law governing the transaction document.

58.

Where the transaction documents are governed by English law but one of the parties is a company incorporated in another jurisdiction, an English law opinion cannot address such questions as whether that company has corporate power to enter into the transaction, whether the documentation has been duly authorised, executed and delivered and whether particulars of it are registerable in that other jurisdiction. These matters will have to be the subject of assumptions. A separate opinion on these matters under the laws of the jurisdiction in which the company is incorporated may be obtained from lawyers qualified in that jurisdiction. In addition, where an obligation is to be performed by a person in a jurisdiction outside England, an English law opinion will typically include a qualification that the obligation may not be recognised as enforceable under English law to the extent that performance would be illegal or contrary to public policy under the law of that other jurisdiction.

How should differences in opinions practice be reconciled in cross-border transactions? 59.

The "Golden Rule" referred to in paragraph 8 may appear difficult to apply in cross-border transactions where, for instance, both a law firm practising in England and a law firm practising in the USA are involved. A law firm practising in the USA may ask a law firm practising in England to give an opinion letter in wider terms than is normal under English practice because the US law firm would be willing to provide an opinion if the roles were reversed.

60.

In practice, a common answer (which is consistent with professional conduct rules) is that the opinion letter should be given by reference to the practice generally applicable in the jurisdiction whose law is the subject of the opinion. So, an opinion letter on English law would take into account the normal approach that applies in England and an opinion letter on New York law would take into account the normal approach which applies in New York. The same transaction may involve documents governed by two or more jurisdictions, requiring different legal opinions. It does not follow that the same approach must necessarily apply to all legal opinions being given in the same transaction. Thus, if a transaction includes a loan agreement governed by New York law and a guarantee governed by English law, the New York legal opinion would follow the normal practice applicable in New York and the English legal opinion would follow the normal practice applicable in England. It is for each law firm to decide what policy to adopt in such cases.26

To what type of legal entity does the opinion letter relate? 61.

The entities to which an opinion letter relates will in the great majority of cases be companies. In the case of companies incorporated under the Companies Act 2006 and its predecessors, the safeguards provided by sections 39 (A company's capacity), 40 (Power of directors to bind the company) and 41 (Constitutional limitations: transactions involving directors or their associates) of the Act will generally apply to them. They will not apply to entities such as a company incorporated by Royal Charter, or a building society,

25

Regulation (EC) No 593/2008 on the law applicable to contractual obligations (Rome 1), article 9. A law firm may, if it thinks appropriate, choose to take into account the practice of the jurisdiction in which the financial transaction is taking place, as well as professional conduct rules. Thus, where a transaction is to raise funds in certain securities markets, a law firm acting for the issuer may be asked to give an opinion to non-client underwriters.

26

36

- 13 local authority, municipality, unit trust or non-incorporated trust fund. Different rules apply to charities.27 Special considerations may also apply to an unlimited company.28 62.

A law firm may occasionally be asked to provide an opinion in respect of individuals and partnerships of individuals. There is no reason in principle why a law firm cannot do this if it chooses to do so, provided that the form of opinion letter is suitably worded and includes appropriate assumptions and qualifications.

What is best practice as to the form of opinion letters? 63.

It is good practice for an opinion letter to use a recognisable format and language which assists the reader to evaluate its contents and to identify any unusual assumptions or qualifications. The terms of the opinion should also be complete and self-reliant, since we are not aware of any reported English case law on the question whether it is possible to rely on "customary practice" being implied into an English opinion letter.

64.

Unless a detailed, reasoned opinion is required, the purpose of an opinion letter lends itself to the use of language as concise as its subject matter permits. It is also good practice to adopt language which is easily intelligible and for the letter to be clearly laid out. For example, a key statement, such as that an agreement is valid, should not be buried in a mass of intricate legal technicalities. The reader may otherwise fail to detect the true message or to draw the correct conclusion. Unnecessary or irrelevant provisions should be avoided. Opinion letters are typically stated in fairly standardised format so that the opinion and any departures from that format can be more easily assessed by the recipient.

65.

Care in wording assumptions and qualifications is important. Where an opinion letter is given to a client, it is helpful not only to the recipient but to the law firm providing it, since it defines the scope (and, at least in reasoned opinions, records the substance) of the opinions given. The addressee of an opinion letter may wish to consider whether material assumptions on which the opinion is based should be made the subject of appropriate warranties in the contractual documents.

66.

The nature of the transaction must be considered in order to determine what assumptions and qualifications are appropriate and whether resolutions or minutes of a relevant company (or certificates from the relevant company's officers) should be obtained and assumed in the opinion to be accurate. Where the legal position is unclear because there is a paucity of case law on the subject or differing views exist, this should be explained in the opinion. Having stated that the position is not free of doubt, it will often be helpful to the client (in the case of a reasoned opinion) for the law firm to go on to state what it considers to be the better view.

67.

Opinion letters of the kind discussed in this Guide are expressed to be given only on English law and not "UK law" or "British law".29 There is no unified body of laws of "the United Kingdom" or of "Great Britain". An opinion on such laws is not normally given, since it would imply a knowledge of the individual legal systems in Northern Ireland or Scotland and (where applicable) legislation passed by the Welsh Assembly. As Scotland and Northern Ireland are separate jurisdictions, such an opinion should not be requested from a law firm that does not practise in the relevant jurisdiction.

68.

It is not usual in an English opinion letter to state that a company is in "good standing", since this is not a recognised term of art. It has a special meaning in the United States, signifying that a corporation has filed an annual return and paid its corporate franchise taxes, which can be proved by obtaining an official certificate. Such an opinion serves no purpose in an English opinion letter, since the existence of a UK company does not depend on payment of franchise or similar taxes.

27

Special rules apply to companies that are charities: section 42 of the Companies Act 2006. To give one example, a legal (as opposed to an equitable) mortgage over shares in an unlimited company is not normally taken, since this would otherwise involve the mortgagee (or its nominee) becoming the registered holder of the shares and being exposed under English law to unlimited liability for unpaid debts of the company (if it were to become insolvent). A reference to "British insolvency law" may be appropriate where the opinion relates to the Cross-Border Insolvency Regulations 2006 as this is a defined term in the Regulations (see Article 2 of Schedule 1).

28

29

37

- 14 69.

Separate opinion letters should be provided on the laws of different jurisdictions. Where one law firm is giving an opinion under English law and another law firm is providing an opinion under the law of a different jurisdiction, it is normal practice for each opinion letter to stand on its own and not rely on the accuracy of the other law firm's opinion. It is not normal for an English law firm to be asked to verify the correctness of an opinion letter provided under the law of another jurisdiction.

70.

Where a legal opinion on questions of English law is addressed to, or may be relied upon by, a party in another jurisdiction, it may be considered prudent to state in the opinion letter that its contents and any non-contractual obligations arising out of the opinion letter are to be governed by and construed in accordance with English law. It is sensible that opinions given by reference to English law concepts be interpreted in accordance with English law.

Financial Law Committee The City of London Law Society 17th November 2011 Š CITY OF LONDON LAW SOCIETY 2011. All rights reserved. This paper has been prepared for guidance only. Its contents should not be taken as legal or professional advice in relation to a particular situation or transaction.

38

- 15 Membership of the Working Party of the CLLS Financial Law Committee This Guide has been prepared, on behalf of the Financial Law Committee, by the members of the following working party:

Geoffrey Yeowart

-

Hogan Lovells International LLP (Chairman of the working party)

Peter Brien

-

Slaughter and May

Richard Calnan

-

Norton Rose LLP

Armel Cates

-

Clifford Chance LLP

Charles Clark

-

Linklaters LLP

Kate Gibbons

-

Clifford Chance LLP

Richard Levitt

-

Slaughter and May

Dorothy Livingston

-

Herbert Smith LLP (Chairman of the Financial Law Committee)

John Naccarato

-

CMS Cameron McKenna LLP

Alan Newton

-

Freshfields Bruckhaus Deringer LLP

Robin Parsons

-

Sidley Austin LLP

Simon Roberts

-

Allen & Overy LLP

Ian Sideris

-

Simmons & Simmons LLP

Jonathan Shann

-

Freshfields Bruckhaus Deringer LLP

Graham Smith

-

Allen & Overy LLP

The views expressed in this Guide are the personal views of members of the working party and do not necessarily represent the views of the law firms to which they belong.

39

40

41

42

43

44

45

46

47

For the avoidance of doubt, this document is in a non-binding, recommended form. Its intention is to be used as a starting point for negotiation only. Individual parties are free to depart from its terms and should always satisfy themselves of the regulatory implications of its use.

MULTICURRENCY TERM AND REVOLVING FACILITIES AGREEMENT

[amount in numbers] FACILITY AGREEMENT dated [

] for

[NAME OF PRINCIPAL COMPANY] arranged by [NAME OF ARRANGERS] with [NAME OF AGENT] acting as Agent

[NAME OF LAW FIRM]

The Loan Market Association ("LMA") consents to the use and reproduction of this document by members of the Loan Market Association for the preparation and documentation of agreements relating to transactions or potential transactions in the loan markets. This document may be reproduced and distributed to non-members of the Loan Market Association in hard copy only. The LMA does not consent to the use, reproduction, distribution or communication to the public of this document for any other purpose, in any other manner or by any other person and expressly reserves all other rights.

ďƒŁď€ Loan Market Association.

All rights reserved.

48 LMA.MTR.06

24 August 2012

JOINT STATEMENT The recommended form of syndicated facility agreements (the "Primary Documents") were developed by a working party consisting of representatives of the Loan Market Association, The Association of Corporate Treasurers and major City law firms. It is hoped that the existence of the Primary Documents will facilitate more efficient negotiation of loan documentation to the benefit of the primary and secondary loan markets. Through the involvement of the associations in the working party, together with the law firms represented, the objective was to balance the interests of borrowers and lenders. In the Primary Documents, financial covenants and related definitions have been deliberately left blank. When considering use of the Primary Documents it is recommended that borrowers and lenders should: 

consider the option of continuing to use existing documentation



carefully consider changes to the Primary Documents that may be required



always have the benefit of independent legal advice

The associations believe that the Primary Documents will provide a valuable aid to the development and efficiency of the syndicated loan market.

49 LMA.MTR.06

24 August 2012

CONTENTS Clause

Page

1.

Definitions and Interpretation ............................................................................................. 1

2.

The Facilities..................................................................................................................... 13

3.

Purpose.............................................................................................................................. 13

4.

Conditions of Utilisation ................................................................................................... 13

5.

Utilisation.......................................................................................................................... 15

6.

Optional Currencies .......................................................................................................... 16

7.

Repayment ........................................................................................................................ 20

8.

Prepayment and Cancellation ........................................................................................... 21

9.

Interest .............................................................................................................................. 25

10.

Interest Periods ................................................................................................................. 26

11.

Changes to the Calculation of Interest .............................................................................. 27

12.

Fees ................................................................................................................................... 28

13.

Tax Gross Up and Indemnities ......................................................................................... 30

14.

Increased Costs ................................................................................................................. 39

15.

Other Indemnities.............................................................................................................. 40

16.

Mitigation by the Lenders ................................................................................................. 42

17.

Costs and Expenses ........................................................................................................... 42

18.

Guarantee and Indemnity .................................................................................................. 43

19.

Representations ................................................................................................................. 46

20.

Information Undertakings ................................................................................................. 48

21.

Financial Covenants .......................................................................................................... 53

22.

General Undertakings ....................................................................................................... 53

23.

Events of Default .............................................................................................................. 56

24.

Changes to the Lenders ..................................................................................................... 59

25.

Changes to the Obligors .................................................................................................... 64

26.

Role of the Agent and the Arranger .................................................................................. 66

27.

Conduct of Business by the Finance Parties ..................................................................... 72

28.

Sharing among the Finance Parties ................................................................................... 72

29.

Payment Mechanics .......................................................................................................... 74

30.

Set-Off .............................................................................................................................. 77

31.

Notices .............................................................................................................................. 77

50 LMA.MTR.06

24 August 2012

32.

Calculations and Certificates ............................................................................................ 79

33.

Partial Invalidity................................................................................................................ 79

34.

Remedies and Waivers ...................................................................................................... 79

35.

Amendments and Waivers ................................................................................................ 79

36.

Confidentiality .................................................................................................................. 80

37.

Counterparts ...................................................................................................................... 85

38.

Governing Law ................................................................................................................. 86

39.

Enforcement ...................................................................................................................... 86

51 LMA.MTR.06

24 August 2012