Commercial finance

Bribery Act 2010 – preparing your defences

The Bribery Act 2010 received Royal Assent in April 2010 and is presently expected to come into force
in April 2011. The delay is while the Secretary of State publishes guidelines for commercial organisations
on what measures they can put in place to constitute an adequate defence to the new offence of failure
by commercial organisations to prevent bribery.

It is particularly important that financiers and insolvency practitioners are prepared for the introduction
of an offence that they can commit if any person “associated” with them bribes another person with the
intention of obtaining or retaining business or any business advantage for the commercial organisation. A
commercial organisation will not commit an offence if it can show that it has in place “adequate
procedures” designed to prevent any of its associates from committing bribery offences.

A consultation seeking views on draft guidance and proposing six general principles that are designed to
be applicable across all sectors and for all types and size of business has recently closed and draft guidance
is expected in early 2011. For financiers wishing to make an early start on establishing the necessary
procedures, steps to consider include: assessing the likely risks; establishing a clear internal policy and
code of conduct for dealing with clients; training staff and developing a management system for monitoring
compliance.

Registration of Security

In December 2010, the government published its outline proposals for changes to the law relating to
the registration of charges created by companies, unregistered companies and limited liability
partnerships. The draft regulations implementing these changes are expected to be published in early
2011 with a view to the changes coming into force in 2012 or 2013.

The headline changes are:

  • The requirement to register should apply to every mortgage or charge created by a company registered in the UK over any of its property (wherever situated), unless expressly excluded by regulation. It will not be necessary to register the crystallisation of a floating charge.
  • It will be possible to register a charge electronically. The filed particulars are to include whether there is an automatic crystallisation clause and a negative pledge.
  • The criminal sanction for failure to register a charge will be abolished.
  • The new regime will not apply to overseas companies.