In the dynamic landscape of corporate real estate, transactions involving listed companies present a unique set of challenges and obligations, particularly when it comes to disclosure, handling sensitive information, and regulatory notifications. Mishcon de Reya's recent involvement in a high-profile joint venture, where we represented a private global enterprise in acquiring, alongside a private equity firm, a 50% stake in a prime London office building from Helical plc, a UK listed Real Estate Investment Trust (REIT), underscores our expertise in managing the intricacies of such deals.
Set to redefine the London skyline with the redevelopment of the office building, the transaction brought to the fore several issues that are increasingly common in dealings with listed entities. Here, we spotlight key considerations and how our Corporate Real Estate team – led by Corporate Partner Mark Thompson, and supported by specialists in our Real Estate (Nick Minkoff), Construction (Adriano Amorese), Banking (Nick Strutt) and Tax (Ceinwen Hayes) teams – navigated these complexities.
Disclosure obligations of the non-listed party
Entering into a joint venture with a listed company requires a deep understanding of the disclosure obligations that extend to all parties involved. Our team advised on the nuances of these obligations, ensuring compliance without compromising the strategic interests of our client. We ensured that our client, a privately owned non-listed party, was fully aware of the implications of the counterparty's status as a listed REIT, and it being subject to the FCA listing rules.
This included advice on whether our client:
- would need to be identified in any public announcements made by the listed entity; and
- would be subject to its own disclosure requirements as a result of its entry into the transaction.
Material non-public information
An issue that always needs to be considered when working on transactions with listed entities is whether you are in receipt of material non-public information (MNPI) which is price-sensitive and therefore inside information. Parties in possession of price-sensitive MNPI need to be aware of the strict restrictions on dealing in securities and that the onward disclosure of such MNPI is only permitted on a need-to-know basis, while maintaining confidentiality.
We ensured our client was fully briefed on the implications of being in receipt of MNPI, both during the transaction and as a JV counterpart going forward.
Considering take-private scenarios
When dealing with a listed company as a counterparty, it is necessary to consider the potential impact of a take-private transaction affecting the counterparty. Unlike privately owned companies, a listed company may undergo a change of control whether recommended by the board or not. It is therefore important to carefully consider the drafting of any change of control provisions to account for this risk and, in the context of a joint venture, ensure that as a counterparty, our client has the relevant protections in place should the plc be subject to a change of control.
Regulatory notifications and recent changes to the UK listing rules
A critical aspect of our advisory role involved guiding our client through the ever-changing regulatory landscape, including the requirements for 'significant' transactions to be subject to shareholder approval or notification. The recent amendments to the listing rules, effective from 29 July 2024, have eliminated the need for plcs to obtain shareholder approval for 'significant' transactions. Our forward-looking approach meant that we were prepared for these changes, advising our client with a clear understanding of the current and upcoming regulatory environment.
Going forward, there is no longer a two-class regime. If a listed company enters into a 'significant' transaction, it is no longer required to obtain prior shareholder approval – it will now be required to publish certain prescribed information which would include:
- detailed information on the effect of the transaction on the listed company;
- a statement by the board of the listed entity that the transaction is, in the board's opinion, in the best interests of the members as a whole; and
- in circumstances where the transaction is intended to take advantage of synergies, the basis of the expected synergies.
- It remains to be seen if these legislative changes will embolden plc directors to undertake larger transactions with a greater degree of frequency.
Mishcon de Reya's Corporate Real Estate team
The transaction's success is a testament to our firm's ability to provide comprehensive legal advice that addresses the specific challenges posed by deals involving listed companies. Our Corporate Real Estate team's ability to drive such deals while drawing on the expertise of specialists in our Real Estate, Construction, Planning, Rights of Light, Banking and Tax teams, ensures a seamless process for our client.
The complexities of corporate real estate transactions with listed entities demand a legal partner with the expertise and foresight to navigate the evolving regulatory landscape. This recent transaction showcases our ability to deliver just that, providing our clients with the confidence to pursue ambitious projects in this sector.
For more information on how we can assist you in your next corporate real estate venture, please contact Mark Thompson or any of the Corporate Real Estate team.