Subsidy Control

May 10th, 2022 by James Goudie QC in Capital Finance and Companies

Public funding/support given in the UK since 1 January 2021 has no longer been subject to EU State Aid Law. Compliance has since then been required with the Trade and Co-Operation Agreement between the UK and the EU (the TCA), incorporated into domestic law by Section 29 of the EU (Future Relationships) Act 2020.  Now the Subsidy Control Act 2022 (the Act) has been enacted, and Regulations are to be made, and Guidance provided thereunder, including with respect to “Subsidies of Particular Interest” and “Subsidies of Interest”, under Section 11 of the Act. Main purposes of the Act are to provide detail on the implementation of the TCA and to define “subsidy”.

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Subsidy Control / State Aid

April 21st, 2022 by James Goudie QC in Capital Finance and Companies

IN VOLOTEA v COMMISSION, Joined Cases C-331/20P and C-343/20P, Advocate General Capeta addresses, at paras 62-114 inclusive, the Market Economy Operator Principle ( the MEO ). The applicability of the MEO test is governed by the NATURE of the activities, that is by whether the public authority intervention is through an activity comparable to what could be envisaged in the market. The test is applicable to all situations in activities are performed by the authority comparable to market activities. These include when the authority acts in a way comparable to a market operator. This is decided by an objective enquiry into HOW the authority engages with undertakings on a given market, irrespective of the form and reasons for that engagement.

 

 

Borrowing

March 24th, 2022 by James Goudie QC in Capital Finance and Companies

The Combined Authorities (Borrowing) Regulations 2022, S.I. 2022/358, provide the North of Tyne, South Yorkshire and West Yorkshire Mayoral Cas with power to borrow money for any function.

 

Subsidy Control

July 1st, 2021 by James Goudie QC in Capital Finance and Companies

Subsidy Control replaced State Aid six months ago. A Subsidy Control Bill has now been published.

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Director Duties

May 19th, 2021 by James Goudie QC in Capital Finance and Companies

A fiduciary, such as a company director, must not act in a position where his interest and his duty conflict or may possibly conflict. An exception is when there is fully informed consent, the burden of proving which is upon the fiduciary. As to informed consent, including implied consent, see John Reader v Spie Ltd (2021) EWHC 1221 (QB), in the context of an enhanced bonus on a TUPE transfer.

 

State Aid during Covid

April 15th, 2021 by James Goudie QC in Capital Finance and Companies

Damage is caused by an exceptional occurrence, such as the Covid-19 pandemic. The entirety of the damage is not made good. Not all victims receive aid from state resources. In Cases T-378&379/20, Ryanair v Commission, it is held that it does not follow that a measure benefitting an individual company is state aid and/or discriminatory, provided that the benefit does not overcompensate and is proportionate.

 

Companies

March 9th, 2021 by James Goudie QC in Capital Finance and Companies

The Duomatic principle, that anything a company’s members could do by formal resolution they could also do informally if they all assented to it, does not apply where the transaction would be ultra vires: Satyam Enterprises Ltd v Burton (2021) EWCA Civ 287.

 

Companies

February 25th, 2021 by James Goudie QC in Capital Finance and Companies

In Byers v Chen (2021) UKPC 4 the Privy Council affirmed, at paras 64/65, the Duomatic principle, that, where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be. The Privy Council also affirmed, at paras 68/69, that a director who has given the company proper notice of his or her resignation is not entitled to withdraw that notice, save with the consent of the company or possibly the ultimate beneficial owner.

 

Company Directors

February 9th, 2021 by James Goudie QC in Capital Finance and Companies

On disclosure by the director of a company of a conflict of interest, see Fairford Water Ski Club Ltd v Cohoon (2021) EWCA Civ 143. The disclosable interest may be of any kind, direct or indirect : para 43. What is then required is a clear declaration of the interest : para 45.

 

State Aid

December 29th, 2020 by James Goudie QC in Capital Finance and Companies

The Brexit deal agreement is accompanied by Declarations. These include a non-binding Joint Declaration of the UK and the EU on Subsidy Control Policies. These are described as “ guidance”. They may be “ taken into consideration” in the respective systems of subsidy controls.

The guidance is concerned with subsidies for (1) the development of disadvantaged and deprived areas or regions, (2) transport, and (3) research and development.

When determining the amount of subsidy for such areas, there may be taken into account (1) the socio-economic situation of the area, (2) the size of the beneficiary, and (3) the size of the investment project. However, (1) the beneficiary should provide its own “ substantial contribution” to the investment costs, and (2) the subsidy should not have as its “ main purpose or effect” to incentivise the beneficiary to transfer the same or a similar activity across borders.

Transport covers (1) airports, (2) roads, and (3) ports. Subsidies to road infrastructure projects may be granted if they are not designed “ selectively”, but provide benefits to society at large. It must be “ ensured” that open access to infrastructure is available to “ all” users on a “ on-discriminatory “ basis.