UK: The European Lawyer's Private Equity Book, UK Chapter

Last Updated: 22 August 2012
Article by Charles Martin and Simon Perry

1. MARKET OVERVIEW

1.1 Types of investors

Investors in private equity funds targeting UK investments comprise in the main pension funds, funds of funds, banks, insurance companies, government agencies, private individuals and family offices. During 2009, according to the British Private Equity and Venture Capital Association (BVCA), a total of £2.9 billion was raised by UK private equity funds (including venture capital funds) for investment in the UK and overseas. This sum was contributed to by those sectors in the following proportions: pension funds (18 per cent), insurance companies (10 per cent), corporate investors (14 per cent), banks (seven per cent), funds of funds (18 per cent), government agencies (six per cent), academic institutions (two per cent), private individuals (four per cent), sovereign wealth funds (six per cent) with the remainder (15 per cent) coming from a variety of other sources. According to the BVCA, £2.9 billion was invested during 2009 by private equity funds into UK companies, of which £296 million comprised venture capital investment.

1.2 Types of investments

Private equity funds will invest in businesses at almost any stage in their lifecycle and divide into a number of distinct types focusing on businesses at different stages in their development. At the smaller end of the scale, start up and seed financings will often be undertaken by private equity investors who specialise in venture capital, although recently there have been several multi-million pound start ups which have been backed by firms often more associated with more traditional leveraged buyouts. Moving up the scale of investment size, it is commonplace to divide the UK buyout market into three tiers, being the upper, mid- and lower market, the mid-range stretching from between £50 million to £500 million with the other two tiers falling on either side respectively. Private equity investors will typically seek to position themselves in a particular market, and while many will operate in two tiers, few will be active in all three. In addition, many private equity investors will focus their activities on particular industry sectors, such as healthcare, retail or heavy industry.

During a business' early stages, private equity financing (seed and start-up and, in certain circumstances, growth capital as well) will typically be unleveraged as banks and other institutions will usually be unwilling to lend where there are few or no assets in the business over which security can be taken. Equally, where a private equity investor takes a minority stake in the business, this will usually be unleveraged as, without control, the private equity investor will be unable to require the business to grant security over the underlying assets.

Once a business has developed to a point where it has a material asset base and some certainty as to the extent of future revenues and cashflow, private equity investment will typically be seen more favourably by lenders provided the company is able and willing to grant security over those assets, revenues and cash. However, at the time of writing, the effects of the credit crunch are still being felt in the UK and banks remain generally cautious over lending to finance private equity investments.

2. FUNDS

2.1 Fund structures

The most commonly used vehicle for a private equity fund is a limited partnership, constituted and governed by a limited partnership agreement to which all investors must adhere. Typically, an English limited partnership is used although there are circumstances in which a Scottish limited partnership is preferred. Scottish limited partnerships have separate legal personality, whereas English limited partnerships do not. A limited partnership structure is beneficial as it provides investors with limited liability (as they each subscribe to the fund as a 'limited partner') and is also a tax transparent vehicle, meaning that income and gains are taxed in the hands of the investors and there is no tax at the level of the partnership. This structure also enables the fund managers to receive their management fees and performance fees in a tax efficient manner.

Limited partnerships are typically closed-ended, meaning that investors are locked in and cannot withdraw their interests in the fund (usually for five to 10 years). Limited partnerships will have a 'general partner', who is liable for the debts and obligations of the partnership and is responsible for the management of the partnership under law. In practice, however, such management duties are usually delegated to a separate manager entity. Limited partners must not take part in the day-to-day management of the fund (or they jeopardise their limited liability status) and they invest in the fund by committing to provide a certain amount of money. This is not usually contributed in full at the outset but in separate tranches during the investment period at such times as the general partner may request.

Offshore fund structures are also used to avoid tax leakage at the level of the manager. Such offshore funds are commonly incorporated in the Channel Islands or the Cayman Islands, typically as offshore limited partnerships. The manager of an offshore fund will often be established offshore as well to avoid tax leakage.

2.2 Regulation of fund raising and fund managers

Private equity funds are typically unregulated collective investment schemes and therefore the fund vehicle itself will not be subject to authorisation by the Financial Services Authority (FSA). However, where carried out in the UK the fund must be established and operated, and its portfolio managed, by an authorised person. Operating a collective investment scheme is a regulated activity under the Financial Services and Markets Act 2000 (FSMA) which requires FSA authorisation, along with dealing in investments, advising on investments and arranging deals in investments, and the manager of the fund will therefore typically be authorised and regulated by the FSA. As a separate regime from that applicable to regulated activities under the FSMA, a fund cannot be marketed to potential investors in the UK (or outside the UK, if such communications may be 'capable of having an effect in the UK') by an unauthorised person, unless an exemption is utilised.

Exemptions typically revolve around the category of investors to which the fund is marketed, with exemptions including communications to 'investment professionals', 'certified high net worth individuals' and 'sophisticated investors'. The category of 'investment professionals' includes FSA authorised persons, therefore a fund can be marketed via an independent financial adviser using this exemption. Certain of these exemptions will require legal disclaimers to be included in marketing materials and in some cases they will impose other conditions, for example the provision of a signed statement confirming the status of the investor.

A new European directive was proposed by the European Commission in 2009 in relation to the regulation of alternative investment fund managers (AIFM), which will impose new regulatory requirements on fund managers once it has been approved and implemented. The AIFM directive proposes to regulate fund managers, rather than funds, and this will include both hedge fund managers and private equity managers. The scope and application of the initial draft of the AIFM directive was very unclear and its precise content is currently subject to intense political discussion and lobbying. The implications of the AIFM directive coming into force are unclear and will depend on the exact content of the final version of the AIFM directive, as well as the circumstances of each individual fund manager. The AIFM directive is likely to be agreed upon during the course of 2010, meaning that the rules would come into force in 2012. See section 7 below for further discussion on this point and further details on the content of the AIFM directive.

2.3 Customary or common terms of funds

The following table sets out the typical terms of a private equity fund.

Fund term

Comments

Management fee

The management fee payable to the fund manager is typically 1.5 per cent to 2.5 per cent of commitments, during the investment period, and then on assets invested.

Carried interest

20 per cent of profits.

Preferred return

Once investors have received repayment of the amounts contributed by them to the fund, the next available profits are distributed to the investors in priority until they have received a certain minimum amount, known as the preferred return (or the 'hurdle'). The preferred return payable to investors is typically eight per cent per annum.

GP commitment

The general partner (GP) typically makes a commitment to the fund equal to one per cent of total commitments.

Investment period

The investment period is typically five years – subject to extension with investor consent.

Term

The life of the fund is typically 10 years – often subject to two one-year extensions.

Catch-up

There is usually a catch-up provision included in the distribution waterfall, meaning that after the investors have received the preferred return (see above) the next available profits are distributed to the carried interest partner such that it has received a certain proportion (typically 20 per cent) of all profits above cost.

Clawback/escrow

Escrow and clawback provisions are required to ensure that if the carried interest partner is overpaid, the excess can be returned to the investors. Typically, escrow and clawback provisions are both included. Escrow provisions typically provide for carried interest to be retained in an escrow account until a certain time when it may be paid out to the carried interest partner, while clawback provisions provide that the carried interest partner must return amounts to the investors, to the extent that the investors have not received repayment of their contributions to the fund, the preferred return and 80 per cent of the profits. Clawback provisions are typically triggered on termination of the fund.

Transaction/banking/other fees

Whether or not the manager should receive any such fees in addition to the management fee payable is a subject of intense debate. The Institutional Limited Partners Association (ILPA) Guidelines (see section 6 below) recommend that all transaction and monitoring fees charged by the general partner should accrue to the benefit of the fund.

Organisational expenses

Organisation expenses payable by the fund typically cover all costs of establishing the fund. These are sometimes capped.

Organisational expenses do not cover placement agent fees, although they can cover the expenses of a placement agent.

Keyman provisions

Keyman provisions are usually provided for. These are provisions to ensure that the fund continues to be managed by the key executives of the manager and to afford investors certain rights in the event that it does not. Such provisions usually stipulate that the key executives of the manager must devote a certain amount of time to the fund, and if they do not, the

ability of the fund to make new investments is suspended until a solution is found (normally the appointment of a

replacement key man). The suspension of investments should be automatic. If a replacement key man is not approved within a certain period (typically six to 12 months), the investment period is usually terminated.

No fault divorce

No fault divorce is typically provided for. This allows a

majority of the limited partners (usually between two-thirds and four-fifths) to remove the GP on payment of

compensation. Provisions may also be included allowing the limited partners to terminate the investment period or

liquidate the fund.

3. DEBT FINANCE

3.1 Restrictions on granting security

General

It is generally possible for an English company to grant security over any or all of its assets. English law recognises a number of security interests which are easy to create and do not require onerous formalities. It is not necessary to use separate security documents for different types of asset; it is very common to use a single document which creates a mixture of mortgages, fixed charges and floating charges over all or substantially all of a company's assets. English companies may also provide third party security but care should be taken to ensure that the directors have considered their legal duties to the company, which include a duty to promote the success of that company itself. The shareholders may by resolution approve, or later ratify, an action which would otherwise be a breach of duty and the lender(s) will often require a shareholders' resolution to approve the grant of security.

Financial assistance

A public company is prohibited from giving financial assistance (broadly defined and including loans, guarantees and security) for the purposes of the acquisition of its own shares or the shares of its holding company. In addition, any private company which is a subsidiary of a public company is prohibited from giving financial assistance for the acquisition of shares in that public company.

Guarantees

Guarantees can be given in a wide variety of situations although care needs to be taken to ensure that they do not prove to be invalid.

Where an upstream guarantee is proposed to be given by a subsidiary in relation to its parent's obligations to repay debt it is important to ensure that, in resolving whether to approve the guarantee, the directors of the subsidiary company comply with their statutory and common law duties as directors such as their obligation to promote the success of the company.

In addition, the giving of an upstream guarantee by a company which is not able to pay its debts as they fall due, or becomes unable to pay its debts as they fall due as a result of giving the guarantee, can be liable to attack and invalidation as a 'transaction at an undervalue' if the company enters insolvency proceedings within a period of two years thereafter.

If a subsidiary company guarantees a parent's obligation to repay debt in circumstances where the guarantee is likely to be called and the subsidiary is unlikely to be promptly and fully reimbursed for the amount it pays under the guarantee, there is a risk that the guarantee could be seen as an indirect way of returning capital to the parent. To the extent that any provision which is made in the subsidiary's accounts against the possibility of the guarantee being called (and the consequent reduction in that company's net assets) exceeds its distributable profits, the grant of the guarantee could be held to be an unlawful distribution and therefore potentially void.

It is advisable for a lender to require evidence that these issues have been addressed by the directors in cases where they may apply (for example, in the directors' resolution or a separate director's certificate).

Registration of security

Security is generally effective as soon as it is created between the parties. However, some registrations are necessary or desirable in order to prevent retrospective invalidity or to confer priority.

With nearly all types of security created by a company, the security document, together with the prescribed notification form setting out particulars of it, must be registered at the UK Companies Registry within 21 days after creation, failing which the security will be void against any liquidator or administrator and the creditors of the relevant company.

With a mortgage or charge over real estate, registration of the security document at HM Land Registry or the applicable land charges registry will also usually be made in order for the lender to obtain priority for the security.

3.2 Inter-creditor issues

Background

An inter-creditor agreement typically regulates the rights and obligations of different lenders or groups of lenders, both before and after insolvency. In a typical buyout structure involving senior, mezzanine and equity investor debt, it will provide that the senior debt (including any hedging debt) ranks ahead of the mezzanine debt, which in turn ranks ahead of any equity investor debt. In more complex structures it will also regulate any additional types of debt such as senior notes, second lien debt, junior mezzanine debt, high yield bonds or payment in kind (PIK) notes.

Contractual subordination as provided for in an inter-creditor agreement is generally considered to be valid under English law. While some senior lenders may seek structural subordination in addition to contractual subordination, there is no legal requirement for this.

Traditionally in the UK market, the inter-creditor agreement has been the least standardised document. While there is some consistency in the commercial terms of acquisition finance deals, the documents drafted often vary in structure and format. However, in March 2009 the Loan Market Association (LMA) launched its recommended form of inter-creditor agreement for use in leveraged finance transactions, with a revised form subsequently launched in November 2009 following consultation with a number of mezzanine investors. The revised form contains a number of alternative options and footnotes dealing with likely areas of contention between senior and mezzanine lenders.

Key issues

As the leveraged finance market returns, both senior and mezzanine lenders are focusing more closely on the terms of inter-creditor agreements, probably as a result of lessons learned from recent restructurings.

To provide a full list of issues which may be raised by senior lenders, bondholders, mezzanine lenders and equity investors in relation to inter-creditor agreements (especially on the new LMA inter-creditor agreement) is beyond the scope of this book. However, some of the issues which are commonly debated between senior and mezzanine lenders are as follows:

  • Structural subordination – should the subordinated creditors also be structurally subordinated? Typically senior lenders will accept contractual subordination only.
  • Limitations on amendments to the senior debt documents – a fairly restricted list will usually be agreed (eg changes to prices, tenor or amount of senior debt). Exceptions are often agreed including allowing for an increase in margin by one per cent, an increase in tenor by up to 12 months and an increase in senior debt by up to 10 per cent of closing day commitments.
  • Permitted payments to subordinated creditors – should these include principal repayments upon illegality or a tax gross-up, interest payments, enforcement costs and expenses, and waiver fees? What should be the trigger for blocking these payments (eg any senior default or just certain material senior defaults) and how long should such a block remain in effect (typically for mezzanine this is either 90 or 120 days)?
  • Enforcement rights for subordinated creditors – what should be the triggers and what should be the length of the standstill periods (typically for mezzanine these have been 90 days for a payment default, 120 for a financial covenant default and 150 for any other breach)?

In addition to these typical issues, subordinated creditors are also looking to enhance or further protect their positions in restructurings. Issues raised by mezzanine lenders in some recent transactions have included:

  • Restrictions on senior lenders' right to release principal debt, guarantees and security on a disposal – including restricting the circumstances when such release may be effected and imposing obligations on senior lenders to show that a fair price has been obtained (eg a fair value opinion from an investment bank – akin to US high yield bond requirements).
  • Security over the shares in the top company in the structure in favour of the mezzanine lenders – giving them the ability to cut off the equity investors from any economic interest (a common feature of infrastructure deals).
  • A right to convert mezzanine debt into equity without the consent of senior lenders (this is currently prohibited under most inter-creditor agreements).
  • A right for the mezzanine lenders to effect an equity cure of a financial covenant breach under the senior facilities agreement (to prevent a senior enforcement in circumstances where the equity investors are unable, or unwilling, to fund the equity cure).

As the volume of new transactions increases, positions on these and other contentious points should (as before) become more standardised.

For the most part equity investors have very few rights under an intercreditor agreement (given their position). However, where payment of any upfront fees, ongoing fees or, perhaps, a repayment of loan notes or dividend (subject to certain financial covenant tests) to the equity investors is permitted, it will be important to check that such payments are expressly permitted and to clarify any additional conditions (eg no default). The equity investor will almost certainly be the controlling shareholder of the group so will not need the other protections re anti-layering, amendments etc.

3.3 Syndication

Methods

There are three main ways of distributing debt among lenders/investors in the UK market: an underwritten syndication, a 'best efforts' syndication and a 'club' deal.

For a truly underwritten deal there are typically three phases. During the underwriting phase, the equity investor will select a bank or banks (referred to as mandated lead arrangers or MLAs) who will initially underwrite the required facilities. Depending on the size of the facilities, the MLAs may then look in phase two to bring in other sub-underwriters before funding takes place. As the final phase, and as soon as practical after the funding has occurred and the transaction has closed, the MLAs (together with other sub-arrangers, if there are any) will look to complete a general syndication of the facilities to the institutional investor market along with other banks that may be interested in participating.

For a 'best efforts' syndication, arrangers will only fund up to their approved hold levels. They will, however, structure and agree the financing package and agree to use their best efforts to bring in other institutional investors and banks to meet the agreed total funding requirement.

For a 'club deal', the equity sponsor or a lead bank will assemble a 'club' or group of lenders to provide a facility on identical terms. The lenders will typically all share the same fees in the deal and will all agree the terms of the financing. Because all the lenders have input in negotiating the facility agreement, the negotiations are often time-consuming and can result in the 'lowest common denominator' positions of the club being reflected in the documentation. For this reason, club deals have traditionally been unpopular with equity investors and, during the credit boom, were limited to the smallest transactions (sub-£100 million). Club deals are typically done by banks and specialist debt investors rather than the wider institutional investor market.

Syndication issues

In acquisition finance deals, syndication takes place after the terms have been struck and the initial money lent. In order to ensure the success of syndication, an MLA will seek to ensure that the deal structure and terms fall within market-acceptable parameters and norms. However, in the period between signing its commitment and closing of the syndication, an event may occur in the market which has an adverse impact on the syndication (perhaps because the perception of risk and pricing in the wider market has changed or because investor liquidity has dried up). In these situations (as was the case following the collapse of Lehman Brothers) underwriters risk being left with huge amounts of debt which they cannot syndicate save at a significant discount and thereby resultant loss.

For this reason, MLAs seek to include a market flex provision in their commitments. The market flex provision allows the MLAs to change the pricing, terms and/or structure of the loan if this proves necessary to ensure a successful syndication.

Depending on the strength of the market, there are typically extensive negotiations over the ability of the MLAs to invoke these provisions (eg the level at which a successful syndication occurs and what obligations are imposed on the MLAs to pay away their fees to potential participants) and over setting caps on the overall economic impact that such changes can have on the borrower group.

In pre-2008 deals, the amount of liquidity in the market often led to syndications being oversubscribed. This enabled equity investors to push for a 'reverse flex' which reduced the pricing or pushed additional debt into the cheaper tranches (with the MLAs sharing a percentage of the upside for the borrower group as a fee). Following the end of the credit crunch the reverse flex has started to return to the market for deals which are oversubscribed; however, it is limited to increasing quantum as opposed to changes in pricing.

There are other issues to be considered, such as the extent of assistance required from the borrower group and equity sponsor on syndication, but these issues have been comprehensively debated and standardised positions are well understood.

3.4 Alternative means of financing

Before the summer of 2007 and the onset of the credit crunch, private equity professionals would expect financing structures to involve some or all of the following types of term debt: senior, second lien, mezzanine, PIK and other similar instruments; and 'covenant-lite' loans, 'PIK toggles' and OpCo/Propco structures were often encountered.

At the time of writing, at least as far as the UK market is concerned, second lien, PIK and the other exotic instruments have all but disappeared, with financing structures reverting to those more closely associated with 2002- and 2003-vintage transactions. In many cases, financing structures are limited to senior-only loans with an amortising tranche A facility and bullet tranche B facility. Where subordinated debt is included in the structure, this is being provided by specialist mezzanine houses or via debt funds of equity investors and typically includes some form of equity participation as well as non-call protections.

Equity underwrites

With the continuing liquidity problems in the leveraged financing markets, a trend has emerged of some equity investors funding the entire transaction with equity and then looking to bring together a club or syndicate of senior lenders (or perhaps asking the target's existing lenders to continue their existing facilities). Such processes are often run as competitive tenders and allow more time for the sponsor to procure the best terms.

High yield bonds

There has been a resurgence in the high yield bond market, driven in part by market conditions but also by a wave of refinancings of corporate ('fallen angels') and leveraged loan facilities. As a result of banks needing to refinance upcoming maturities there has been a willingness to share security with bondholders on a pari passu basis (although the exact terms of pari passu are yet to be consistently applied – both the Association for Financial Markets in Europe (AFME) and the LMA are working on forming agreed pari passu principles). However, high yield debt remains relatively unavailable in the small and medium enterprise environment (ie below £150 million) unless such notes are placed with specialist investors.

Vendor financing

Another increasing source of funding has been vendor financing. This is seen as attractive for the vendor as it enables the vendor to account for the sale on the basis of a higher purchase price albeit partially funded by the vendor loan. The vendor also benefits from income on the vendor loan, typically at a high PIK coupon. From the purchaser's perspective, this provides another source of funding enabling it to achieve a higher leverage. Typically vendor loans will be unsecured and subordinated to senior loans; however, in exceptional cases vendors may successfully argue that they are arm's length, third-party lenders.

Asset-based lending (ABL)

There has been a growing acceptance of ABL structures as a financing option in private equity deals, whether as part of the funding structure for the acquisition or as a refinancing tool subsequently. ABL is relatively inexpensive compared with cashflow or term loan financing and typically has fewer financial covenants. English law is broadly conducive to asset-based products, particularly by the ability to take floating security over assets. ABL facilities also allow borrowers with a working-capital need to borrow only what they require to operate as their asset base fluctuates. However, there remain concerns about its initial funding potential (as it relies on asset valuation rather than earnings before interest, taxes, depreciation and amortisation) and on the certainty of funding.

To read the remainder of this article please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.