Article / 1 Feb 2026
In this month’s update we:
Corporate finance advisers often seek protection against being side stepped late in a transaction by including a so-called “tail” clause in their engagement letter. This clause is designed to ensure that, if a client goes on to complete a similar transaction with a different adviser within a defined period, then the original adviser remains entitled to its fee.
In Strand Hanson Ltd v Conduit Pharmaceuticals Ltd [2025] EWHC 3287 (Ch), the High Court upheld a tail clause and gave guidance on how such provisions are likely to be interpreted.
A “tail” clause (sometimes referred to as a “tail gunner” or “equivalent transaction” clause) is a contractual protection for an adviser. It seeks to ensure that if an engagement ends without a deal, the adviser will still get their fee if the client subsequently completes the same transaction, or a substantially similar one, within a specified “tail” period (often six to 12 months).
The clause acts as an anti-avoidance mechanism, preventing clients avoiding payment by delaying completion, changing deal structure or switching advisers once sufficient preparatory work has been done.
In July 2022, Conduit Pharmaceuticals Limited (Conduit) engaged Strand Hanson Limited as financial advisers to assist with a public listing in the United States via a “de-SPAC merger”. The engagement letter had a fixed term of 12 months and was expressly framed around a proposed reverse takeover involving Galmed Pharmaceuticals. If the transaction completed, Strand Hanson would receive a $2m non-refundable advisory fee as well as a 10% equity “carry” in the listed entity.
The engagement letter included a “tail” clause which provided that Strand Hanson would be entitled to its fees if:
The Galmed transaction did not proceed. Instead, Conduit entered into a de SPAC merger with a different US vehicle (MURF). That transaction completed in September 2023, two months after the Strand Hanson engagement had ended, but within the 12-month tail period. Strand Hanson did not advise on the MURF transaction.
Strand Hanson claimed payment under the tail clause, arguing that the MURF transaction was an “Equivalent Transaction” and that the relevant trigger conditions had been met.
The Court found in favour of Strand Hanson, awarding them the $2m cash fee plus $5m in damages for the carry shares they should have received.
The decision rested on the Judge’s interpretation of the tail clause. Conduit argued that the clause only applied if the contract was actively terminated early, not if it simply expired at the end of its 12-month term. But the Judge disagreed. He identified two “limbs” in the clause, separated by the word “or”:
In reaching his decision, the Judge placed weight on the commercial rationale of the tail clause. He said this was intended to protect an adviser against various avoidance strategies, including switching advisers or timing completion so that the contractual trigger for fees under the primary transaction was never met. The clause would be undermined if it applied only to early termination scenarios and not where the agreement simply reached the end of its term.
The Judge also held that the MURF de SPAC merger was an “Equivalent Transaction”, saying that the relevant test was one of economic substance. The tail clause did not require a line-by-line comparison of deal mechanics, but rather a “high level” assessment of whether the commercial objective was the same. In this case, both the original Galmed deal and the MURF transaction achieved substantially the same commercial objective, namely a NASDAQ listing via a reverse takeover at broadly the same valuation.
The decision confirms that properly drafted protections will be upheld. The Court viewed the tail clause as a legitimate protection against what it saw as a client “buying optionality”, and then attempting to exclude the adviser who helped set the stage for the final transaction.
Anyone entering into an arrangement containing a tail clause should carefully review how it is drafted to ensure that the circumstances in which it will apply are clear and unambiguous. Where such arrangements exist, disengaging from an adviser – even politely and at the end of a fixed term – will not necessarily bring fee exposure to an end.
The High Court has ordered that a company be wound up under its powers to tackle promoters of tax avoidance schemes.
Section 85 Finance Act 2022 allows HMRC to petition to wind up a company that promotes tax avoidance schemes where it is expedient in the public interest to protect the public revenue. The court may make the order if it is “just and equitable” to do so, applying the familiar test from the Insolvency Act 1986.
HMRC v Purity Limited [2025] EWHC 3401 (Ch) is the first reported use of these powers by HMRC.
The case involved Purity Limited which operated as an umbrella company for agency workers. Most of its workers were paid a small PAYE salary, with the balance of their income paid as a long‑term “loan”, said to be repayable in the future. The structure was intended to avoid PAYE and NICs on most of the earnings.
Purity later introduced an “Employee Motivation Scheme” allegedly to fund loan repayments. But HMRC showed this was commercially unrealistic: only £470,000 was paid into that scheme, compared with around £45m of loans made in a single year.
HMRC issued PAYE and NIC determinations against Purity. Purity initially appealed but then withdrew its appeals. This triggered statutory deeming provisions under the Taxes Management Act 1970 which meant the scheme was treated as having failed and the liabilities as final.
HMRC also alleged that employees were misled about the nature and consequences of the scheme and were encouraged by Purity to withhold information from HMRC. In addition, HMRC alleged that Purity represented a continuation of a substantially similar scheme previously operated by another company that collapsed following an HMRC investigation.
The High Court ordered Purity to be compulsorily wound up in the public interest.
The Judge held that Purity was a promoter within the scope of section 85 and that the arrangements it promoted caused serious harm to the public revenue. The loan‑based payment structure did not alter the reality that workers were entitled to their full earnings, which were taxable as employment income. In addition, the lack of transparency and phoenix‑style continuation of a previous scheme justified the Court intervening in the public‑interest.
Importantly, the Court rejected any suggestion that HMRC must show that the relevant scheme had already failed or that tax was definitively due before bringing a petition under section 85. The focus of the relevant powers was on public interest and conduct, not merely on quantified tax loss.
This decision shows that HMRC will actively use its powers to close down avoidance promoters at an early stage. In particular, it can do so before litigation on the underlying tax position is resolved. Loan‑based remuneration and similar umbrella arrangements remain high‑risk, particularly where repayment is unrealistic.
The compulsory winding up of Purity was ordered despite the fact that it was already in voluntary liquidation. As this case shows, voluntary liquidation will not protect a business, or its directors, from public-interest action, which can lead to a fuller investigation and greater risk of director disqualification for those involved.
In Cobden v Cobden [2025] EWCA Civ 1612, the Court of Appeal upheld the decision of the High Court, confirming that on dissolution of a family farming partnership, one family member could buy out the other at a fair, expert-valued price, rather than forcing an open-market sale of the partnership assets.
The case is of interest as it clarifies that the court’s discretion to order a buy out of partnership assets instead of a standard public sale, is not restricted to a narrow, closed list of “exceptional circumstances”. A court may also intervene to ensure a fair and just outcome where one partner has relied on a long-term understanding to their detriment.
The process for dissolving a partnership involves the valuation of partnership assets and, in the absence of agreement between the parties, the court will have to rule on how best to achieve a fair outcome.
Where there is no written partnership agreement, a sale of the partnership assets in the open market (often by auction) is usually found to be the most appropriate way to achieve a full and fair value for those assets. However, it is also open to a court to grant an order which permits one or more of the partners to buy out the other partners (known as a Syers order).
Syers orders are relatively rare and have typically only been made in four “exceptional circumstances”, as summarised in Bahia v Sidhu [2024] EWCA Civ 605. The Court of Appeal’s decision in Cobden v Cobden extends that list of exceptional circumstances so that equitable considerations can also provide the justification for making a Syers order.
Matthew and Daniel Cobden were equal partners in a successful farming business. The partnership operated as a partnership at will as there was no formal written partnership agreement.
The relationship between the brothers eventually collapsed, leading Matthew to serve a notice of dissolution of the partnership. Instead of an open-market sale of the partnership assets, Matthew requested that the court make a Syers order, allowing him to buy Daniel’s share of the partnership at a price based on an expert valuation.
The High Court ruled in favour of Matthew and granted a Syers order allowing Matthew to buy out Daniel’s share of the business. The Judge accepted that there were “exceptional circumstances”, including a long-standing shared understanding that Matthew would one day buy Daniel out at a fair price, and Matthew’s substantial reliance on this understanding and his investment in the business over many years.
Daniel appealed the decision, arguing that the circumstances of the case did not fall within any of the four categories where “exceptional circumstances” had been found to exist, or it had been envisaged that there might be justification for departing from the general practice of ordering a sale.
The Court of Appeal dismissed the appeal, finding that the High Court had correctly exercised its discretion to depart from the usual open-market sale in favour of a Syers order.
The Court emphasised that the categories of “exceptional circumstances” detailed in Bahia v Sidhu were illustrative and not exhaustive, confirming that the test is whether, as an exception to the normal rule, a Syers order can be justified on the basis it would serve the interests of justice on the facts of the particular case.
The Court found that Matthew had established what was described as a “proprietary estoppel-ish” equity that was capable of making an open market sale unfair and of justifying a Syers order instead. This proprietary estoppel was based on the brothers’ understanding that Matthew would eventually buy out Daniel’s share of the partnership at a fair price and the fact that Matthew had relied on this understanding to his detriment.
The Cobden v Cobden case serves as a stark warning for anyone in a partnership – a written partnership agreement will, in most cases, better serve the interests of all those involved.
Relying on a “partnership at will” means that, should the relationship fail, it will be up to a court’s discretion as to how any dissolution of the partnership will be implemented. Whilst this case confirms that a Syers order remains an exception to the default open-market sale rule, it also expands the list of exceptions to include equitable principles (such as proprietary estoppel) where appropriate.
To avoid the uncertainty and costs of litigation, partners should ensure they have a formal agreement that clearly outlines (amongst other things):
As this case demonstrates, the court’s priority is to achieve a “just outcome,” but “justice” in the eyes of a court may look very different from the financial expectations of a departing partner.
The UK’s new public offers and admission to trading regime took effect on 19 January 2026. All public offers of securities, and all prospectuses published from that date, must comply with the new rules.
The Public Offers and Admissions to Trading Regulations 2024 (POAT Regulations) provide the statutory framework for the new regime and revoke the UK Prospectus Regulation. The FCA’s Prospectus Rules: Admission to trading on a Regulated Market (PRM sourcebook) provide detailed rules underpinning the regime and replace the FCA Prospectus Regulation Rules.
The aim behind the new regime is to simplify capital raising, reduce costs, improve retail participation and boost the competitiveness of the UK’s capital markets.
Under the previous UK Prospectus Regulation, an approved prospectus was required before either transferable securities could be offered to the public in the UK or transferable securities could be admitted to trading on a UK regulated market, unless an exemption applied.
Under the new POAT regime, offers of shares to the public and admissions to trading on a regulated market are regulated separately, rather than as overlapping activities.
Public offers are now governed principally by the POAT Regulations, and in a reversal from the previous position, they introduce a general prohibition so that an offer of securities to the public is unlawful unless an exemption applies. This effectively means that a public offer of securities will no longer trigger a requirement for a prospectus as any public offer must now fall under an exemption.
Many of the previous public offer exemptions have been carried over to the new regime, including offers to qualified investors, offers to fewer than 150 persons in the UK and offers below £5m (a change from the previous €8m threshold).
New exemptions have, however, been added, including a very significant exemption for offers of securities which are to be admitted or are already admitted to trading on a regulated market or to a primary MTF (such as AIM) in the UK. This new exemption means that offers by a listed company will fall outside the public offer prohibition irrespective of the size of the offer or the identity of the offerees.
Offers made via a “public offer platform” (POP) will also be exempt under the new regime. A POP is a new FCA regulated trading platform that allows companies to make large offerings of securities to the public (above the £5m threshold) outside a public market, without needing to publish a prospectus.
The POAT Regulations delegate to the FCA the power to set rules on when a prospectus is required where a company is seeking to admit securities to a regulated market, and what information should be included in a prospectus. The FCA’s rules are set out in the PRM sourcebook.
Under the PRM sourcebook, unless an exemption applies, transferable securities can only be admitted to trading on a regulated market following prior publication of an FCA approved prospectus.
This means that the process for IPOs on a UK regulated market will remain the same, and an FCA approved prospectus will still be required.
Most of the previous admission to trading exemptions have been carried across to the new regime (including exemptions for bonus issues, scrip dividends and issues to directors and employees). However, in a significant change for secondary fundraisings, the threshold for commercial companies to issue further shares without having to publish a prospectus is raised from the previous 20% of existing share capital to 75%.
This change should make it significantly easier, quicker and cheaper for an issuer to raise substantial amounts of capital in a secondary fundraising. No alternative document will be required below this threshold, though issuers will have the option to publish a voluntary prospectus.
Under the new regime, all primary MTFs that allow retail participation (such as AIM) must require the publication of an “MTF admission prospectus” on all initial admissions and reverse takeovers (subject to specified exceptions).
Although not required to be approved by the FCA, an MTF admission prospectus will be subject to the same statutory responsibility and compensation provisions as apply to a regulated market prospectus.
Operators of primary MTFs will determine the relevant prospectus approval process and content requirements of their admission prospectus. They will also have discretion as to whether a prospectus will be required for secondary issuances. The LSE has confirmed that it will not require an MTF admission prospectus for secondary issues of shares on AIM (though this will be required for AIM IPOs).
It is hoped that the introduction of an admission prospectus will be welcomed by MTF issuers that are considering whether to make a retail offer. The ability to include retail investors without the need for an FCA approved prospectus will be an attractive option and should increase retail participation.
Whilst the FCA has maintained the bulk of the current prospectus requirements that apply to an IPO on a regulated market (including as to prospectus content), the new regime introduces significant reforms. Some of the key changes include:
First published on Accountancy Daily.
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