Anti-bribery and anti-corruption (ABAC) clauses
Corruption costs 5% of the world's GDP according to the UN. Laws against corruption have been in place for decades. However, the inclusion of ABAC reps and warranties in sale and purchase agreements (SPAs) has been a gradual process.
In 2005, despite the OECD Anti-Corruption Convention already being in effect for several years, only 25% of the SPAs contained ABAC clauses. This figure has now increased to 82% (2020).
Not all ABAC reps and warranties are the same: knowledge, time and materiality are typical qualifiers. A single knowledge qualifier is most often used (36%), followed by a knowledge plus materiality qualifier (23%). 22% of ABAC clauses are unqualified. There are jurisdictional differences as well.
MARTINI analysed over 1,000 multi-jurisdictional SPAs in the last 15 years on ESG-related clauses.
Preventing bribery and corruption is but only one component of the #ESG (Environmental, Social, and Governance) framework.
In our next issue, we will have a closer look at the ‘Weinstein clause’. We will predict the speed of inclusion of the ‘Weinstein clause’ in SPAs based on past trends.
Stay tuned so that you stay ahead of the curve!
A lawyer turned entrepreneur. Flora enjoys applying her legal skills with a brand new perspective. Formerly an M&A lawyer at Linklaters London, Hong Kong & Shanghai.