Executive Summary
- The case concerns Nationwide Building Society’s tax liability arising from an oversight: certain US Medium Term Notes issued in 2018-2019 were not listed on the London Stock Exchange (LSE), thus losing the quoted Eurobond exemption from UK withholding tax.
- Nationwide initially targeted both Bank of New York Mellon (BNY) as Trustee/Paying Agent and Allen & Overy (A&O) as legal adviser for liability; now only pursuing A&O.
- A&O seeks contribution from BNY, alleging BNY owed a duty to confirm listing status; BNY denies such duty and seeks summary judgment.
- The dispute centers on contractual duties under the Indenture and legal responsibilities related to note listing and withholding tax consequences.
Sanctions Highlights
- — No sanctions implications identified in the case.
Emerging Risks
- Legal risk for trustees and paying agents in confirming regulatory compliance (e.g., listing status) to avoid tax liabilities.
- Potential for increased scrutiny on legal advisers’ and trustees’ roles in structured finance transactions.
- Risk of costly litigation over technical oversights in bond issuance documentation and regulatory filings.
Geopolitical Impact
- The case highlights regulatory and tax enforcement rigor within the UK financial markets, impacting EU, UK, and US cross-border capital raising.
- UK’s withholding tax regime and listing requirements under the FCA’s Official List remain critical for international issuers.
- The involvement of UK courts and law firms (A&O, Hogan Lovells, Clyde & Co) underscores London’s role as a global financial and legal hub.
- The case may influence international investor confidence in UK bond markets post-Brexit, especially regarding tax certainty and regulatory compliance.
Economic Intelligence
- The oversight resulted in a “windfall” tax gain for HMRC and the UK Treasury, emphasizing the fiscal impact of regulatory technicalities.
- The US Medium Term Note Programme remains a significant capital-raising vehicle for UK issuers targeting US institutional investors.
- The case underscores the economic importance of listing status for tax efficiency in bond issuance.
- Potential financial exposure for legal advisers and trustees in structured finance may increase professional indemnity costs.
Strategic Recommendations
- Issuers should implement rigorous compliance checks to ensure listing applications are completed and confirmed to secure tax exemptions.
- Trustees and paying agents must clarify and document their duties regarding regulatory confirmations to mitigate liability risks.
- Legal advisers should enhance due diligence and client advisories on listing and tax implications in cross-border note issuances.
- Financial institutions and law firms should review contractual waivers and indemnities to limit exposure from technical oversights.
- Monitor UK regulatory and tax developments affecting bond issuance to anticipate emerging compliance risks.
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**Source Notes:**
Case Title: *Nationwide Building Society v Bank of New York Mellon, London Branch & Anor [2025] EWHC 1046 (Comm)*
Link: https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/1046.txt