The Takeover Code (Code) is being amended to reflect the increasing use made by companies, shareholders and other market participants of electronic forms of communication and websites, together with legislative changes introduced by the Companies Act 2006 (CA 2006). The amendments are set out in full in Appendix B to RS 2008/3 and can be found at http://www.thetakeoverpanel.org.uk/new/consultation/DATA//RS200803.pdf The amendments to the Code will take effect on 30 March 2009 and will be applied to all offers and possible offers from that date.
ELECTRONIC COMMUNICATIONS, WEBSITES AND INFORMATION RIGHTS
The Code amendments mean that:
- Companies will be able to use electronic forms of communication (for example, email and websites) to send offer-related documents and information to target shareholders. There will be no requirement for shareholder approval in order to publish Code documents in electronic form or by means of website publication.
- A Code document will be treated as being 'sent' if it is sent in (i) hard copy form (as is currently the case), (ii) electronic form (e.g. by email) or (iii) published on a website, provided a notification is sent to the intended recipient in electronic form or hard copy form.
- A party to an offer will be free to choose the most convenient form of communication or a combination of them (hard copy, electronic or website).
- If a shareholder in the target has been elected to receive communications in hard copy, then under both the Code and CA 2006, all communications with that shareholder must be in hard copy.
- Certain information required to be in a Code document can be incorporated into the relevant document by reference to other sources of information.
- Certain Code documents, announcements and other information will be required to be published on the company website at the time of publication. All relevant documents, announcements and other offer-related information will be required to include details of the website on which a copy will be published. The website will need to be maintained during the course of an offer.
- Persons nominated to enjoy information rights under the CA 2006 will be entitled to receive information in relation to offers in the same way as shareholders.
MISCELLANEOUS CODE AMENDMENTS
The Panel has also published RS 2008/2 regarding other miscellaneous Code amendments. Most of the proposed changes are either clarificatory or codify existing practices. These include:
- Amending Rule 2.2(e) so that the Panel should be consulted prior to a target company seeking more than one potential bidder and, in addition, the Panel should be consulted if an offeror or offeree company wishes to approach more than a very restricted number of people in relation to a possible offer.
- Amending Rule 2.4 to clarify the requirements regarding statements by a potential offeror regarding the form and/or mix of consideration referred to in a possible offer announcement.
- Rule 8 and Rule 38.5 will be revised to provide that inaccurate information previously included in a dealing disclosure should be amended as soon as possible in a subsequent disclosure.
- The deletion of Rule 9.7 and the adoption of a new Rule 9.7 relating to voting restrictions and disposal of interests in shares by a person who has triggered a mandatory Rule 9 obligation.
- Rule 38.2 will be amended to include corporate brokers as one of the advisers to a bidder.
PROVISIONS EXTENDED TO THE ISLE OF MAN
The Companies Act 2006 (Extension of Takeover Panel Provisions) (Isle of Man) Order 2008 (SI 2008/3122) which comes into force on 1 March 2009 extends the provisions of Chapter 1 of Part 28 of the CA 2006 to the Isle of Man. From 1 March 2009 the Takeover Panel will supervise takeovers involving Isle of Man companies.
Key differences between the Code and CA 2006
- The CA 2006 makes provision for a company to communicate with its shareholders whereas the Code makes provision for shareholders to receive communication from both bidder and target.
- Under the CA 2006 shareholder consent must be obtained for the use of electronic forms of communication. In contrast, under the Code, no shareholder consent is needed to send Code documents to offeree company shareholders in electronic form amendment. This also applies to website publications.
- The Code requires bidder and target companies to set up a website and publish certain information on such website during the course of the offer. The CA 2006 has no equivalent requirement.