Amendments to the Takeover Code relating to electronic communications and other miscellaneous amendments will take effect today, 30 March 2009.
Electronic Distribution of Offer Documentation
Today's changes, which are summarised below, allow bidders and targets to send documentation relating to an offer using electronic communication.
- Documents required to be sent to any person under the Code may be sent in hard copy form, in electronic form, or by being published on a website, in which case a "website notification" must be sent, in hard copy form or electronic form, to the intended recipients. Shareholder approval for electronic communication is not required under the Code, but the offeree should ensure that it complies with the relevant provisions of the Companies Act 2006, the Disclosure and Transparency Rules and its articles with regard to electronic communications.
- The new regime is permissive, and parties to offers can choose the most convenient form of communication with a shareholder.
- Acceptance forms, withdrawal forms, proxy cards and other forms connected with an offer must still be sent in hard copy form.
- Recipients may request a hard copy of documents received electronically, and may request that all future documents in connection with the offer be sent in hard copy form.
- Website notifications must not convey any other substantive information, and must not be used for "argument or invective" for example to persuade shareholders to accept the offer.
The amended Code also contains the following new provisions:
- Certain information required to be in a Code document will be permitted to be incorporated into the relevant document by reference to other sources of information. The relevant information will be required to be published on a website at the same time as the document itself is published. In addition, any person sent a Code document that incorporates information by reference will be able to request a hard copy of the relevant information.
- Persons nominated to enjoy "information rights" pursuant to the Companies Act 2006 will be entitled to receive information in relation to offers in the same way as shareholders.
- Documents sent to shareholders in connection with an offer, and announcements made by either party, with certain exceptions, must be published on a website by noon the following day.
The following amendments also come into force today. These largely clarify the Panel's current position and incorporate existing practice into the rules.
Rule 2.2 has been amended to clarify that the Panel should be consulted where negotiations or discussions are to be extended to more than a restricted number of people by either the offeror or the offeree. In line with its guidance in Practice Statement 20, Note 1 has been amended to state that the Panel should be consulted before an offeree company or the seller of a controlling stake seeks more than one potential purchaser or offeror.
Rule 2.4 has been amended to clarify the position in respect of the the binding nature of statements concerning the value of an offer, in particular where mixed consideration is offered.
Rule 9.7, which required Panel consent to board appointments of nominees by a Rule 9 offeror, has been deleted. A new Rule 9.7 has been adopted which requires that where the Panel has agreed to the disposal of shares as an alternative to a mandatory offer, it must be consulted as to the interests required to be disposed of and the application of restrictions on the exercise of voting rights attaching to the relevant shares pending disposal.
Rule 8 and Rule 38.5 have been revised to make it clear that if incorrect details are put in dealing disclosures they should be amended as soon as possible in a subsequent disclosure and that the subsequent disclosure should (i) state clearly that it corrects details previously disclosed; (ii) identify the disclosure or disclosures being corrected; and (iii) provide sufficient details for the reader to understand the nature of the corrections being made.
Rule 38.2, which prohibits dealings in offeree securities between an offeror, or anyone acting in concert with it, and an exempt principal trader connected with the offeror during an offer period has been amended to specifically include the offeror's corporate broker within the meaning of the "advisors to the offereror" who are responsible for ensuring compliance with this rule.