Companies Act 2006

Section 943

[F1 SCHEDULE 1C U.K. Rules of the Takeover Panel: general principles and other provision

Textual Amendments

F1 Sch. 1C inserted (31.12.2020) by The Takeovers (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/217), reg. 1, Sch.; 2020 c. 1, Sch. 5 para. 1(1)

Modifications etc. (not altering text)

C1 Sch. 1C applied (31.12.2020) by S.I. 2009/2436, Sch. 1 para 14(A1) (as inserted by The Takeovers (Amendment) (EU Exit) Regulations 2019 (S.I. 2019/217), regs. 1, 20; 2020 c. 1, Sch. 5 para. 1(1))

PART 1 U.K. General principles

1. (1) All holders of the securities of an offeree company of the same class must be afforded equivalent treatment. U.K.

(2) If a person acquires control of a company, the other holders of securities must be protected.

2. (1) The holders of the securities of an offeree company must have sufficient time and information to enable them to reach a properly informed decision on the takeover bid. U.K.

(2) Where it advises the holders of securities, the board of directors of the offeree company must give its views on the effects of implementation of the takeover bid on—

(a) employment,

(b) conditions of employment, and

(c) the locations of the company’s places of business.

3. U.K. The board of directors of an offeree company must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the takeover bid.

4. U.K. False markets must not be created in the securities of—

(a) the offeree company,

(b) if the offeror is a company, that company, or

(c) any other company concerned by the takeover bid,

in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted.

5. U.K. An offeror must announce a takeover bid only after—

(a) ensuring that the offeror can fulfil in full any cash consideration, if such is offered, and

(b) taking all reasonable measures to secure the implementation of any other type of consideration.

6. U.K. An offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a takeover bid for its securities.

PART 2 U.K. Other provision

Protection of minority shareholders, the mandatory takeover bid and the equitable price U.K.

7. (1) Rules must ensure that a person (“P”) is required to make a takeover bid (“a mandatory takeover bid”) where— U.K.

(a) P, or any person acting in concert with P, has acquired securities in a company, and

(b) the acquired securities, when added to any existing securities held by P or by persons acting in concert with P, directly or indirectly give P control of that company.

(2) Rules must ensure that the mandatory takeover bid must be addressed at the earliest opportunity to all of the holders of those securities for all their holdings at the equitable price.

(3) Rules must ensure that where control has been acquired following a voluntary takeover bid to all the holders of securities for all their holdings, the obligation referred to in sub-paragraph (1) to make a mandatory takeover bid no longer applies.

8. (1) For the purposes of paragraph 7, “the equitable price” is the highest price paid for the same securities by the offeror, or by persons acting in concert with the offeror, over a period, determined by rules, of not less than 6 and not more than 12 months before the mandatory takeover bid is announced. U.K.

(2) Rules must ensure that if, after the mandatory takeover bid has been made public and before the offer closes for acceptance, the offeror or any person acting in concert with the offeror purchases securities at a price higher than the offer price, the offeror must increase the offer consideration so that it is not less than the highest price paid for the securities so acquired.

(3) Rules may confer power on the Panel to adjust the equitable price in circumstances and in accordance with criteria that are clearly determined.

(4) Rules must ensure that any decision by the Panel to adjust the equitable price must be substantiated and made public.

9. (1) Rules must ensure that the offeror may offer by way of consideration for the securities which are the subject of the mandatory takeover bid— U.K.

(a) securities,

(b) cash, or

(c) a combination of both.

(2) Rules must ensure that cash must be offered—

(a) as an alternative where the consideration offered does not consist of liquid securities admitted to trading on a UK regulated market, and

(b) at least as an alternative where the securities purchased for cash over a relevant period by the offeror or by persons acting in concert with the offeror, taken together, carry 5% or more of the voting rights in the offeree company.

(3) “A relevant period” is a period—

(a) beginning at the same time as the period determined in accordance with paragraph 8(1), and

(b) ending when the offer closes for acceptance.

(4) Rules may require that cash must be offered, at least as an alternative, in all cases.

10. U.K. Any rules that make provision to protect the interests of the holders of securities that goes beyond the provision referred to in paragraphs 7 to 9 must not hinder the normal course of a takeover bid.

Information concerning takeover bids U.K.

11. (1) Rules must ensure that a decision to make a takeover bid must be made public without delay and the Panel must be informed of the bid. U.K.

(2) Rules may require that the Panel is informed before such a decision is made public.

(3) Rules must ensure that, as soon as the takeover bid has been made public, the boards of directors of the offeree company and of the offeror must inform—

(a) the representatives of their respective employees, or

(b) where there are no such representatives, the employees themselves.

12. (1) Rules must ensure that an offeror must draw up and make public in good time an offer document containing the information necessary to enable the holders of the offeree company’s securities to reach a properly informed decision on the takeover bid. U.K.

(2) Rules must ensure that, before the offer document is made public, the offeror must provide a copy to the Panel.

(3) Rules must ensure that, when the offer document is made public, the boards of directors of the offeree company and of the offeror must communicate it—

(a) to the representatives of their respective employees, or

(b) where there are no such representatives, to the employees themselves.

(4) Rules must ensure that the offer document must state at least—

(a) the terms of the takeover bid,

(b) the identity of the offeror and, where the offeror is a company, the company’s type, name and registered office,

(c) the securities or, where appropriate, the class or classes of securities for which the takeover bid is made,

(d) the consideration offered for each security or class of securities and, in the case of a mandatory takeover bid, the method employed in determining it, with particulars of the way in which that consideration is to be paid,

(e) the compensation offered for the rights which might be removed as a result of a company’s opting-in resolution under Chapter 2, with particulars of the way in which that compensation is to be paid and the method employed in determining it,

(f) the maximum and minimum percentages or quantities of securities which the offeror undertakes to acquire,

(g) details of any existing holdings of the offeror, and of any person acting in concert with the offeror, in the offeree company,

(h) all the conditions to which the takeover bid is subject,

(i) the offeror’s intentions with regard to the future business of the offeree company,

(j) the offeror’s intentions with regard to the safeguarding of the jobs of the employees and management of the offeree company, including any material change in the conditions of employment,

(k) the offeror’s strategic plans for the offeree company, and their likely repercussions on employment and the locations of the company’s places of business,

(l) if the offeror is a company and in so far as it is affected by the takeover bid—

(i) the offeror’s intentions with regard to its future business,

(ii) the offeror’s intentions with regard to the safeguarding of the jobs of its employees and management, including any material change in the conditions of employment, and

(iii) the offeror’s strategic plans for itself, and their likely repercussions on employment and the locations of its places of business,

(m) the time allowed for acceptance of the takeover bid,

(n) where the consideration offered includes securities of any kind, information concerning those securities,

(o) information concerning the financing for the takeover bid,

(p) the identity of persons acting in concert with the offeror or with the offeree company and, in the case of companies, the types, names, registered offices and relationships with the offeror and, where possible, with the offeree company, and

(q) the national law which will govern contracts concluded between the offeror and the holders of the offeree company’s securities as a result of the takeover bid and the competent courts.

Time allowed for acceptance U.K.

13. (1) Rules must ensure that, subject to any provision made in accordance with paragraph 14, the time allowed for the acceptance of a takeover bid must not be less than the period of two weeks nor more than the period of 10 weeks beginning with the day after the date of publication of the offer document. U.K.

(2) Rules may provide that the maximum period allowed for acceptance of a takeover bid may be extended on the condition that the offeror gives at least two weeks’ notice of the offeror’s intention to close the takeover bid.

14. (1) Rules may contain provision changing the time allowed for the acceptance of a takeover bid in specific cases. U.K.

(2) Rules may confer power on the Panel to grant a derogation from the time allowed for the acceptance of a takeover bid in order to allow the offeree company to call a general meeting of the company to consider the takeover bid.

Disclosure U.K.

15. U.K. Rules must ensure that a takeover bid must be made public in such a way as to ensure market transparency and integrity for the securities of—

(a) the offeree company,

(b) if the offeror is a company, that company, or

(c) any other company affected by the takeover bid,

in particular in order to prevent the publication or dissemination of false or misleading information.

16. U.K. Rules must ensure that all information and documents required by provision made in accordance with paragraphs 11 and 12 must be disclosed in such a manner as to ensure that they are both readily and promptly available—

(a) to the holders of securities admitted to trading on a UK regulated market who are located in the United Kingdom, and

(b) to the representatives of the employees of the offeree company and of the offeror, or where there are no such representatives, to the employees themselves.

Obligations of the board of directors of the offeree company U.K.

17. (1) Rules must ensure that, during the relevant period, the board of directors of the offeree company must obtain the prior authorisation of a general meeting of the company given for this purpose— U.K.

(a) before taking any action, other than seeking alternative takeover bids, which may result in the frustration of the bid, and

(b) in particular, before issuing any shares which may result in a lasting impediment to the offeror’s acquiring control of the offeree company.

(2) “The relevant period”—

(a) begins when the board of directors of the offeree company receives the information that a decision to make a takeover bid has been made public, or at such earlier stage as rules may determine, and

(b) ends when the result of the bid is made public or the bid lapses.

(3) Rules must ensure that, with regard to decisions taken before the beginning of the relevant period and not yet partly or fully implemented, a general meeting of the company must approve or confirm any decision—

(a) which does not form part of the normal course of the company’s business, and

(b) the implementation of which may result in the frustration of the takeover bid.

(4) For the purposes of this paragraph, where a company has a two-tier board structure, “board of directors” means both the management board and the supervisory board.

18. (1) Rules must ensure that the board of directors of the offeree company must draw up and make public a document setting out its opinion of the takeover bid and the reasons for the opinion, including its views on— U.K.

(a) the effects of implementation of the takeover bid on all the company’s interests and specifically employment, and

(b) the offeror’s strategic plans for the offeree company and their likely repercussions on employment and the locations of the company’s places of business as set out in the offer document in accordance with paragraph 12(4)(k).

(2) Rules must ensure that the board of directors of the offeree company must at the same time communicate that opinion—

(a) to the representatives of its employees, or

(b) where there are no such representatives, to the employees themselves.

(3) Rules must ensure that, where the board of directors of the offeree company receives in good time a separate opinion from the representatives of its employees on the effects of the takeover bid on employment, that opinion must be appended to the document.

Other rules applicable to the conduct of takeover bids U.K.

19. U.K. Rules must make provision governing the conduct of takeover bids which must address at least—

(a) the lapsing of takeover bids,

(b) the revision of takeover bids,

(c) competing takeover bids,

(d) the disclosure of the results of takeover bids, and

(e) the irrevocability of takeover bids and the conditions permitted.

Interpretation U.K.

20. (1) In this Schedule— U.K.

• “offer document” means a document required to be published by rules made in accordance with paragraph 12;

• “offeree company” means a company, the securities of which are the subject of a takeover bid;

• “offeror”, in relation to a takeover bid, means the person making the bid;

• “rules” means rules made by the Panel under section 943(1);

• “securities” means transferable securities carrying voting rights in a company;

• “takeover bid” means a public offer made to the holders of the securities of a company to acquire some or all of those securities, whether mandatory or voluntary, which follows or has as its objective the acquisition of control of that company, but does not include cases where the offer is made by the company itself;

• “voting rights” means rights to vote at general meetings of the company in question.

(2) For the purposes of this Schedule, securities are of one class if the rights attached to them are in all respects uniform; and for that purpose the rights attached to securities are not regarded as different from those attached to other securities by reason only that they do not carry the same rights to dividends in the twelve months immediately following their allotment.

(3) In this Schedule, “persons acting in concert” means persons who co-operate with the offeror or the offeree company on the basis of an agreement or understanding aimed at—

(a) acquiring control of the offeree company, or

(b) frustrating the successful outcome of a takeover bid.

(4) For the purposes of this Schedule, where a person (“A”) is a subsidiary undertaking of another person (“B”) within the meaning of section 420 of the Financial Services and Markets Act 2000 (but disregarding subsections (2)(b) and (3) of that section, and subsections (2)(c) and (4)(b) of section 1162 of the Companies Act 2006)—

(a) A is deemed to be acting in concert with B and with any other subsidiary undertakings of B, and

(b) B and those subsidiary undertakings are deemed to be acting in concert with A.

21. (1) In this Schedule, other than in the listed provisions, “company” means a company that has securities admitted to trading on a UK regulated market. U.K.

(2) The listed provisions are—

• paragraph 4(b) and (c);

• paragraph 12(4)(b), (l) and (p);

• paragraph 15(b) and (c).

(3) Section 1 (meaning of “company”) does not apply for the purposes of the listed provisions.]