Does UK Takeover Code apply to you? - ISLE OF MAN by Gill Crennell of Appleby ( Article courtesy of Isle of Man Newspapers) Almost one year ago, significant changes were made to the UK Takeover Code widening its application. Given their significance, it is worth revisiting the changes. The Code is a statutory set of rules which shape the structure and timetable of takeovers, administered by the UK Panel on Takeovers and Mergers (Panel) and aim to ensure fair treatment of target shareholders in takeover bids. Prior to September 30, if a company’s securities were admitted to trading on a regulated market in the UK (e.g. the London Stock Exchange or the Channel Islands Securities Exchange), the Code automatically applied. Where companies were not admitted to trading on such markets or traded on a UK multilateral trading facility (MTF), (e.g. AIM), the Code only applied if the company’s management and control was considered to be in the UK, the Channel Islands or the Isle of Man (known as the ‘residency test’). Key Changes Listed/Public Companies: The Code now applies to companies with their registered offices in the UK, Channel Island and Isle of Man if any of the securities are admitted to trading on (i) a UK regulated market (e.g. the Main Market or ISDX Main Board), any stock exchange in the Channel Islands or on an MTF (e.g. AIM or the ISDX Growth Market), irrespective of their place of central management and control. The residency test continues to apply to a public or private company (subject to the 10 year rule, see below) with its registered office in the UK, Channel Islands or the Isle of Man whose securities are not admitted to trading on a public market. The Code therefore applies to the following companies only if the Panel considers that they have their place of central management and control in the UK, Channel Islands or the Isle of Man: • a public company whose securities are admitted to trading solely on a public market which is neither a UK or EEA regulated market, nor a UK MTF, nor a stock exchange in the Channel Islands; • a public company whose securities are not traded on any public market; or • a private company (subject to the 10 year rule, see below). The Panel had initially proposed that the Code should automatically apply to UK, Channel Island or Isle of Man registered companies whose securities are admitted to trading solely on an overseas market, but instead it retained the residency test in respect of such companies. Private Companies: The application of the Code to private companies with their registered offices in the UK, Channel Islands or Isle of Man has also changed. Previously, a company was potentially subject to the Code because, broadly, it satisfied the residency test and had securities admitted to trading within the previous 10 years. This has now changed as follows: • by simplifying the ‘10 year test’ into a requirement that the company’s securities have been admitted to trading on a regulated market or a MTF in such jurisdictions at any time during the relevant 10 year period; and • by amending the Code so it applies to private companies which have actually filed a prospectus for the offer, admission to trading or issue of securities (the previous test was whether a company was required to file a prospectus). Implications for firms subject to the Code If applicable, the Code regulates takeover offers for the company. Affected companies should review: (i) their articles of association and remove any conflicting provisions, (ii) shareholder profiles to determine whether any of the company’s shareholders form a concert party, where further acquisitions would trigger a Rule 9 (of the Code) mandatory bid obligation. Where a share buyback programme is in place, Panel clearance and independent shareholder approval may be required if a shareholder could end up holding 30 per cent-plus as a result of a buyback. Non-compliance with the Code may result in sanctions by the Panel and the UK Financial Conduct Authority. IOMTODAY.CO.IM Report : bit.ly/Y6eZf0
Posted on: Wed, 24 Sep 2014 12:34:00 +0000
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