Takeover Code Flashcards
Background of Takeover Code
1960s Growth in number/ size of bids
1968 Bank of England “City Code”
Aim of Takeover Code
Protect shareholders in both companies
Fair play (importance of spirit) - principles based
Designed to promote integrity of financial market
however - not concerned with financial/commercial advantages (CMA takes look into competition factor)
Application of Takeover Code (status of target company only)
Residence status - UK , CI , IOM - that are traded on a trading venue
Legal status - ALL PLCs whether listed or not
CMA
Competitions market authoritiy
2014
single powerful voice that advocates competition (government)
Advantages of Takeover Code (when non statutory)
Flexible adjustable
Advance Consultation possible (i.e. takeover panel)
Speed decisions
Adherence to principles
Involvement of practitioners
Non statutory language - understandable
What Law came in made take-over safer
EU Takeover Markets Directive ( MAY 2006)
Takeovers easier / safer single market
Panel becomes statutory body
Statutory provisions in Companies Act 2006 + amendments to code
Takeover Panel Sanctions
Private reprimand - alert company before going public
Public Censure - damges reputation
Reporting offender to the regulator (FCA) or professional body
FCA Sanctions for breach of takeover code
Market Conduct principle 5
“Cold shoulder” provisions
Normal statuary provisions over authorised persons
Market abuse powers if relevant
Statutory powers of panel under CA 2006
Since takeover directive
Make rules for takeover bids and implement them
Production of documents
Formal directions given to secure compliance with rules
Order payments of compensation for breaches
Impose sanctions for breaches of rules/ failure to comply
6 Principles of Takeover Code
1) Equivalent protection for all shareholders of target
2) Shareholders of target have sufficient time and info to decide
3) Board of target must act in interest of company as a whole
4) no false markets created - equal treatment
5) Bid only if they can meet full consideration ( meet cash)
6) No undue hindrance in conduct of targets affairs
