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UNITED KINGDOM
BUSINESS AS USUAL
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ARTICLE 9
ACCEPTED
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MINOR POINTS ON R 21
• Applies once a bid believed to be imminent
• Panel consent required for:
- prior decisions fully implemented
- prior decision not fully implemented but in ordinary course of business
- fulfilment of prior obligations
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PARTICULAR APPLICATIONS OF R 21
• INDUCEMENT FEES (R 21.2)
• LITIGATION
• INTERIM DIVIDENDS
• REFUSING TO OPEN THE COMPANY’S BOOKS
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ARTICLE 11• OPTED OUT• IRRATIONAL?• MANAGERIAL DECISIONS –
Proper Purposes Rule• VOTING AND TRANSFER
RESTRICTIONS – Leave to the Market
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ART 11: OPTING BACK IN
• RESTRICTIONS IN THE ARTICLES: PUT THE BURDEN ON THE COMPANY
- NO COMPENSATION
- ROLE OF CLASS RIGHTS
• CONTRACTUAL RESTRICTIONS
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RECIPROCITY: ART 12(3)
• REJECTED BY UK
• WILL UK COMPANIES OPT INTO ART 11 TO AVOID RECIPROCITY BY FOREIGN TARGETS?
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MANDATORY BID: R 9The longest rule in the Code
• Applies at 30% level• Applies to any further acquisition in 30 – 50%
range• Price highest paid in 12 months prior to the bid
or during the bid period (subject to Panel consent for a different level)
• Offer to be in cash/cash alternative• Offer to all classes of equity security, even if non-
voting• Conditional only on 50% result
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CONCERT PARTIESLongest definition in the Code
• Six presumptions of concerted action (which may be relaxed by the Panel)
- Group and associated companies- Company and its directors- Company and pension fund- Fund manager and discretionary clients- Advisers and clients- Directors of a target company
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INTER-RELATIONSHIP WITH SHAREHOLDER ACTIVISM
RULES APPLY TO ACQUISITIONS OF INTERESTS IN SHARES AS WELL AS THE ACQUISITION OF SHARES
- THIS INCLUDES LONG ECONOMIC EXPOSURES TO SHARES EVEN THOUGH THERE IS NO OWNERSHIP OF THEM (CONTRACTS FOR DIFFERENCES)
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PANEL RELAXATIONS
• Rule not normally applied to ‘chain acquisitions’
• New issues (with shareholder approval)• Rescue operations (with shareholder
protection)• Enforcement of security• Enfranchisement• Mistake
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THE PANEL AND ART 4
• PANEL SHOULD MAKE, INTERPRET, AND APPLY RULES AND HEAR APPEALS WITHOUT EXTERNAL CONTROL
• KEEPING THE COURTS OUT AND JUDICIAL REVIEW