UNITED KINGDOM

BUSINESS AS USUAL

ARTICLE 9

ACCEPTED

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

PARTICULAR APPLICATIONS OF R 21

• INDUCEMENT FEES (R 21.2)

• LITIGATION

• INTERIM DIVIDENDS

• REFUSING TO OPEN THE COMPANY’S BOOKS

ARTICLE 11• OPTED OUT• IRRATIONAL?• MANAGERIAL DECISIONS –

Proper Purposes Rule• VOTING AND TRANSFER

RESTRICTIONS – Leave to the Market

ART 11: OPTING BACK IN

• RESTRICTIONS IN THE ARTICLES: PUT THE BURDEN ON THE COMPANY

- NO COMPENSATION

- ROLE OF CLASS RIGHTS

• CONTRACTUAL RESTRICTIONS

RECIPROCITY: ART 12(3)

• REJECTED BY UK

• WILL UK COMPANIES OPT INTO ART 11 TO AVOID RECIPROCITY BY FOREIGN TARGETS?

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

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

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)

PANEL RELAXATIONS

• Rule not normally applied to ‘chain acquisitions’

• New issues (with shareholder approval)• Rescue operations (with shareholder

protection)• Enforcement of security• Enfranchisement• Mistake

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