C7C5C6C4Part 28Takeovers etc

Annotations:
Modifications etc. (not altering text)
C5

Pts. 1-39 modified (31.12.2020) by Regulation (EC) No. 2157/2001, Art. AAA1(3) (as inserted by The European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2018 (S.I. 2018/1298), regs. 1, 97 (with regs. 140-145) (as amended by S.I. 2020/523, regs. 1(2), 5(a)-(f)); 2020 c. 1, Sch. 5 para. 1(1))

C1Chapter 2Impediments to takeovers

Annotations:
Modifications etc. (not altering text)

Opting in and opting out

I1C2966Opting in and opting out

1

A company may by special resolution (an “opting-in resolution”) opt in for the purposes of this Chapter if the following F8five conditions are met in relation to the company.

2

The first condition is that the company has voting shares admitted to trading on a F5UK regulated market.

F73

The second condition is that the company’s articles of association do not contain any restrictions on the transfer of shares or, if they do contain any such restrictions, provide that they are not to apply to—

a

transfers to the offeror, or at the offeror’s direction to another person, during the offer period, or

b

transfers to any person at a time during the offer period when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company.

3A

The third condition is that the company’s articles of association—

a

do not contain any restrictions on rights to vote at a general meeting of the company, or

b

if they do contain any such restrictions, provide that they are not to have effect on rights to vote at a general meeting of the company that—

i

decides whether to take any action which might result in the frustration of the takeover bid, or

ii

is held at a time when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company,

unless the restrictions are compensated for by specific pecuniary advantages.

3B

The fourth condition is that the company’s articles of association do not contain any other provision which would be incompatible with the requirements of subsection (3C).

3C

Those requirements are—

a

multiple-vote shares are to carry only one vote each at a general meeting of the company that decides whether to take any action which might result in the frustration of the takeover bid,

b

multiple-vote shares are to carry only one vote each at a general meeting of the company which—

i

is the first such meeting to be held after the end of the offer period,

ii

is held at a time when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company, and

iii

is called at the offeror’s request under section 969 in order to amend the company’s articles of association or to appoint or remove members of the board of directors, and

c

at a time during the offer period when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company, shareholders are not to have any extraordinary rights to appoint or remove members of the board of directors.

3D

The references in subsections (3A)(b) and (3C)(a) to voting at a general meeting of the company that decides whether to take any action which might result in the frustration of the takeover bid includes a reference to voting on a written resolution concerned with that question.

3E

For the purposes of subsections (3A)(b)(i) and (3C)(a), action which might result in the frustration of the takeover bid is any action of that kind specified in rules under section 943(1) made in accordance with paragraphs 17 or 18 of Schedule 1C.

3F

The references in subsections (3), (3A) and (3C) to voting shares in the company do not include—

a

debentures, or

b

shares that, under the company’s articles of association, do not normally carry rights to vote at its general meetings (for example, shares carrying rights to vote that, under those articles, arise only where specified pecuniary advantages are not provided).

3G

In subsection (3C), “multiple-vote shares” means shares included in a distinct and separate class and carrying more than one vote each.

4

The F9fifth condition is that—

a

no shares conferring special rights in the company are held by—

i

a minister,

ii

a nominee of, or any other person acting on behalf of, a minister, or

iii

a company directly or indirectly controlled by a minister,

and

b

no such rights are exercisable by or on behalf of a minister under any enactment.

5

A company may revoke an opting-in resolution by a further special resolution (an “opting-out resolution”).

F116

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7

In subsection (4) “minister” means—

a

the holder of an office in Her Majesty's Government in the United Kingdom;

b

the Scottish Ministers;

c

a Minister within the meaning given by section 7(3) of the Northern Ireland Act 1998 (c. 47);

F1d

the Welsh Ministers;

and for the purposes of that subsection “minister” also includes the Treasury, the Board of Trade F2and, the Defence Council F3. . . .

8

The Secretary of State may by order subject to negative resolution procedure provide that subsection (4) applies in relation to a specified person or body that exercises functions of a public nature as it applies in relation to a minister.

“Specified” means specified in the order.

C3967Further provision about opting-in and opting-out resolutions

1

An opting-in resolution or an opting-out resolution must specify the date from which it is to have effect (the “effective date”).

2

The effective date of an opting-in resolution may not be earlier than the date on which the resolution is passed.

3

The F6second, third, fourth and fifth conditions in section 966 must be met at the time when an opting-in resolution is passed, but the first one does not need to be met until the effective date.

4

An opting-in resolution passed before the time when voting shares of the company are admitted to trading on a F4UK regulated market complies with the requirement in subsection (1) if, instead of specifying a particular date, it provides for the resolution to have effect from that time.

5

An opting-in resolution passed before the commencement of this section complies with the requirement in subsection (1) if, instead of specifying a particular date, it provides for the resolution to have effect from that commencement.

6

The effective date of an opting-out resolution may not be earlier than the first anniversary of the date on which a copy of the opting-in resolution was forwarded to the registrar.

7

Where a company has passed an opting-in resolution, any alteration of its articles of association that would prevent the F10second, third or fourth condition in section 966 from being met is of no effect until the effective date of an opting-out resolution passed by the company.