U.K. – TO Brexit Takeover Changes

U.K. – TO Brexit Takeover Changes

On 5 November 2018, UK TO Panel proposed Brexit amends to takeover code.

Legal Framework

  • Section 2 of paper describes legislative framework within which the Code currently operates and changes which will be made to that framework as a result of Brexit.
  • In summary directive 2004/25/EC on takeover bids will cease to apply in the UK.
  • And section 943(1) of the Companies Act 2006, which currently requires panel to
    make rules giving effect to certain articles of takeovers directive will be amended.
  • To require panel to make rules, in accordance with a new schedule 1C to the Act.
  • Amendment to be made by Takeovers (Amendment) (EU Exit) Regulations 2019.
  • Takeovers (EU Exit) Regulations set out in appendix A and the amendment which those rules will make to part 1 of chapter 28 of the Act are set out in appendix B.

Shared Jurisdiction

  • Section 3 explains the implications of the shared jurisdiction regime not applying.
  • Shared jurisdiction regime applies to offers for companies which have registered
    office in one MS of EEA and the securities admitted to trading in another EEA MS.
  • Proposes deletion of section 3(a)(iii) (shared jurisdiction) of introduction to code.
  • Which sets out rules re: offers for shared jurisdiction companies code applies to.
  • Upon the deletion of section 3(a)(iii), code would no longer apply to the following.
  • A company which has registered office in EEA member state (i.e. not in the UK),
    whose securities admitted to trading on a market in UK (but not in that EEA MS).
  • A company which has registered office in UK, and whose securities are admitted
    to trading on regulated market in EEA MS (and not on a regulated marked in UK).
  • And which does not satisfy residency test, in section 3(a)(ii) of the introduction.
  • Code would then apply (in full) to an offer for company which has its registered
    office in UK and whose securities are admitted to trading on a market in EEA MS.
  • If that company satisfies the residency test in section 3(a)(ii) of the introduction.
  • Details of companies to which code currently applies are set out in Appendix C.

Effectiveness

  • Comments to be received by Monday, 17 December 2018.