| Company Law Reform Bill [Lords] - continued | House of Commons |
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Meaning of “takeover offer” Margaret Hodge NC352 To move the following Clause:— ‘(1) For the purposes of this Chapter an offer to acquire shares in a company is a “takeover offer” if the following two conditions are satisfied in relation to the offer. (2) The first condition is that it is an offer to acquire— (a) all the shares in a company, or (b) where there is more than one class of shares in a company, all the shares of one or more classes, other than shares that at the date of the offer are already held by the offeror. Section (Shares already held by the offeror etc) contains provision supplementing this subsection. (3) The second condition is that the terms of the offer are the same— (a) in relation to all the shares to which the offer relates, or (b) where the shares to which the offer relates include shares of different classes, in relation to all the shares of each class. Section (Cases where offer treated as being on same terms) contains provision treating this condition as satisfied in certain circumstances. (4) In subsections (1) to (3) “shares” means shares, other than relevant treasury shares, that have been allotted on the date of the offer (but see subsection (5)). (5) A takeover offer may include among the shares to which it relates— (a) all or any shares that are allotted after the date of the offer but before a specified date; (b) all or any relevant treasury shares that cease to be held as treasury shares before a specified date; (c) all or any other relevant treasury shares. (6) In this section— “relevant treasury shares” means shares that— (k) are held by the company as treasury shares on the date of the offer, or (l) become shares held by the company as treasury shares after that date but before a specified date; “specified date” means a date specified in or determined in accordance with the terms of the offer. (7) Where the terms of an offer make provision for their revision and for acceptances on the previous terms to be treated as acceptances on the revised terms, then, if the terms of the offer are revised in accordance with that provision— (a) the revision is not to be regarded for the purposes of this Chapter as the making of a fresh offer, and (b) references in this Chapter to the date of the offer are accordingly to be read as references to the date of the original offer.’. Shares already held by the offeror etc Margaret Hodge NC353 To move the following Clause:— ‘(1) The reference in section (Meaning of “takeover offer”)(2) to shares already held by the offeror includes a reference to shares that he has contracted to acquire, whether unconditionally or subject to conditions being met. This is subject to subsection (2). (2) The reference in section (Meaning of “takeover offer”)(2) to shares already held by the offeror does not include a reference to shares that are the subject of a contract— (a) intended to secure that the holder of the shares will accept the offer when it is made, and (b) entered into— (i) by deed and for no consideration, (ii) for consideration of negligible value, or (iii) for consideration consisting of a promise by the offeror to make the offer. (3) In relation to Scotland, this section applies as if the words “by deed and” in subsection (2)(b)(i) were omitted. (4) The condition in section (Meaning of “takeover offer”)(2) is treated as satisfied where— (a) the offer does not extend to shares that associates of the offeror hold or have contracted to acquire (whether unconditionally or subject to conditions being met), and (b) the condition would be satisfied if the offer did extend to those shares. (For further provision about such shares, see section (Shares to which an offer relates)(2)).’. Cases where offer treated as being on same terms Margaret Hodge NC354 To move the following Clause:— ‘(1) The condition in section (Meaning of “takeover offer”)(3) (terms of offer to be the same for all shares or all shares of particular classes) is treated as satisfied where subsection (2) or (3) below applies. (2) This subsection applies where— (a) shares carry an entitlement to a particular dividend which other shares of the same class, by reason of being allotted later, do not carry, (b) there is a difference in the value of consideration offered for the shares allotted earlier as against that offered for those allotted later, (c) that difference merely reflects the difference in entitlement to the dividend, and (d) the condition in section (Meaning of “takeover offer”)(3) would be satisfied but for that difference. (3) This subsection applies where— (a) the law of a country or territory outside the United Kingdom— (i) precludes an offer of consideration in the form, or any of the forms, specified in the terms of the offer (“the specified form”), or (ii) precludes it except after compliance by the offeror with conditions with which he is unable to comply or which he regards as unduly onerous, (b) the persons to whom an offer of consideration in the specified form is precluded are able to receive consideration in another form that is of substantially equivalent value, and (c) the condition in section (Meaning of “takeover offer”)(3) would be satisfied but for the fact that an offer of consideration in the specified form to those persons is precluded.’. Shares to which an offer relates Margaret Hodge NC355 To move the following Clause:— ‘(1) Where a takeover offer is made and, during the period beginning with the date of the offer and ending when the offer can no longer be accepted, the offeror— (a) acquires or unconditionally contracts to acquire any of the shares to which the offer relates, but (b) does not do so by virtue of acceptances of the offer, those shares are treated for the purposes of this Chapter as excluded from those to which the offer relates. (2) For the purposes of this Chapter shares that an associate of the offeror holds or has contracted to acquire, whether at the date of the offer or subsequently, are not treated as shares to which the offer relates, even if the offer extends to such shares. In this subsection “contracted” means contracted unconditionally or subject to conditions being met. (3) This section is subject to section (Right of offeror to buy out minority shareholder)(8) and (9).’. Effect of impossibility etc of communicating or accepting offer Margaret Hodge NC356 To move the following Clause:— ‘(1) Where there are holders of shares in a company to whom an offer to acquire shares in the company is not communicated, that does not prevent the offer from being a takeover offer for the purposes of this Chapter if— (a) those shareholders have no registered address in the United Kingdom, (b) the offer was not communicated to those shareholders in order not to contravene the law of a country or territory outside the United Kingdom, and (c) either— (i) the offer is published in the Gazette, or (ii) the offer can be inspected, or a copy of it obtained, at a place in an EEA State or on a website, and a notice is published in the Gazette specifying the address of that place or website. (2) Where an offer is made to acquire shares in a company and there are persons for whom, by reason of the law of a country or territory outside the United Kingdom, it is impossible to accept the offer, or more difficult to do so, that does not prevent the offer from being a takeover offer for the purposes of this Chapter. (3) It is not to be inferred— (a) that an offer which is not communicated to every holder of shares in the company cannot be a takeover offer for the purposes of this Chapter unless the requirements of paragraphs (a) to (c) of subsection (1) are met, or (b) that an offer which is impossible, or more difficult, for certain persons to accept cannot be a takeover offer for those purposes unless the reason for the impossibility or difficulty is the one mentioned in subsection (2).’. Right of offeror to buy out minority shareholder Margaret Hodge NC357 To move the following Clause:— ‘(1) Subsection (2) applies in a case where a takeover offer does not relate to shares of different classes. (2) If the offeror has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire— (a) not less than 90% in value of the shares to which the offer relates, and (b) in a case where the shares to which the offer relates are voting shares, not less than 90% of the voting rights carried by those shares, he may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he desires to acquire those shares. (3) Subsection (4) applies in a case where a takeover offer relates to shares of different classes. (4) If the offeror has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire— (a) not less than 90% in value of the shares of any class to which the offer relates, and (b) in a case where the shares of that class are voting shares, not less than 90% of the voting rights carried by those shares, he may give notice to the holder of any shares of that class to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he desires to acquire those shares. (5) In the case of a takeover offer which includes among the shares to which it relates— (a) shares that are allotted after the date of the offer, or (b) relevant treasury shares (within the meaning of section (Meaning of “takeover offer”)) that cease to be held as treasury shares after the date of the offer, the offeror’s entitlement to give a notice under subsection (2) or (4) on any particular date shall be determined as if the shares to which the offer relates did not include any allotted, or ceasing to be held as treasury shares, on or after that date. (6) Subsection (7) applies where— (a) the requirements for the giving of a notice under subsection (2) or (4) are satisfied, and (b) there are shares in the company which the offeror, or an associate of his, has contracted to acquire subject to conditions being met, and in relation to which the contract has not become unconditional. (7) The offeror’s entitlement to give a notice under subsection (2) or (4) shall be determined as if— (a) the shares to which the offer relates included shares falling within paragraph (b) of subsection (6), and (b) in relation to shares falling within that paragraph, the words “by virtue of acceptances of the offer” in subsection (2) or (4) were omitted. (8) Where a takeover offer is made and, during the period beginning with the date of the offer and ending when the offer can no longer be accepted, the offeror— (a) acquires or unconditionally contracts to acquire any of the shares to which the offer relates, but (b) does not do so by virtue of acceptances of the offer, then, if subsection (10) applies, the offeror is treated for the purposes of this section as having acquired or contracted to acquire those shares by virtue of acceptances of the offer. (9) Where a takeover offer is made and, during the period beginning with the date of the offer and ending when the offer can no longer be accepted, an associate of the offeror acquires or unconditionally contracts to acquire any of the shares to which the offer relates, then, if subsection (10) applies, those shares are treated for the purposes of this section as shares to which the offer relates. (10) This subsection applies if— (a) at the time the shares are acquired or contracted to be acquired as mentioned in subsection (8) or (9) (as the case may be), the value of the consideration for which they are acquired or contracted to be acquired (“the acquisition consideration”) does not exceed the value of the consideration specified in the terms of the offer, or (b) those terms are subsequently revised so that when the revision is announced the value of the acquisition consideration, at the time mentioned in paragraph (a), no longer exceeds the value of the consideration specified in those terms.’. Further provision about notices given under section (Right of offeror to buy out minority shareholder) Margaret Hodge NC358 To move the following Clause:— ‘(1) A notice under section (Right of offeror to buy out minority shareholder) must be given in the prescribed manner. (2) No notice may be given under section (Right of offeror to buy out minority shareholder)(2) or (4) after the end of— (a) the period of three months beginning with the day after the last day on which the offer can be accepted, or (b) the period of six months beginning with the date of the offer, where that period ends earlier and the offer is one to which subsection (3) below applies. (3) This subsection applies to an offer if the time allowed for acceptance of the offer is not governed by rules under section 643(1) that give effect to Article 7 of the Takeovers Directive. In this subsection “the Takeovers Directive” has the same meaning as in section 643. (4) At the time when the offeror first gives a notice under section (Right of offeror to buy out minority shareholder) in relation to an offer, he must send to the company— (a) a copy of the notice, and (b) a statutory declaration by him in the prescribed form, stating that the conditions for the giving of the notice are satisfied. (5) Where the offeror is a company (whether or not a company within the meaning of this Act) the statutory declaration must be signed by a director. (6) A person commits an offence if— (a) he fails to send a copy of a notice or a statutory declaration as required by subsection (4), or (b) he makes such a declaration for the purposes of that subsection knowing it to be false or without having reasonable grounds for believing it to be true. (7) It is a defence for a person charged with an offence for failing to send a copy of a notice as required by subsection (4) to prove that he took reasonable steps for securing compliance with that subsection. (8) A person guilty of an offence under this section is liable— (a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both); (b) on summary conviction— (i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximum; (ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximum.’. Effect of notice under section (Right of offeror to buy out minority shareholder) Margaret Hodge NC359 To move the following Clause:— ‘(1) Subject to section (Applications to the court), this section applies where the offeror gives a shareholder a notice under section (Right of offeror to buy out minority shareholder). (2) The offeror is entitled and bound to acquire the shares to which the notice relates on the terms of the offer. (3) Where the terms of an offer are such as to give the shareholder a choice of consideration, the notice must give particulars of the choice and state— (a) that the shareholder may, within six weeks from the date of the notice, indicate his choice by a written communication sent to the offeror at an address specified in the notice, and (b) which consideration specified in the offer will apply if he does not indicate a choice. The reference in subsection (2) to the terms of the offer is to be read accordingly. (4) Subsection (3) applies whether or not any time-limit or other conditions applicable to the choice under the terms of the offer can still be complied with. (5) If the consideration offered to or (as the case may be) chosen by the shareholder— (a) is not cash and the offeror is no longer able to provide it, or (b) was to have been provided by a third party who is no longer bound or able to provide it, the consideration is to be taken to consist of an amount of cash, payable by the offeror, which at the date of the notice is equivalent to the consideration offered or (as the case may be) chosen. (6) At the end of six weeks from the date of the notice the offeror must immediately— (a) send a copy of the notice to the company, and (b) pay or transfer to the company the consideration for the shares to which the notice relates. Where the consideration consists of shares or securities to be allotted by the offeror, the reference in paragraph (b) to the transfer of the consideration is to be read as a reference to the allotment of the shares or securities to the company. (7) If the shares to which the notice relates are registered, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by an instrument of transfer executed on behalf of the holder of the shares by a person appointed by the offeror. On receipt of that instrument the company must register the offeror as the holder of those shares. (8) If the shares to which the notice relates are transferable by the delivery of warrants or other instruments, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by a statement to that effect. On receipt of that statement the company must issue the offeror with warrants or other instruments in respect of the shares, and those already in issue in receipt of the shares become void. (9) The company must hold any money or other consideration received by it under subsection (6)(b) on trust for the person who, before the offeror acquired them, was entitled to the shares in respect of which the money or other consideration was received. Section (Further provision about consideration held on trust under section (Effect of notice under section (Right of offeror to buy out minority shareholder))(9)) contains further provision about how the company should deal with such money or other consideration.’. Further provision about consideration held on trust under section (Effect of notice under section (Right of offeror to buy out minority shareholder))(9) Margaret Hodge NC360 To move the following Clause:— ‘(1) This section applies where an offeror pays or transfers consideration to the company under section (Effect of notice under section (Right of offeror to buy out minority shareholder))(6). (2) The company must pay into a separate bank account that complies with subsection (3)— (a) any money it receives under paragraph (b) of section (Effect of notice under section (Right of offeror to buy out minority shareholder))(6), and (b) any dividend or other sum accruing from any other consideration it receives under that paragraph. (3) A bank account complies with this subsection if the balance on the account— (a) bears interest at an appropriate rate, and (b) can be withdrawn by such notice (if any) as is appropriate. (4) If— (a) the person entitled to the consideration held on trust by virtue of section (Effect of notice under section (Right of offeror to buy out minority shareholder))(9) cannot be found, and (b) subsection (5) applies, the consideration (together with any interest, dividend or other benefit that has accrued from it) must be paid into court. (5) This subsection applies where— (a) reasonable enquiries have been made at reasonable intervals to find the person, and (b) twelve years have elapsed since the consideration was received, or the company is wound up. (6) In relation to a company registered in Scotland, subsections (7) and (8) apply instead of subsection (4). (7) If the person entitled to the consideration held on trust by virtue of section (Effect of notice under section (Right of offeror to buy out minority shareholder))(9) cannot be found and subsection (5) applies— (a) the trust terminates, (b) the company or (if the company is wound up) the liquidator must sell any consideration other than cash and any benefit other than cash that has accrued from the consideration, and (c) a sum representing— (i) the consideration so far as it is cash, (ii) the proceeds of any sale under paragraph (b), and (iii) any interest, dividend or other benefit that has accrued from the consideration, must be deposited in the name of the Accountant of Court in a separate bank account complying with subsection (3) and the receipt for the deposit must be transmitted to the Accountant of Court. (8) Section 58 of the (9) The expenses of any such enquiries as are mentioned in subsection (5) may be paid out of the money or other property held on trust for the person to whom the enquiry relates.’. |
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| © Parliamentary copyright 2006 | Prepared: 20 July 2006 |