Company Law Reform Bill [HL] (425-431)

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Company Law Reform Bill [HL] (425-431)

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 27 — Arrangements and reconstructions
425

Mergers and divisions of public companies
908
Power to make provision for mergers and divisions of public companies
(1)
Where—
(a)
a compromise or arrangement is proposed between a public company
and any such persons as are mentioned in section 900 for the purpose
5
of, or in connection with, a scheme for—
(i)
the reconstruction of any company or companies, or
(ii)
the amalgamation of any two or more companies,
(b)
the circumstances are as specified in any of the Cases described below,
and
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(c)
the consideration for the transfer or each of the transfers envisaged in
the Case in question is to be shares in the transferee company or any of
the transferee companies receivable by members of the transferor
company or transferor companies, with or without any cash payment
to members,
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the preceding provisions of this Part have effect, as regards that compromise
or arrangement, subject to regulations under this section.
(2)
The Cases are—
Case 1

Where under the scheme the undertaking property and liabilities of the
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company in respect of which the compromise or arrangement in question is
proposed are to be transferred to another public company, other than one
formed for the purpose of, or in connection with, the scheme.
Case 2

Where under the scheme the undertaking, property and liabilities of two or
25
more public companies concerned in the scheme, including the company in
respect of which the compromise or arrangement in question is proposed, are
to be transferred to a company (whether or not a public company) formed for
the purposes of or in connection with the scheme.
Case 3
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Where under the scheme the undertaking, property and liabilities of the
company in respect of which the compromise or arrangement in question is
proposed are to be divided among and transferred to two or more companies
each of which is either—
(a)
a public company, or
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(b)
a company (whether or not a public company) formed for the purposes
of, or in connection with, the scheme.
(3)
This section does not apply where the company in respect of which the
compromise or arrangement is proposed is being wound up.
(4)
The Secretary of State may by regulations provide that where this section
40
applies the court must not sanction a compromise or arrangement unless the
requirements of the regulations have been complied with.
(5)
Without prejudice to the generality of the power conferred by this section, the
regulations may make any such provision as was formerly made by section
427A(3) of, and Schedule 15B to, the Companies Act 1985 (c. 6).
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
426

(6)
Regulations under this section are subject to affirmative resolution procedure.
Part 28
Takeovers etc
Chapter 1
The Takeover Panel
5
The Panel and its rules
909
The Panel
(1)
The body known as the Panel on Takeovers and Mergers (“the Panel”) is to
have the functions conferred on it by or under this Chapter.
(2)
The Panel may do anything that it considers necessary or expedient for the
10
purposes of, or in connection with, its functions.
(3)
The Panel may make arrangements for any of its functions to be discharged
by—
(a)
a committee or sub-committee of the Panel, or
(b)
an officer or member of staff of the Panel, or a person acting as such.
15

This is subject to section 910(4) and (5).
910
Rules
(1)
The Panel must make rules giving effect to Articles 3.1, 4.2, 5, 6.1 to 6.3, 7 to 9
and 13 of the Takeovers Directive.
(2)
Rules made by the Panel may also make other provision—
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(a)
for or in connection with the regulation of—
(i)
takeover bids,
(ii)
merger transactions, and
(iii)
transactions (not falling within sub-paragraph (i) or (ii)) that
have or may have, directly or indirectly, an effect on the
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ownership or control of companies;
(b)
for or in connection with the regulation of things done in consequence
of, or otherwise in relation to, any such bid or transaction;
(c)
about cases where—
(i)
any such bid or transaction is, or has been, contemplated or
30
apprehended, or
(ii)
an announcement is made denying that any such bid or
transaction is intended.
(3)
The provision that may be made under subsection (2) includes, in particular,
provision for a matter that is, or is similar to, a matter provided for by the Panel
35
in the City Code on Takeovers and Mergers as it had effect immediately before
the passing of this Act.
(4)
In relation to rules made by virtue of section 924 (fees and charges), functions
under this section may be discharged either by the Panel itself or by a
committee of the Panel (but not otherwise).
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
427

(5)
In relation to rules of any other description, the Panel must discharge its
functions under this section by a committee of the Panel.
(6)
Section 1 (meaning of “company”) does not apply for the purposes of this
section.
(7)
In this section “takeover bid” includes a takeover bid within the meaning of the
5
Takeovers Directive.
(8)
In this Chapter “the Takeovers Directive” means Directive 2004/25/EC of the
European Parliament and of the Council.
(9)
A reference to rules in the following provisions of this Chapter is to rules under
this section.
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911
Further provisions about rules
(1)
Rules may—
(a)
make different provision for different purposes;
(b)
make provision subject to exceptions or exemptions;
(c)
contain incidental, supplemental, consequential or transitional
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provision;
(d)
authorise the Panel to dispense with or modify the application of rules
in particular cases and by reference to any circumstances.

Rules made by virtue of paragraph (d) must require the Panel to give reasons
for acting as mentioned in that paragraph.
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(2)
Rules must be made by an instrument in writing.
(3)
Immediately after an instrument containing rules is made, the text must be
made available to the public, with or without payment, in whatever way the
Panel thinks appropriate.
(4)
A person is not to be taken to have contravened a rule if he shows that at the
25
time of the alleged contravention the text of the rule had not been made
available as required by subsection (3).
(5)
The production of a printed copy of an instrument purporting to be made by
the Panel on which is endorsed a certificate signed by an officer of the Panel
authorised by it for that purpose and stating—
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(a)
that the instrument was made by the Panel,
(b)
that the copy is a true copy of the instrument, and
(c)
that on a specified date the text of the instrument was made available
to the public as required by subsection (3),

is evidence (or in Scotland sufficient evidence) of the facts stated in the
35
certificate.
(6)
A certificate purporting to be signed as mentioned in subsection (5) is to be
treated as having been properly signed unless the contrary is shown.
(7)
A person who wishes in any legal proceedings to rely on an instrument by
which rules are made may require the Panel to endorse a copy of the
40
instrument with a certificate of the kind mentioned in subsection (5).
912
Rulings
(1)
The Panel may give rulings on the interpretation, application or effect of rules.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
428

(2)
To the extent and in the circumstances specified in rules, and subject to any
review or appeal, a ruling has binding effect.
913
Directions
Rules may contain provision conferring power on the Panel to give any
direction that appears to the Panel to be necessary in order—
5
(a)
to restrain a person from acting (or continuing to act) in breach of rules;
(b)
to restrain a person from doing (or continuing to do) a particular thing,
pending determination of whether that or any other conduct of his is or
would be a breach of rules;
(c)
otherwise to secure compliance with rules.
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Information
914
Power to require documents and information
(1)
The Panel may by notice in writing require a person—
(a)
to produce any documents that are specified or described in the notice;
(b)
to provide, in the form and manner specified in the notice, such
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information as may be specified or described in the notice.
(2)
A requirement under subsection (1) must be complied with—
(a)
at a place specified in the notice, and
(b)
before the end of such reasonable period as may be so specified.
(3)
This section applies only to documents and information reasonably required in
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connection with the exercise by the Panel of its functions.
(4)
The Panel may require—
(a)
any document produced to be authenticated, or
(b)
any information provided (whether in a document or otherwise) to be
verified,
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in such manner as it may reasonably require.
(5)
The Panel may authorise a person to exercise any of its powers under this
section.
(6)
A person exercising a power by virtue of subsection (5) must, if required to do
so, produce evidence of his authority to exercise the power.
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(7)
The production of a document in pursuance of this section does not affect any
lien that a person has on the document.
(8)
The Panel may take copies of or extracts from a document produced in
pursuance of this section.
(9)
A reference in this section to the production of a document includes a reference
35
to the production of—
(a)
a hard copy of information recorded otherwise than in hard copy form,
or
(b)
information in a form from which a hard copy can be readily obtained.

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
429

(10)
A person is not required by this section to disclose documents or information
in respect of which a claim to legal professional privilege (in Scotland, to
confidentiality of communications) could be maintained in legal proceedings.
915
Restrictions on disclosure
(1)
This section applies to information (in whatever form)—
5
(a)
relating to the private affairs of an individual, or
(b)
relating to any particular business,

that is provided to the Panel in connection with the exercise of its functions.
(2)
No such information may, during the lifetime of the individual or so long as
the business continues to be carried on, be disclosed without the consent of that
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individual or (as the case may be) the person for the time being carrying on that
business.
(3)
Subsection (2) does not apply to any disclosure of information that—
(a)
is made for the purpose of facilitating the carrying out by the Panel of
any of its functions,
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(b)
is made to a person specified in Part 1 of Schedule 2,
(c)
is of a description specified in Part 2 of that Schedule, or
(d)
is made in accordance with Part 3 of that Schedule.
(4)
The Secretary of State may amend Schedule 2 by order subject to negative
resolution procedure.
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(5)
An order under subsection (4) must not—
(a)
amend Part 1 of Schedule 2 by specifying a person unless the person
exercises functions of a public nature (whether or not he exercises any
other function);
(b)
amend Part 2 of Schedule 2 by adding or modifying a description of
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disclosure unless the purpose for which the disclosure is permitted is
likely to facilitate the exercise of a function of a public nature;
(c)
amend Part 3 of Schedule 2 so as to have the effect of permitting
disclosures to be made to a body other than one that exercises functions
of a public nature in a country or territory outside the United Kingdom.
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(6)
Subsection (2) does not apply to—
(a)
the disclosure by an authority within subsection (7) of information
disclosed to it by the Panel in reliance on subsection (3);
(b)
the disclosure of such information by anyone who has obtained it
directly or indirectly from an authority within subsection (7).
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(7)
The authorities within this subsection are—
(a)
the Financial Services Authority;
(b)
an authority designated as a supervisory authority for the purposes of
Article 4.1 of the Takeovers Directive;
(c)
any other person or body that exercises functions of a public nature,
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under legislation in an EEA State other than the United Kingdom, that
are similar to the Panel’s functions or those of the Financial Services
Authority.
(8)
This section does not prohibit the disclosure of information if the information
is or has been available to the public from any other source.
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
430

(9)
Nothing in this section authorises the making of a disclosure in contravention
of the Data Protection Act 1998 (c. 29).
916
Offence of disclosure in contravention of section 915
(1)
A person who discloses information in contravention of section 915 is guilty of
an offence, unless—
5
(a)
he did not know, and had no reason to suspect, that the information
had been provided as mentioned in section 915(1), or
(b)
he took all reasonable steps and exercised all due diligence to avoid the
commission of the offence.
(2)
A person guilty of an offence under this section is liable—
10
(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
15
statutory maximum (or both);
(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).
(3)
Where a company or other body corporate commits an offence under this
20
section, an offence is also committed by every officer of the company or other
body corporate who is in default.
Co-operation
917
Panel’s duty of co-operation
(1)
The Panel must take such steps as it considers appropriate to co-operate with—
25
(a)
the Financial Services Authority;
(b)
an authority designated as a supervisory authority for the purposes of
Article 4.1 of the Takeovers Directive;
(c)
any other person or body that exercises functions of a public nature,
under legislation in any country or territory outside the United
30
Kingdom, that appear to the Panel to be similar to its own functions or
those of the Financial Services Authority.
(2)
Co-operation may include the sharing of information that the Panel is not
prevented from disclosing.
Hearings and appeals
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918
Hearings and appeals
(1)
Rules must provide for a decision of the Panel to be subject to review by a
committee of the Panel (the “Hearings Committee”) at the instance of such
persons affected by the decision as are specified in the rules.
(2)
Rules may also confer other functions on the Hearings Committee.
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Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 1 — The Takeover Panel
431

(3)
Rules must provide for there to be a right of appeal against a decision of the
Hearings Committee to an independent tribunal (the “Takeover Appeal
Board”) in such circumstances and subject to such conditions as are specified
in the rules.
(4)
Rules may contain—
5
(a)
provision as to matters of procedure in relation to proceedings before
the Hearings Committee (including provision imposing time limits);
(b)
provision about evidence in such proceedings;
(c)
provision as to the powers of the Hearings Committee dealing with a
matter referred to it;
10
(d)
provision about enforcement of decisions of the Hearings Committee
and the Takeover Appeal Board.
(5)
Rules must contain provision—
(a)
requiring the Panel, when acting in relation to any proceedings before
the Hearings Committee or the Takeover Appeal Board, to do so by an
15
officer or member of staff of the Panel (or a person acting as such);
(b)
preventing a person who is or has been a member of the committee
mentioned in section 910(5) from being a member of the Hearings
Committee or the Takeover Appeal Board;
(c)
preventing a person who is a member of the committee mentioned in
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section 910(5), of the Hearings Committee or of the Takeover Appeal
Board from acting as mentioned in paragraph (a).
Contravention of rules etc
919
Sanctions
(1)
Rules may contain provision conferring power on the Panel to impose
25
sanctions on a person who has—
(a)
acted in breach of rules, or
(b)
failed to comply with a direction given by virtue of section 913.
(2)
Subsection (3) applies where rules made by virtue of subsection (1) confer
power on the Panel to impose a sanction of a kind not provided for by the City
30
Code on Takeovers and Mergers as it had effect immediately before the
passing of this Act.
(3)
The Panel must prepare a statement (a “policy statement”) of its policy with
respect to—
(a)
the imposition of the sanction in question, and
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(b)
where the sanction is in the nature of a financial penalty, the amount of
the penalty that may be imposed.

An element of the policy must be that, in making a decision about any such
matter, the Panel has regard to the factors mentioned in subsection (4).
(4)
The factors are—
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(a)
the seriousness of the breach or failure in question in relation to the
nature of the rule or direction contravened;
(b)
the extent to which the breach or failure was deliberate or reckless;
(c)
whether the person on whom the sanction is to be imposed is an
individual.
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