House of Commons portcullis
House of Commons
Session 2005 - 06
Internet Publications
Other Bills before Parliament

Company Law Reform Bill [HL] (432-438)


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

432

 

(5)   

The Panel may at any time revise a policy statement.

(6)   

The Panel must prepare a draft of any proposed policy statement (or revised

policy statement) and consult such persons about the draft as the Panel

considers appropriate.

(7)   

The Panel must publish, in whatever way it considers appropriate, any policy

5

statement (or revised policy statement) that it prepares.

(8)   

In exercising, or deciding whether to exercise, its power to impose a sanction

within subsection (2) in the case of any particular breach or failure, the Panel

must have regard to any relevant policy statement published and in force at the

time when the breach or failure occurred.

10

920     

Failure to comply with rules about bid documentation

(1)   

This section applies where a takeover bid is made for a company that has

securities carrying voting rights admitted to trading on a regulated market in

the United Kingdom.

(2)   

Where an offer document published in respect of the bid does not comply with

15

offer document rules, an offence is committed by—

(a)   

the person making the bid, and

(b)   

where the person making the bid is a body of persons, any director,

officer or member of that body who caused the document to be

published.

20

(3)   

A person commits an offence under subsection (2) only if—

(a)   

he knew that the offer document did not comply, or was reckless as to

whether it complied, and

(b)   

he failed to take all reasonable steps to secure that it did comply.

(4)   

Where a response document published in respect of the bid does not comply

25

with response document rules, an offence is committed by any director or

other officer of the company referred to in subsection (1) who—

(a)   

knew that the response document did not comply, or was reckless as to

whether it complied, and

(b)   

failed to take all reasonable steps to secure that it did comply.

30

(5)   

Where an offence is committed under subsection (2)(b) or (4) by a company or

other body corporate (“the relevant body”)—

(a)   

subsection (2)(b) has effect as if the reference to a director, officer or

member of the person making the bid included a reference to a director,

officer or member of the relevant body;

35

(b)   

subsection (4) has effect as if the reference to a director or other officer

of the company referred to in subsection (1) included a reference to a

director, officer or member of the relevant body.

(6)   

A person guilty of an offence under this section is liable—

(a)   

on conviction on indictment, to a fine;

40

(b)   

on summary conviction, to a fine not exceeding the statutory

maximum.

(7)   

Nothing in this section affects any power of the Panel in relation to the

enforcement of its rules.

 
 

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

433

 

(8)   

Section 1 (meaning of “company”) does not apply for the purposes of this

section.

(9)   

In this section—

“designated” means designated in rules;

“offer document” means a document required to be published by rules

5

giving effect to Article 6.2 of the Takeovers Directive;

“offer document rules” means rules designated as rules that give effect to

Article 6.3 of that Directive;

“response document” means a document required to be published by

rules giving effect to Article 9.5 of that Directive;

10

“response document rules” means rules designated as rules that give

effect to the first sentence of Article 9.5 of that Directive;

“securities” means shares or debentures;

“takeover bid” has the same meaning as in that Directive;

“voting rights” means rights to vote at general meetings of the company

15

in question, including rights that arise only in certain circumstances.

921     

Compensation

(1)   

Rules may confer power on the Panel to order a person to pay such

compensation as it thinks just and reasonable if he is in breach of a rule the

effect of which is to require the payment of money.

20

(2)   

Rules made by virtue of this section may include provision for the payment of

interest (including compound interest).

922     

Enforcement by the court

(1)   

If, on the application of the Panel, the court is satisfied—

(a)   

that there is a reasonable likelihood that a person will contravene a

25

rule-based requirement, or

(b)   

that a person has contravened a rule-based requirement or a disclosure

requirement,

   

the court may make any order it thinks fit to secure compliance with the

requirement.

30

(2)   

In subsection (1) “the court” means the High Court or, in Scotland, the Court of

Session.

(3)   

Except as provided by subsection (1), no person—

(a)   

has a right to seek an injunction, or

(b)   

in Scotland, has title or interest to seek an interdict or an order for

35

specific performance,

   

to prevent a person from contravening (or continuing to contravene) a rule-

based requirement or a disclosure requirement.

(4)   

In this section—

“contravene” includes fail to comply;

40

“disclosure requirement” means a requirement imposed under section

914;

“rule-based requirement” means a requirement imposed by or under

rules.

 
 

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

434

 

923     

No action for breach of statutory duty etc

(1)   

Contravention of a rule-based requirement or a disclosure requirement does

not give rise to any right of action for breach of statutory duty.

(2)   

Contravention of a rule-based requirement does not make any transaction void

or unenforceable or (subject to any provision made by rules) affect the validity

5

of any other thing.

(3)   

In this section—

(a)   

“contravention” includes failure to comply;

(b)   

“disclosure requirement” and “rule-based requirement” have the same

meaning as in section 922.

10

Funding

924     

Fees and charges

(1)   

Rules may provide for fees or charges to be payable to the Panel for the

purpose of meeting any part of its expenses.

(2)   

A reference in this section or section 925 to expenses of the Panel is to any

15

expenses that have been or are to be incurred by the Panel in, or in connection

with, the discharge of its functions, including in particular—

(a)   

payments in respect of the expenses of the Takeover Appeal Board;

(b)   

the cost of repaying the principal of, and of paying any interest on, any

money borrowed by the Panel;

20

(c)   

the cost of maintaining adequate reserves.

925     

Levy

(1)   

For the purpose of meeting any part of the expenses of the Panel, the Secretary

of State may by regulations provide for a levy to be payable to the Panel—

(a)   

by specified persons or bodies, or persons or bodies of a specified

25

description, or

(b)   

on transactions, of a specified description, in securities on specified

markets.

   

In this subsection “specified” means specified in the regulations.

(2)   

The power to specify (or to specify descriptions of) persons or bodies must be

30

exercised in such a way that the levy is payable only by persons or bodies that

appear to the Secretary of State—

(a)   

to be capable of being directly affected by the exercise of any of the

functions of the Panel, or

(b)   

otherwise to have a substantial interest in the exercise of any of those

35

functions.

(3)   

Regulations under this section may in particular—

(a)   

specify the rate of the levy and the period in respect of which it is

payable at that rate;

(b)   

make provision as to the times when, and the manner in which,

40

payments are to be made in respect of the levy.

(4)   

In determining the rate of the levy payable in respect of a particular period, the

Secretary of State—

 
 

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

435

 

(a)   

must take into account any other income received or expected by the

Panel in respect of that period;

(b)   

may take into account estimated as well as actual expenses of the Panel

in respect of that period.

(5)   

The Panel must—

5

(a)   

keep proper accounts in respect of any amounts of levy received by

virtue of this section;

(b)   

prepare, in relation to each period in respect of which any such

amounts are received, a statement of account relating to those amounts

in such form and manner as is specified in the regulations.

10

   

Those accounts must be audited, and the statement certified, by persons

appointed by the Secretary of State.

(6)   

Regulations under this section—

(a)   

are subject to affirmative resolution procedure if subsection (7) applies

to them;

15

(b)   

otherwise, are subject to negative resolution procedure.

(7)   

This subsection applies to—

(a)   

the first regulations under this section;

(b)   

any other regulations under this section that would result in a change

in the persons or bodies by whom, or the transactions on which, the

20

levy is payable.

(8)   

If a draft of an instrument containing regulations under this section would,

apart from this subsection, be treated for the purposes of the Standing Orders

of either House of Parliament as a hybrid instrument, it is to proceed in that

House as if it were not such an instrument.

25

926     

Recovery of fees, charges or levy

An amount payable by any person or body by virtue of section 924 or 925 is a

debt due from that person or body to the Panel, and is recoverable accordingly.

Miscellaneous and supplementary

927     

Panel as party to proceedings

30

The Panel is capable (despite being an unincorporated body) of—

(a)   

bringing proceedings under this Chapter in its own name;

(b)   

bringing or defending any other proceedings in its own name.

928     

Exemption from liability in damages

(1)   

Neither the Panel, nor any person within subsection (2), is to be liable in

35

damages for anything done (or omitted to be done) in, or in connection with,

the discharge or purported discharge of the Panel’s functions.

(2)   

A person is within this subsection if—

(a)   

he is (or is acting as) a member, officer or member of staff of the Panel,

or

40

(b)   

he is a person authorised under section 914(5).

 
 

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

436

 

(3)   

Subsection (1) does not apply—

(a)   

if the act or omission is shown to have been in bad faith, or

(b)   

so as to prevent an award of damages in respect of the act or omission

on the ground that it was unlawful as a result of section 6(1) of the

Human Rights Act 1998 (c. 42) (acts of public authorities incompatible

5

with Convention rights).

929     

Privilege against self-incrimination

(1)   

A statement made by a person in response to—

(a)   

a requirement under section 914(1), or

(b)   

an order made by the court under section 922 to secure compliance with

10

such a requirement,

   

may not be used against him in criminal proceedings in which he is charged

with an offence to which this subsection applies.

(2)   

Subsection (1) applies to any offence other than an offence under one of the

following provisions (which concern false statements made otherwise than on

15

oath)—

(a)   

section 5 of the Perjury Act 1911 (c. 6);

(b)   

section 44(2) of the Criminal Law (Consolidation) (Scotland) Act 1995

(c. 39);

(c)   

Article 10 of the Perjury (Northern Ireland) Order 1979 (S.I. 1979/1714

20

(N.I. 19)).

930     

Annual reports

(1)   

After the end of each financial year the Panel must publish a report.

(2)   

The report must—

(a)   

set out how the Panel’s functions were discharged in the year in

25

question;

(b)   

include the Panel’s accounts for that year;

(c)   

mention any matters the Panel considers to be of relevance to the

discharge of its functions.

931     

Amendments to Financial Services and Markets Act 2000

30

(1)   

The Financial Services and Markets Act 2000 (c. 8) is amended as follows.

(2)   

Section 143 (power to make rules endorsing the City Code on Takeovers and

Mergers etc) is repealed.

(3)   

In section 144 (power to make price stabilising rules), for subsection (7)

substitute—

35

“(7)   

“Consultation procedures” means procedures designed to provide an

opportunity for persons likely to be affected by alterations to those

provisions to make representations about proposed alterations to any

of those provisions.”.

(4)   

In section 349 (exceptions from restrictions on disclosure of confidential

40

information), after subsection (3) insert—

“(3A)   

Section 348 does not apply to—

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 2 — Impediments to takeovers

437

 

(a)   

the disclosure by a recipient to which subsection (3B) applies of

confidential information disclosed to it by the Authority in

reliance on subsection (1);

(b)   

the disclosure of such information by a person obtaining it

directly or indirectly from a recipient to which subsection (3B)

5

applies.

(3B)   

This subsection applies to—

(a)   

the Panel on Takeovers and Mergers;

(b)   

an authority designated as a supervisory authority for the

purposes of Article 4.1 of the Takeovers Directive;

10

(c)   

any other person or body that exercises public functions, under

legislation in an EEA State other than the United Kingdom, that

are similar to the Authority’s functions or those of the Panel on

Takeovers and Mergers.”.

(5)   

In section 354 (Financial Services Authority’s duty to co-operate with others),

15

after subsection (1) insert—

“(1A)   

The Authority must take such steps as it considers appropriate to co-

operate with—

(a)   

the Panel on Takeovers and Mergers;

(b)   

an authority designated as a supervisory authority for the

20

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 Kingdom, that appear to the Authority to be similar to

those of the Panel on Takeovers and Mergers.”.

25

(6)   

In section 417(1) (definitions), insert at the appropriate place—

““Takeovers Directive” means Directive 2004/25/EC of the

European Parliament and of the Council;”.

932     

Power to extend to Isle of Man and Channel Islands

Her Majesty may by Order in Council direct that any of the provisions of this

30

Chapter extend, with such modifications as may be specified in the Order, to

the Isle of Man or any of the Channel Islands.

Chapter 2

Impediments to takeovers

Opting in and opting out

35

933     

Opting 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 three conditions are met in relation to

the company.

(2)   

The first condition is that the company has voting shares admitted to trading

40

on a regulated market.

 
 

Company Law Reform Bill [HL] (changed to Companies Bill [HL])
Part 28 — Takeovers etc
Chapter 2 — Impediments to takeovers

438

 

(3)   

The second condition is that—

(a)   

the company’s articles of association—

(i)   

do not contain any such restrictions as are mentioned in Article

11 of the Takeovers Directive, or

(ii)   

if they do contain any such restrictions, provide for the

5

restrictions not to apply at a time when, or in circumstances in

which, they would be disapplied by that Article,

   

and

(b)   

those articles do not contain any other provision which would be

incompatible with that Article.

10

(4)   

The third 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

15

(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

20

(an “opting-out resolution”).

(6)   

For the purposes of subsection (3), a reference in Article 11 of the Takeovers

Directive to Article 7(1) or 9 of that Directive is to be read as referring to rules

under section 910(1) giving effect to the relevant Article.

(7)   

In subsection (4) “minister” means—

25

(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);

30

   

and for the purposes of that subsection “minister” also includes the Treasury,

the Board of Trade, the Defence Council and the National Assembly for Wales.

(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.

35

“Specified” means specified in the order.

934     

Further 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

40

which the resolution is passed.

(3)   

The second and third conditions in section 933 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.

 
 

 
previous section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 2006
Revised 28 July 2006