Takeovers and mergers in Jersey have, for some time, been
regulated by the Panel for Takeovers and Mergers (the
"Panel"), an independent body based in the UK. The Panel
was established in 1968 and historically regulated takeovers in
both the UK and the Crown Dependencies (including Jersey) on an
informal basis through the application of its prescribed rules -
the City Code on Takeovers and Mergers (the "Code"). The
Code is designed principally to ensure that shareholders in listed
companies are treated fairly and are not denied an opportunity to
decide on the merits of a takeover and that shareholders of the
same class are afforded equivalent treatment by an offeror. The
Code also provides an orderly framework within which such takeovers
Whilst this has worked well in practice, the EU Takeover
Directive (2004/25/EU) (the "Takeovers Directive")
required the Panel, as a designated supervisory authority, to be
recognised by statute. Statutory implementation of the Directive in
UK law occurred with the enactment of the Companies Act
2006, in particular, Chapter 1 of Part 28.
Once the Panel was placed within a statutory framework in the
UK, they no longer thought it appropriate to continue to administer
takeovers in Jersey unless an equivalent framework applied in the
Jersey's legislative response
Jersey's legislators recognise that the regulation of
takeovers and mergers is desirable to ensure that shareholder
interests are protected when those activities occur. A well
regulated market provides investors with confidence about the
regime and therefore encourages investment which, given the present
economic climate, is vital to maintain.
Consequently, the Companies (Takeovers and Mergers
Panel) (Jersey) Law 2008 (the "Law") closely
follows Chapter 1 of the UK Companies Act 2006,
adapted for the Jersey context. The Law was adopted by the States
of Jersey on July 2008 and is expected to be approved by the Privy
Council in late 2008.
Applying the legislation
As in previous years, when the Panel acted in a non-statutory
capacity, the Law will apply to offers made for public companies
incorporated in Jersey if either their shares are listed on a
regulated market in the UK or on any stock exchange in the Channel
Islands or the Isle of Man or if they are considered by the Panel
to have their place of central management and control in the UK,
the Channel Islands or the Isle of Man. Application to private
companies is also possible in very limited circumstances.
Article 2 of the Law empowers the Minister for Economic
Development in Jersey to appoint a body to oversee takeovers and
mergers. The Minister intends to appoint the Panel as the
appropriate overseer, but the Minister does have the power to
appoint an alternative regulator if the need ever arose.
Article 3 of the Law requires the Panel to make rules to give
effect to the Takeovers Directive as if it were applied to Jersey.
It is envisaged by Jersey's legislators that the Panel's
existing rules will be adopted, giving the Code the same statutory
basis in Jersey as in the UK.
The Law also formally grants the Panel powers to issue
directions and give binding rulings on the application of its
rules; as well as the power to request documents and information
from relevant bodies; and impose sanctions for the breach of its
rules or procedures. Ultimately, Article 15 of the Law allows the
Royal Court of Jersey to make such order as it thinks fit in order
to secure compliance with any breach of the Panel rules. In
addition to punitive sanctions that the Panel may levy against
those found to be in breach of its rules, the Panel is also able to
make rules imposing fees or charges payable to the Panel for
meeting its expenses under the Law.
Although the Panel remains an independent body with the power to
make rulings and to take or defend proceedings in its own name,
Article 10 of the Law requires the Panel to take appropriate steps
of co-operation with the Jersey Financial Services Commission (the
"Commission") or any similar body when consider a
takeover relevant to a Jersey entity.
For practitioners trying to assess the impact of the new
statutory regime, it is important to note that Article 23 states
that nothing in the Law shall affect the operation of any provision
of the Companies (Jersey) Law 1991 or the
Competition (Jersey) Law 2005 in relation to any
takeover bid or transaction in respect of which the Panel can make
rules under the Law.
This article first appeared in the autumn 2008 issue of Appleby
Jersey's Finance newsletter.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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