On 4 September 2015, FCA published its tenth quarterly consultation paper. The paper invites comments on several proposals.
- Delisting Following a Takeover Offer
-
Some modifications have been proposed for the application of the listing rules in relation to the cancellation of listed securities following a takeover. These changes aim to resolve disparity in terms of outcome with the procedures that apply in respect of a decision on cancellation by a premium listed issuer following a vote by shareholders. Under normal circumstances, there must be a minimum of 25% free float shareholding for a company to be listed. However, if a company had exceptionally been allowed to list with an 80% controlling shareholder and a 20% free float shareholding and a takeover offer were made on terms that did not require any acceptances, the controlling shareholder could subsequently try to delist the company. In this circumstance, the decisions made by some shareholders to accept the offer would not reflect whether the terms of the offer provided fair compensation for those independent shareholders that may not want to hold the shares once the company is unlisted.
To tackle this issue, the FCA considers that the best option would be to delete the 80% control provision. This would mean that for a cancellation request to be made, the controlling shareholder has to obtain acceptances of the offer from independent shareholders which represent a majority of voting rights held by independent shareholders.
- Audit Committees
-
The FCA has also proposed some amendments and additions to the Disclosure and Transparency Rules ("DTR") to reflect the changes brought by the Statutory Audit Amending Directive. The effect of these proposals would be to extend the independence requirement from at least one member to a majority of the members of the relevant body in charge of the audit and require the members of that body as a whole to have competence relevant to the sector in which the issuer is operating. Furthermore, the chairman of that body should be independent and appointed by the members of that body or a supervisory body of the issuer company. Also the responsibilities of that body would be expanded to reflect wider scope of responsibilities in the directive. However, FCA has not amended the DTR in relation to the composition of the audit committee. The direective will now require the shareholders of a company to elect in general meeting the non-executive members of the audit committee. In particular, FCA noted that there is no evidence that not implementing these changes would create problems or disadvantages to issuers. Equally FCA proposes not to adopt the option to require the audit committee chairman to be elected by the shareholders in general meeting.
The FCA is also consulting on making minor amendments to the prospectus rules which would reflect the changes introduced by the regulatory technical standards on the Prospectus Directive, as amended by the Omnibus II Directive.
A copy of the consultation paper is available here:
https://www.fca.org.uk/your-fca/documents/consultation-papers/cp15-28
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.