On 12 July 2017, the Code Committee of the Takeover Panel published PCP 2017/1, seeking views on a number of proposed amendments to the Code in relation to asset sales in competition with an offer and other matters.

The Committee proposes to make the following changes in relation to the sale by a target of assets in competition with an offer (or possible

offer) for the target:

  • Amend Rules 2.8 (statements of intention not to make an offer), 35.1 (delay of 12 months) and 12.2 (competition reference periods) by inserting an additional restriction prohibiting any person, subject to these Rules, from purchasing, agreeing to purchase, or making any statement which raises or confirms the possibility that it is interested in purchasing the target's assets;
  • Amend Rule 21.1, concerning "when shareholders' consent is required", so as to clarify the circumstances in which consent is not necessary, and to require that, where shareholder approval is to be sought in a general meeting for a proposed action under Rule 21.1, the target board must obtain competent independent advice as to whether the terms are fair and reasonable;
  • Introduce a new Rule 4.7, concerning "asset disposals in competition with an offer"; this will prevent a purchaser of some or all of the target's assets from acquiring interests in shares in the target during the offer period, unless the target board has made a statement quantifying the cash sum expected to be paid to shareholders, and then only to the extent that the price paid does not exceed the amount stated;
  • Introduce a new note on the definition of "quantified financial benefits statement" to ensure that, where the target board states it is proposing to sell all or substantially all of the company's assets and to return to shareholders all or substantially all of the company's cash balances, any statement made by the board of the target quantifying the cash sum expected to be paid to shareholders if the offer is withdrawn or lapses should be treated as a "quantified financial benefits statement".

In relation to other matters, the Committee proposes to amend:

  • Rule 2.8 – "statements of intention not to make an offer" – and the accompanying Note 2, so as to require a person making a statement to specify the circumstances in which it reserves the right to set the statement aside;
  • Rule 20.4 – "social media" – to remove the restrictions on the use of social media for the publication of information about a party to an offer (such that the restrictions in Rule 20.4 would apply only to the use of social media for the publication of information relating to the offer) and to permit the publication via social media of videos approved by the Takeover Panel in accordance with Rule 20.3 (videos);
  • Note 1 on Rule 19.1 – "standards of care" – to ensure it is clear that financial advisers are responsible for guiding their clients with regard to the publication of information via social media in the same way as for information published by other means;
  • Note 5 on the Notes of Dispensations from Rule 9 – to ensure the current note reflects the existing practice of the Panel Executive to consider granting a waiver from the obligation to make a mandatory offer that would otherwise arise under Rule 9 as a result of an issue of new securities if independent shareholders holding shares carrying more than 50% of voting rights of the company capable of being cast on a "whitewash" resolution give certain confirmations in writing.

Responses to the consultation are requested by 22 September 2017. The full consultation can be accessed here:

http://www.thetakeoverpanel.org.uk/wp-content/uploads/2017/07/PCP.192957_1.pdf

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