On 22 December 2017, in the decision of The Panel on Takeovers and Mergers v David Cunningham King [2017] CSOH 156, the court considered a situation where a shareholder had, acting in concert with other parties, acquired interests in shares carrying more than 30% of the voting rights in a company. This triggered an obligation under Rule 9.1 of the Takeover Code (the "Code") to extend an offer to acquire the shares of the company's other shareholders on the terms stipulated by Rules 9.3 and 9.5 of the Code. The individual did not make this offer, and the Panel initiated proceedings with the Scottish Court of Session seeking an order for compliance with the ruling.
The court considered two questions:
- Did the court have discretion to
decide whether or not to grant an order to enforce compliance with
the Code?
- It was concluded that the court does have discretion to refuse to grant an order in these circumstances.
- If the court has discretion to refuse
the order, should the court in the exercise of that discretion
refuse the order sought?
- It was held that the court should not refuse the order but should exercise its discretion in favour of granting the order sought by the Panel and obliging the individual to make the Rule 9 mandatory offer.
The financial circumstances of the individual and the fact that the mandatory offer price was significantly lower than the current share price were irrelevant considerations for the purposes of the court's exercise of the discretion to grant the order.
The decision can be read in full here:
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