By BRIAN FALLOW economics editor
The Takeovers Panel has drafted rules for dealing with innocent or technical breaches of the Takeovers Code.
It is seeking public comment on the draft class exemptions, which it expects will reduce the need for specific exemptions which the panel is empowered to grant.
Panel chairman John King
said the draft exemptions included conditions designed to ensure the code's purpose and intent were fulfilled.
Under the proposed code, a transaction which lifts a shareholder's stake above the threshold of 20 per cent of a company's shares will trigger an offer to all other shareholders.
But shareholders could find themselves unintentionally in that position - as a result of share buybacks, for example. If a shareholder opts not to take a share buyback offer, but enough other shareholders do, the 20 per cent threshold could also be inadvertently passed.
In those circumstances, the panel proposes the shareholder have six months to sell down below the threshold, and not be allowed to exercise the additional voting rights.
A similar provision is proposed for cases where a shareholder crosses the threshold through a rights issue.
Exemptions are also proposed for cases where someone holds proxies for more than 20 per cent of a company's shares, provided the appointment is only for one shareholders' meeting and no consideration is involved.
Nominee companies are exempt, provided they do not control the voting rights.
Underwriters of a share issue who find themselves holding more than 20 per cent of a company's shares would be exempt from making an offer under the code, provided they sell down within six months and do not vote the shares in the meantime.
There are also exemptions for people inheriting shares and for the executors of wills.
The draft exemptions are to be found on the panel's website. The closing date for submissions is April 9.
Links
The Takeovers Panel
