CODEWORD

Under rule 57(3) of the Takeovers Code, if a dominant owner (that is, a person who holds or controls 90% or more of the voting securities in a Code company) receives a specified percentage of written objections to the consideration specified in the acquisition notice, the dominant owner must immediately refer to expert determination the amount of the consideration to be provided for the securities. Rule 58(1) provides that the reference to expert determination is a reference to an independent person appointed by the Panel.

The Panel considers similar issues arise in respect of an appointment of an expert to those relevant to the approval of independent advisers.

To enable the Panel to appoint an independent person to make an expert determination, the current policy of the Panel is that it requires the dominant owner, in the circumstances outlined in rule 57(3), to immediately notify the Panel of the receipt of these objections and the requirement for an expert determination together with a list of:

• the persons making the objections;
• the current auditors of the relevant Code company; and
• the professional advisers the dominant owner has received advice from in relation to this compulsory acquisition or any other acquisition of securities in the relevant Code company

The dominant owner should not make any suggestions as to who it thinks would be appropriate for appointment. After receiving this information, the Panel will invite applications from persons it considers may be suitable to make an expert determination in the particular case. The outline of an application for appointment as an expert is set out below.

A prior or existing relationship between an expert and all relevant entities must be disclosed to the Panel but will not automatically disqualify the expert from being approved. The Panel will wish to review the nature and extent of any such relationships before an appointment is made.

Outline of application for appointment as an Expert (upon invitation by the Panel)

• Name, address, place of business and contact details of applicant.
• If the applicant is a company, the applicant’s place of incorporation should also be provided, together with background information as to the directors and shareholders of the applicant.
• A statement certifying that the applicant’s professional liability insurance cover is adequate in relation to the size of the transaction.
• A statement of the qualifications and expertise of the applicant together with, if a firm or company is the applicant, the names and curriculum vitae of the individuals who will be involved in preparing the determination. This statement should include evidence of previous relevant experience demonstrating the applicant’s suitability for appointment.
• Disclosure of all past and present relationships between the applicant and the parties to the transaction or series of transactions (including the directors and shareholders of any such parties) in relation to which the expert determination is required including statements as to the nature, extent and duration of those relationships.
• Disclosure of any direct or indirect pecuniary or other interest, (other than the applicant’s fees for providing the determination) in relation to the transaction (or series of transactions) in respect of which the expert determination is required.
• A statement that the applicant has no conflict of interest that could affect the applicant’s ability to provide an unbiased determination.
• An outline of the proposed fees the applicant would charge if appointed.

Applications may be delivered, sent or faxed to the Panel. The Panel is also pleased to accept application by email but does not regard this as an appropriate means for the communication of confidential information.