CODEWORD

Partial offers

Rules 9 and 10 contain the Code’s general provisions about partial offers. Partial offers may be for a specified percentage of the voting securities of the target company not already held or controlled by the offeror that, together with the voting securities already held or controlled by the offeror, confer either:

• above 50%; or
• with the approval of the target company’s shareholders, 50% or less.

These rules were not intended to allow a single offer to contain alternative proposals, e.g. an offer that would result in the offeror holding or controlling more than 50%, or, failing that, an offer for a lesser percentage, with the second alternative acting as a fallback if the more-than-50% level is not achieved.

The amendments clarify that for a partial offer an offeror must opt for only one specified percentage of voting securities – either:

• a specified percentage that would result in the offeror holding or controlling more than 50%, under rule 10(1)(a), or
• a specified percentage that would result in their holding or controlling 50% or less, with shareholder approval, under rule 10(1)(b).

Miscellaneous changes

• The definite article preceding the word “person” in rule 7(c) and (d) has been changed to the indefinite article to clarify that upstream parties are (and always have been) covered by these exceptions to the fundamental rule;
• The wording of rule 7(e) has been changed, but only to make its meaning more obvious; there is no change to the intention of the ‘creep’ provisions in rule 7(e);
• Subtle changes have been made to the wording of rule 44(1)(b) and some disclosure clauses in Schedule 1 of the Code to help offerors get the dates right for the disclosures required in the draft offer document sent with a takeover notice and in the formal offer that is sent to shareholders;
• The takeover documents which must be sent to the Panel (under rule 47) now include the notification given by the offeror to the target company, under rule 48. This must show any differences between the draft offer document that was sent to the target company with the takeover notice, and the final offer document to be sent to shareholders (this is usually notified by sending a marked-up version);
• The references in Schedule 1 and Schedule 2 of the Code to persons holding or controlling “more than 5%” of the equity securities in the target company have been changed to refer to holders or controllers of “5% or more”. This aligns these Code disclosure thresholds with the substantial security holder thresholds in the Securities Markets Act 1988.