CODEWORD

Rule 46 of the Code requires a target company to send a target company statement (“TCS”), but the Code does not specify how to determine the date of the TCS. However, clauses 5 and 6 of Schedule 1 to the Code require that the TCS includes or is accompanied by the date for information about the ownership of equity securities of the target company and trading in target company equity securities over time periods defined by reference to the date of the TCS, so the date of the TCS can have a material effect on the disclosures made in the TCS.

While there are no explicit rules in the Code regarding the date of the TCS, the target company is subject, as always, to rule 64’s prohibition on misleading conduct. The greater the discrepancy between the date of the TCS and the date on which the TCS is sent to shareholders and the offeror, the more likely that the information in the TCS will be inaccurate and possibly misleading to shareholders, and consequently be in breach of rule 64.

Furthermore, rule 46 requires the target company to send the TCS either:

(a) to the offeror within 14 days after it receives the takeover notice (or any longer period as the offeror may allow) (rule 46(a)(i)); or

(b) to the offerees within 14 days after it receives the despatch notice (rule 46(a)(ii)).

In non-hostile takeovers, target companies can send the TCS in accordance with rule 46(a)(i) in order to allow the TCS to be sent to shareholders concurrently with the offer document. In that scenario, it would be common for the TCS to be dated on or about the date of the offer document.

A far more common scenario, and certainly when the takeover is hostile, is that the TCS is prepared in response to the offer document and so is sent in accordance with rule 46(a)(ii). In that scenario, it would be counterintuitive and arguably misleading for the TCS to be dated prior to the date on which the offer document was sent.

While the dating of a TCS will depend on the circumstances of the takeover to which it relates, target companies should be mindful of their obligations under the Code. Legal advisers are reminded that the Panel executive is available to discuss Code matters on a confidential basis. If there is any doubt as to whether dating a TCS in a particular way may mislead shareholders, the Panel executive is available to discuss the issues.