CODEWORD

The Panel’s Guidance Note on Schemes of Arrangement states that the standard of disclosure required by the Panel in a scheme of arrangement will be equivalent to the standard that would be required by the Code in a Code-regulated transaction. This means that the relevant disclosures required by Schedules 1 and 2 of the Code and rule 15 or rule 16 of the Code need to be made as set out in the Code, or modified to better match the proposed scheme.

Under the Code, the particulars in Schedule 1 are disclosures required from the offeror in the offer document, and the particulars in Schedule 2 are disclosures required from the target company in the target company statement. Directors and senior officers of the offeror and the target company certify their respective disclosures.

In a scheme of arrangement, directors and senior officers of the offeror and the target company understandably wish to certify the accuracy of only the information supplied by or confirmed by their company. In order to limit the extent of the disclosure that is certified by the ‘offeror’ and the ‘target company’ respectively, scheme documents invariably include the Schedules 1 and 2 equivalent disclosures in separate appendices to the scheme booklet.

The unavoidable consequence of this is that some information set out in the appendices will also be included in the body of the scheme booklet in order to give the full picture of the proposed scheme. This results in repetition of information in the scheme documentation.

Rule 64 applies to scheme documents until the exclusion in section 236B of the Companies Act 1993 applies – that is, once the Court has made final orders approving that a scheme is binding on an applicant company and its shareholders. In addition, scheme documents are submitted to the Court for approval to be put to shareholders in accordance with section 236A of the Companies Act. The Court process ensures that an applicant takes responsibility for the accuracy of scheme documents and any other evidence put before the Court.

The Panel considers that the certification is superfluous and causes unnecessary repetition in scheme documents. To encourage clear and concise Code disclosures, the Panel will no longer require certification in a scheme document by the ‘offeror’ and ‘target company’, akin to Schedules 1 and 2 of the Code.