CODEWORD

The Panel recently considered how the term “share parcels” (used in the definition of Code company) should be interpreted. Given this is a threshold issue relating to whether a company is a Code company, the Panel thought it appropriate to set out its view on the matter.

In the Panel’s view, for the purposes of the Code, a share parcel comprises all of the shares which are either:

(a) held by an individual shareholder; or

(b) held jointly by multiple shareholders (e.g., the trustees of a trust).

For clarity, multiple classes of shares which are held by one shareholder (or held jointly by multiple shareholders) can therefore form one share parcel for Code purposes.

We have included an example to illustrate this point:

There are two shareholding trusts (Trust I and Trust II). The trustees of these trusts hold various shares jointly.

There are two classes of shares in the company:

(a) ordinary shares; and

(b) A shares (which carry preferential entitlements on liquidation but otherwise confer the same rights and entitlements as ordinary shares).

The trustees of Trust I and Trust II each hold (jointly) 100 ordinary shares; and 100 A shares. The company has two share parcels (the Trust I parcel and Trust II parcel).