CODEWORD

In September 2020, the Panel issued the Takeovers Code (Voting Agreements for Schemes of Arrangement) Exemption Notice 2020 exempting persons from rule 6(1) of the Takeovers Code for increases in voting control resulting from entering into voting agreements in relation to schemes of arrangement (the Voting Agreements Exemption).

The Panel has become aware of some uncertainty in relation to whether:

• bidders may rely on the Voting Agreements Exemption to enter into voting agreements which go beyond requiring a shareholder to vote in favour of a scheme proposed under a scheme implementation agreement (SIA) by requiring the shareholder to vote against any potential competing scheme (including a scheme which is not yet the subject of an SIA); and
• shareholders may enter into voting agreements with bidders which would require the shareholder to vote in favour of any scheme proposed by the Code company where the bidder was to pay scheme consideration at or above a specified amount.

The Panel’s intention in granting the Voting Agreements Exemption (as is relevant) had been as follows:

• The Voting Agreements Exemption would only apply to voting commitments in respect of extant schemes.
• The Voting Agreements Exemption would permit voting agreements that require the shareholder to vote against a scheme, if it is extant.
• However, the Voting Agreements Exemption does not apply to voting agreements that require a shareholder to vote for or against potential or hypothetical schemes.

Given the market feedback, the Panel has addressed any potential ambiguity by amending the Voting Agreements Exemption.

The Takeovers Code (Voting Agreements for Schemes of Arrangement) Exemption Amendment Notice 2021 (the Amendment Notice) came into effect on 8 November 2021. Clause 5(aa) states that:

the voting commitment must relate to a scheme of arrangement that is proposed under a scheme implementation agreement that is duly executed by all parties to the agreement and is in force;

The Panel notes that this amendment will also ensure that the voting agreement cannot continue once the SIA is terminated or expires.

If you have any questions regarding this guidance, please contact the Panel executive.