Explanation of the anti-avoidance provisions of the Takeovers Code

Published 1 September 2002

The Takeovers Code is concerned with regulating the change of control of “Code companies”, that is, listed companies and certain larger non-listed companies. The mechanisms of the Code are centered around the “fundamental rule” contained in rule 6(1) and a number of anti-avoidance measures contained in rules 6(1) and 6(2) overview that are designed to ensure the effectiveness of the Code. This issue of CodeWord explains the fundamental rule and sets out the principal anti-avoidance measures associated with rules 6(1) and 6(2).

These measures include the control and associates elements of rule 6(1), and the three deeming provisions in rule 6(2). This explanation presents a “layered” examination of anti-avoidance. The discussion commences with the most elemental anti-avoidance features of the fundamental rule as applied to simple transactions and proceeds to the more arcane features as they relate to increasingly complex transactions.