Changes relating to shareholder meetings

Published 1 May 2013

Where an acquisition or allotment of shares must be approved by the shareholders of the Code company under rules 7(c) or 7(d), a notice of meeting must be sent to the shareholders that includes the information required by rule 15 (for an acquisition) or rule 16 (for an allotment). Some minor changes will be made to improve the efficiency of this procedure by the amendments.

Change to the definition of “equity securities” and “voting right” (clause 4)

Rules 7(c) and 7(d) apply, respectively, to acquisitions or allotments of “voting securities in [a] Code company or any other body corporate”. However, the Code defines voting securities in such a way that it includes only securities issued by companies registered under the Companies Act 1993. This is a drafting anomaly. The definition of “voting right” (and the related definition of “equity security”) will be amended to extend its application to other forms of bodies corporate.

Identity of upstream acquirer or allottee of voting securities (clauses 10, 11)

The notice of meeting must disclose the identity of the person acquiring voting securities (rule 15(a)) and, in the case of an allotment, the identity of the allottee (rule 16(a)). This means that only the holder of the securities needs to be stated.

Rules 15(a) and 16(a) will now contain the further requirement that the identity of any person increasing their control in the Code company is also disclosed in the notice of meeting.

Stating potential maxima in the notice of meeting (clauses 12, 35)

Rule 16(b) prescribes the particulars that a notice of meeting must contain about an allotment for the purposes of rule 7(d). The Panel has granted numerous exemptions from this requirement in cases where it was not possible for those particulars to be ascertained at the time that the notice of meeting was prepared. The Panel’s exemptions enabled notices of meeting to state the potential maximum number and percentage of securities that could be allotted to the allottee. The Panel granted a class exemption in 2010 to cover the most common transactions that needed exemptions from rule 16(b).

The Code will now be amended to permit a notice of meeting to state potential maximums provided that the assumptions on which those maximums are calculated are clearly disclosed and certain other disclosures are made in the Code company’s annual report and its website. The previous class exemption will be revoked.