Erratum: Rule 24c(1)(A) of the Code

Published 1 November 2013

On 1 June 2013, a number of “technical” amendments were made to the Takeovers Code. CodeWord 34 (May 2013) contains a summary of these amendments.

The amending regulations added a new rule 24C to the Code. This rule provides:

24C Extension of offer period if minimum acceptance condition satisfied or waived in final week

(1) This rule applies if –

(a) the offer is subject to a minimum acceptance condition referred to in rule 23; and

(b) that condition is satisfied or waived in the period that begins 7 days before the end of the offer period.

(2) If this rule applies, the offer period is extended for 14 days from the day on which the condition referred to in subclause (1) is satisfied or waived.

Rule 24C(1)(a) contains a drafting error. The automatic extension of the offer period was intended to apply to all minimum acceptance conditions. As it is currently drafted, the rule only applies to a minimum acceptance condition referred to in rule 23. Rule 23 provides:

23 Minimum acceptance condition

If, on the date of an offer, the offeror does not hold or control more than 50% of the voting rights in the target company, the offer must be conditional on the offeror receiving acceptances in respect of voting securities that, when taken together with voting securities already held or controlled by the offeror, confer—

(a) more than 50% of the voting rights in the target company; or

(b) in the case of a partial offer, any lesser percentage approved under rule 10(1)(b).

This means that, until the drafting error is resolved, a 90% minimum acceptance condition will not be subject to the automatic extension of the offer period, under rule 24C(1)(a).

The Panel is working with officials to remedy the error.