Rule 25(1) and shareholder approval conditions in offers

Published 1 December 2015

Following the recent takeover offer by Briscoe Group Limited for Kathmandu Holdings Limited, the Panel has updated its Guidance Note on Offer Documents with guidance relating to the use of shareholder approval conditions in an offer.

The update provides that, in certain limited circumstances, it may be possible for an offer to be made subject to shareholder approval. In July 2015, Briscoe made a full takeover offer for Kathmandu. The offer was a major transaction for Briscoe and was conditional upon approval by the shareholders of Briscoe under section 129 of the Companies Act.

Briscoe sought to comply with rule 25(1) on the basis that irrevocable undertakings, in favour of, and enforceable by the Panel and Kathmandu, were given by:

  • Briscoe, to convene its shareholders’ meeting before the latest date by which the offer could be declared unconditional; and 
  • the shareholders who held more than 75% of the voting rights in Briscoe appointing a proxy and irrevocably instructing that proxy holder to vote in favour of the major transaction resolution at the shareholders meeting.

The effect of the undertakings was to eliminate the risk that the resolution could in effect allow Briscoe to have an option over the shares of Kathmandu.