Class Exemption from Rule 46(1)

Published 1 March 2018

The Takeovers Panel has granted an exemption from rule 46(1)(a)(ii)(A) of the Code which requires a target company to send a target company statement (TCS), including an independent adviser’s report (IA report), to shareholders within 14 days after it receives notice that a takeover offer has been despatched.

The new exemption (clause 25F of the Takeovers Code (Class Exemptions) Notice (No 2) 2001) grants the exemption on the condition that the TCS is instead made available on the company’s website in a prominent position within that 14-day period. The company must also send the TCS to its shareholders as soon as practicable in the case of shareholders who receive documents electronically or within 3 further days in any other case.

The exemption was proposed after a wider discussion with independent advisers about their role, and specifically the time constraints imposed by the Code on independent advisers preparing IA reports in respect of surprise takeovers. Given that time must be allowed for the appointment process of the independent adviser, the Panel’s approval process, and printing and posting of the TCS and IA report, independent advisers could be under considerable time pressure when preparing IA reports for these types of transactions. The new exemption allows target companies an additional three days for printing and posting of hard copy TCS.

The Panel considered it was appropriate and consistent with the objectives of the Code to grant the exemption as it would increase confidence and integrity in the takeovers market by increasing the time available to target companies and independent advisers to prepare the TCS and IA reports. It would also support an efficient takeovers market by ensuring that shareholders continue to have access to the TCS within 14 days of the takeover offer being despatched. The Panel considered that these benefits outweighed the impact on shareholders who may have to wait an additional period of time before they receive a TCS by post.

Electronic sending of documents is consistent with the policy of facilitating the use of technology in every day transactions. The Panel encourages shareholders who have not already done so to register their email address with the companies they invest in, and ensure that their contact details on the share register are updated as needed.