|
Schemes of Arrangement And Amalgamations Involving Code Companies
Recommendations to the Minister of Commerce
The Panel's recommendation to the Minister regarding schemes of arrangement
191. Taking into account the views expressed by the market, submissions received on its proposed amendments and the relationship between the Code and the Companies Act, and its own concerns, the Panel in its function of keeping the law relating to takeovers under review recommends to the Minister that the provisions of the Code and the Companies Act be amended as follows:
- (a)
- the Code be amended to no longer apply to changes of control resulting from a scheme of arrangement under Part XV of the Companies Act; and
- (b)
- Part XV of the Companies Act be amended to require that:
- (i)
- the Courts take into account the principles of the Code when deciding the requirements for approval of schemes of arrangement, including the level of shareholder approval required and the information to be provided to shareholders; and
-
- (ii)
- before approving a scheme of arrangement the Court receives and takes into account recommendations from the Panel as to the requirements to be met for the scheme of arrangement to be approved.
192. A copy of the suggested amendments to the Code and Part XV of the Companies Act are attached as Appendix H.
193. In terms of the Panel's recommendations to the Court as to the requirements to be met for a scheme to be approved, the Panel's recommendations would address:
- (a)
- The information to be provided to code company shareholders in respect of the proposed transaction. The Panel considers that the information provided to shareholders should be consistent with the information which would be required in respect of a code transaction, including an independent adviser's report; and
- (b)
- The level of shareholder approval required in order for the scheme to proceed.
194. In respect of recommending an appropriate shareholder approval threshold to the Court, the Panel would take the following approach:
- The Panel will first consider whether the proposed transaction is akin to a compulsory acquisition (or force out) or is in the nature of a merger of shareholder interests.
If the transaction is a scheme in which code company shareholders are offered cash or other consideration for their shares and will not be continuing as shareholders in a merged entity, the transaction will be in the nature of a compulsory acquisition rather than a merger of shareholder interests. In such situations the Panel would be likely to recommend to the Court that the appropriate shareholder approval threshold is 90% of total voting rights, i.e. the same as the compulsory acquisition threshold
- If the transaction is in the nature of a merger of shareholder interests the Panel would be likely to recommend that the scheme proposal be approved by:
- (i)
- At least 75% of the votes cast at a meeting at which all shareholders can vote, provided that the resolution represents more than 50% of the total voting rights in the code company; and
- (ii)
- At least 75% of the votes cast at the meeting of independent shareholders.
- The Panel would of necessity need to ensure that it considered the particular circumstances of each case in applying the guidelines described above.
195. The role of the Panel in respect of schemes involving code companies may increase under an amended Companies Act. The Panel will need to make recommendations to the Court and may be requested to appear before the Court.
196. It would be appropriate for parties proposing a scheme of arrangement to meet the costs of the Panel's involvement.
197. The Panel suggests that if the Code and the Companies Act are amended as it recommends, it would be appropriate for the Takeovers (Fees) Regulations 2001 to be amended to allow the Panel to recover its costs from parties to a scheme proposal.
PREVIOUS | INDEX | BACK TO TOP | NEXT
|
