or had a cash alternative. However, outstanding security holders have the right to object to the price under the objection procedure in rule 57. The requirement for the independent adviser’s certificate has been removed. This is because outstanding security holders will have recently received an independent adviser’s report, under rule 21, on the merits of the offer, including the value of the target company and of the shares under the offer.

This change only affects compulsory acquisition following a takeover offer. It does not affect compulsory acquisition where a person becomes a dominant owner through other Code mechanisms e.g. "creeping" to the 90% threshold or through an allotment or an acquisition. In these circumstances an independent adviser approved under rule 57(1) would be required to certify as fair and reasonable the cash sum that must be paid for the outstanding securities.

In summary, the changes mean that an independent adviser’s report is required under rule 57 only where:

• no takeover offer was made; or
• a takeover offer was made and:
  • the takeover offer was not for cash or did not include a cash alternative; and
  • acceptances were received for 50% or less of the equity securities under the takeover offer.

CLARIFICATION OF SOME RULES AND SOME MISCELLANEOUS TECHNICAL ADJUSTMENTS

Partial offers

Rules 9 and 10 contain the Code’s general provisions about partial offers. Partial offers may be for a specified percentage of the voting securities of the target company not already held or controlled by the offeror that, together with the voting securities already held or controlled by the offeror, confer either:

• above 50%; or
• with the approval of the target company’s shareholders, 50% or less.

These rules were not intended to allow a single offer to contain alternative proposals, e.g. an offer that would result in the offeror holding or controlling more than 50%, or, failing that, an offer for a lesser percentage, with the second alternative acting as a fallback if the more-than-50% level is not achieved.

The amendments clarify that for a partial offer an offeror must opt for only one specified percentage of voting securities – either:

• a specified percentage that would result in the offeror holding or controlling more than 50%, under rule 10(1)(a), or
• a specified percentage that would result in their holding or controlling 50% or less, with shareholder approval, under rule 10(1)(b).

Miscellaneous changes

• The definite article preceding the word "person" in rule 7(c) and (d) has been changed to the indefinite article to clarify that upstream parties are (and always have been) covered by these exceptions to the fundamental rule;
• The wording of rule 7(e) has been changed, but only to make its meaning more obvious; there is no change to the intention of the ‘creep’ provisions in rule 7(e);
• Subtle changes have been made to the wording of rule 44(1)(b) and some disclosure clauses in Schedule 1 of the Code to help offerors get the dates right for the disclosures required in the draft offer document sent with a takeover notice and in the formal offer that is sent to shareholders;
• The takeover documents which must be sent to the Panel (under rule 47) now include the notification given by the offeror to the target company, under rule 48. This must show any differences between the draft offer document that was sent to the target company with the takeover notice, and the final offer document to be sent to shareholders (this is usually notified by sending a marked-up version);
• The references in Schedule 1 and Schedule 2 of the Code to persons holding or controlling "more than 5%" of the equity securities in the target company have been changed to refer to holders or controllers of "5% or more". This aligns these Code disclosure thresholds with the substantial security holder thresholds in the Securities Markets Act 1988.

TRANSITIONAL ARRANGEMENTS

The amendment regulations include transitional arrangements. The technical amendments to the Code will not apply in respect of any of the following: