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| Code Word
July 2010
Compliance with rule 64 of the Code - prohibition on misleading or deceptive conduct
32.
Rule 64 of the Code prohibits misleading or deceptive conduct in relation to Code regulated transactions or events.
33.
Rule 64 provides that:
(1)
A person must not engage in conduct that is-
(a)
conduct in relation to any transaction or event that is regulated by [the] Code; and
(b)
misleading or deceptive or likely to mislead or deceive.
(2)
A person must not engage in conduct that is-
(a)
incidental or preliminary to a transaction or event that is or is likely to be regulated by [the] Code; and
(b)
misleading or deceptive or likely to mislead or deceive.
34.
Any statements, actions or other conduct by any person
in relation to the downstream Code company (or
potentially the upstream acquisition) would be subject
to the rule 64 prohibition.
35.
Particular care should be taken over 'last and final
statements'. For example,if the upstream acquirer
were to state that it was going to elect the decrease
compliance option, that would constitute a last and final
statement under rule 64. The Panel would likely find that
rule 64 had been breached if the upstream acquirer did
not then elect the decrease compliance option.
36.
Likewise, shareholders, directors and any other persons
are subject to the rule 64 prohibition against misleading
or deceptive conduct.
37.
The Panel's policy on last and final statements is set
out in Code Word Number 22 (available on the Panel's
website under Publications).8
If the purpose test is not satisfied or the upstream acquisition is of a target that is not listed on a recognised exchange, the Panel will most likely not grant an unconditional exemption.
However, the Panel will normally grant a conditional exemption in these circumstances.
Footnotes