CODEWORD

Many shareholders in Code companies hold shares in the capacity as a trustee of a private family trust. The Takeovers Panel has granted a class exemption from rule 6(1) of the Takeovers Code for persons who are or who become trustees of a private family trust: the Takeovers Code (Trustees of Family Trusts) Exemption Notice 2012.

The exemption is available for trustees who increase their voting control in a Code company either:

(a) as a result of being appointed as a new trustee and so becoming a joint shareholder with the other trustees; or

(b) as a result of a reduction in the number of trustees of a family trust (which is deemed to have increased the extent to which each of the remaining trustees share in the trust’s voting control in the Code company).

In either case, the conditions of exemption require that there is no increase in the trust’s voting control in the Code company. The conditions of the exemption require that:

(a) the family trust is established and remains mainly for the benefit of the settlor or appointers, their relatives, or persons for whom they have natural love and affection;

(b) under the trust deed, the trustees must act unanimously;

(c) the changes to trustees must be a bona fide reorganisation of the family trust or be the result of an event beyond the control of the trustees;

(d) there is no collateral purpose of enabling the trustees to increase voting control in a Code company otherwise than in compliance with the Code; and

(e) the changes to trustees involve no increase in the trustees’ voting control in the Code company.