CODEWORD

As indicated in CodeWord 39, the Panel has now granted the Takeovers Code (Small Code Companies) Exemption Notice 2015 for persons who increase their holding or control of voting rights in a “small”, unlisted Code company as a result of an allotment of voting securities by the Code company. 

For the purposes of the exemption, a company is “small” if its assets total $20 million or less. The exemption permits a small company to opt out of Code compliance. The exemption applies only if: 

• the company’s board has resolved that, in its opinion, opting out is in the best interests of the company;
• the company has given shareholders a disclosure document and an opportunity to object to the opt out and to require full Code compliance; and
• objections to the opt out represent less than 5% of the “free float” shares.

Free float in this context means the shares belonging to shareholders who are not relying on the exemption. 

The Panel intends to consider whether it is appropriate to extend the application of the class exemption to other Code transactions after the operation of the class exemption for allotments has been observed.