Two reminders for Code companies and their directors about Code compliance

Published 1 September 2015

The Panel has recently dealt with a number of enforcement matters and takes this opportunity to remind Code companies and their directors and advisers of the following matters. 

First, transactions undertaken in accordance with a class exemption granted by the Panel must accord strictly with the conditions of the exemption. If a condition of a class exemption is not met, then the exemption will not apply to the transaction in question. Any resulting breach of the Code will require the Panel to consider whether to exercise its enforcement powers under Part 3 of the Takeovers Act 1993.

Secondly, when Code companies are allotting shares to raise capital they need to consider whether any shareholder’s voting control position could be subject to the Code. If so, then the company will have certain compliance obligations under the Code. When considering these obligations, directors of Code companies planning on participating in the capital raising should consider whether they are associates of the relevant shareholder. If so, those directors may have Code compliance obligations as well.

Directors of Code companies should consider seeking legal advice on compliance with the Code and any applicable class exemption. Legal advisers are reminded that the Panel executive is available to discuss Code matters on a confidential basis.

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