The Takeovers (Amendment) (EU Exit) Regulations 2019

Made: 11th February 2019

Coming into force in accordance with regulation 1

In accordance with paragraph 1(1) of Schedule 7 to the European Union (Withdrawal) Act 2018 a draft of this instrument has been laid before Parliament and approved by a resolution of each House of Parliament.

Citation and commencement

1

These Regulations may be cited as the Takeovers (Amendment) (EU Exit) Regulations 2019 and come into force on exit day.

Amendments to the Companies Act 2006

2

The Companies Act 2006[^f00002] is amended as follows.

3

In section 943—

• (a) for subsection (1), substitute—

(1) The Panel must make rules— (a) giving effect to the general principles in Part 1 of Schedule 1C, and (b) in accordance with Part 2 of that Schedule.

• (b) after subsection (1), insert—

(1A) Rules must specify the percentage of voting rights that gives a person control of a company for the purposes of this Chapter and how it is to be calculated.

• (c) in subsection (7), for “of the Takeovers Directive” substitute “given by paragraph 20(1) of Schedule 1C”;

• (d) omit subsection (8).

4

In section 948[^f00003], in subsection (7) omit paragraphs (b) and (c).

5

In section 950[^f00004], omit subsection (1)(b).

6

In section 953, in subsection (9)—

• (a) in the definition of “offer document”, for “giving effect to Article 6.2 of the Takeovers Directive” substitute “made in accordance with paragraph 12(1) to (3) of Schedule 1C;”;

• (b) for the definition of “offer document rules”, substitute—

• “offer document rules” means rules under section 943(1) designated as rules made in accordance with paragraph 12(4) of Schedule 1C;

• (c) in the definition of “response document”, for “giving effect to Article 9.5 of that Directive” substitute “made in accordance with paragraph 18 of Schedule 1C;”;

• (d) for the definition of “response document rules”, substitute—

• “response document rules” means rules under section 943(1) designated as rules made in accordance with paragraph 18(1) of Schedule 1C;

• (e) in the definition of “takeover bid”, for “same meaning as in that Directive” substitute “meaning given by paragraph 20(1) of Schedule 1C;”.

7

• (1) Section 966 is amended as follows.

• (2) In subsection (1), for “three” substitute “five”.

• (3) In subsection (2), before “regulated market” insert “UK”.

• (4) For subsection (3) substitute—

(3) The second condition is that the company’s articles of association do not contain any restrictions on the transfer of shares or, if they do contain any such restrictions, provide that they are not to apply to— (a) transfers to the offeror, or at the offeror’s direction to another person, during the offer period, or (b) transfers to any person at a time during the offer period when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company. (3A) The third condition is that the company’s articles of association— (a) do not contain any restrictions on rights to vote at a general meeting of the company, or (b) if they do contain any such restrictions, provide that they are not to have effect on rights to vote at a general meeting of the company that— (i) decides whether to take any action which might result in the frustration of the takeover bid, or (ii) is held at a time when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company, unless the restrictions are compensated for by specific pecuniary advantages. (3B) The fourth condition is that the company’s articles of association do not contain any other provision which would be incompatible with the requirements of subsection (3C). (3C) Those requirements are— (a) multiple-vote shares are to carry only one vote each at a general meeting of the company that decides whether to take any action which might result in the frustration of the takeover bid, (b) multiple-vote shares are to carry only one vote each at a general meeting of the company which— (i) is the first such meeting to be held after the end of the offer period, (ii) is held at a time when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company, and (iii) is called at the offeror’s request under section 969 in order to amend the company’s articles of association or to appoint or remove members of the board of directors, and (c) at a time during the offer period when the offeror holds shares amounting to not less than 75% in value of all the voting shares in the company, shareholders are not to have any extraordinary rights to appoint or remove members of the board of directors. (3D) The references in subsections (3A)(b) and (3C)(a) to voting at a general meeting of the company that decides whether to take any action which might result in the frustration of the takeover bid includes a reference to voting on a written resolution concerned with that question. (3E) For the purposes of subsections (3A)(b)(i) and (3C)(a), action which might result in the frustration of the takeover bid is any action of that kind specified in rules under section 943(1) made in accordance with paragraphs 17 or 18 of Schedule 1C. (3F) The references in subsections (3), (3A) and (3C) to voting shares in the company do not include— (a) debentures, or (b) shares that, under the company’s articles of association, do not normally carry rights to vote at its general meetings (for example, shares carrying rights to vote that, under those articles, arise only where specified pecuniary advantages are not provided). (3G) In subsection (3C), “multiple-vote shares” means shares included in a distinct and separate class and carrying more than one vote each.

• (5) In subsection (4), for “third” substitute “fifth”.

• (6) Omit subsection (6).

8

In section 967—

• (a) in subsection (3), for “second and third” substitute “second, third, fourth and fifth”;

• (b) in subsection (4), before “regulated market” insert “UK”;

• (c) in subsection (7), for “second condition” substitute “second, third or fourth condition”.

9

In section 968(5) for “giving effect to Article 9 of the Takeovers Directive” substitute “made in accordance with paragraph 17 or 18 of Schedule 1C”.

10

In section 970—

• (a) in subsection (1), omit paragraph (b) and the “and” after paragraph (a);

• (b) in subsection (2), omit the words from “and,” to the end.

11

In section 971(1)—

• (a) omit the definitions of “offeror” and “takeover bid”;

• (b) at the appropriate place, insert—

• “offeror”, in relation to a takeover bid, means the person making the bid;

• (c) at the appropriate place, insert—

• “takeover bid” has the meaning given by paragraph 20(1) of Schedule 1C;

• (d) in the definition of “offer period”, for the words from “giving effect to Article 7.1” to the end substitute “made in accordance with paragraph 13 of Schedule 1C;”;

• (e) omit the definition of “the Takeovers Directive”.

12

In section 978(1)(c)(ii), for “an EEA State” substitute “the United Kingdom”.

13

In section 980(3)[^f00005], for the words from “that give effect” to the end substitute “made in accordance with paragraph 13 or 14 of Schedule 1C”.

14

After Schedule 1B, insert the Schedule 1C set out in the Schedule to these Regulations.

15

In Schedule 2[^f00006], in Part 2, in Section (E) (General), omit paragraph 5.

16

In Schedule 8[^f00007]—

• (a) in the entry for “company”, after the entry in relation to Part 26, insert—

• (b) in the entry for “offeror”, before the entry in relation to Chapter 2 of Part 28, insert—

• (c) for the entry for “takeover bid (in Chapter 2 of Part 28)” substitute—

• (d) omit the entry for “the Takeovers Directive”;

• (e) in the entry for “voting rights”, before the entry in relation to Chapter 2 of Part 28, insert—

Amendments to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

17

The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008[^f00008] are amended as follows.

18

In Schedule 7, in Part 6, in paragraph 13(6)—

• (a) in the definition of “takeover bid”, for “the Takeovers Directive” substitute “paragraph 20(1) of Schedule 1C to the Companies Act 2006[^f00009]”;

• (b) omit the definition of “the Takeovers Directive”.

Amendment to the Unregistered Companies Regulations 2009

19

The Unregistered Companies Regulations 2009[^f00010] are amended as follows.

20

In Schedule 1, in paragraph 14, at the beginning insert—

(A1) Schedule 1C to the Companies Act 2006 applies to unregistered companies.

SCHEDULE — Schedule to be inserted after Schedule 1B to the Companies Act 2006

Signed

Signed by authority of the Secretary of State for Business, Energy and Industrial Strategy.

Kelly Tolhurst — Minister for Small Business, Consumer and Corporate Responsibility — Department for Business, Energy and Industrial Strategy — 11th February 2019

Explanatory note

(This note is not part of the Regulations)

EXPLANATORY NOTE

These Regulations are made in exercise of the powers in section 8 of the European Union (Withdrawal) Act 2018 (c.16) in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the United Kingdom from the European Union.

These Regulations make amendments to Part 28 of the Companies Act 2006 which relates to company takeovers. The Schedule to these Regulations contains a new Schedule to be added to the Companies Act 2006.

An impact assessment has not been produced for this instrument as no significant impact on the private or voluntary sector is foreseen.

Footnotes

[^f00001]: 2018 c.16.

[^f00002]: 2006 c.46.

[^f00003]: Section 948(7) was amended by the Financial Services Act 2012 (c. 21) Schedule 18, Part 2, paragraphs 110 and 118.

[^f00004]: Section 950 was amended by the Financial Services Act 2012 (c. 21) Schedule 18, Part 2, paragraphs 110 and 119.

[^f00005]: There is an amending instrument but it is not relevant.

[^f00006]: The original Schedule 2 was substituted by a new Schedule 2 containing new Part headings by S.I. 2009/1208.

[^f00007]: There are amending instruments but they are not relevant.

[^f00008]: S.I. 2008/410.

[^f00009]: 2006 c.46.

[^f00010]: S.I. 2009/2436.

[^f00011]: 2000 c.8. Section 420(1) was amended by the Companies Act 2006 (Consequential Amendments etc) Order 2008/948 Schedule 1(2), paragraph 212(1).