From 30 September 2013, all AIM-listed companies registered in the United Kingdom, Channel Islands or the Isle of Man (relevant territories) will be subject to the United Kingdom’s Takeover Code. There are several implications for such companies.
From 30 September 2013, all AIM-listed companies registered in the United Kingdom, Channel Islands or the Isle of Man (relevant territories) will be subject to the United Kingdom’s Takeover Code.
This is a significant change. Currently, such companies are subject to a residency test which means that if their place of central management and control is outside of the relevant territories, they are not within the Code’s jurisdiction.
Implications for AIM Companies That Will Become Subject to The Takeover Code
There will be no transitional arrangements or grandfathering for transactions that straddle 30 September. Any subsisting offer made prior to 30 September will become subject to the Code on that date.
Directors and Investors
Directors of affected companies will need to familiarise themselves with their obligations and responsibilities under the Code, e.g., announcement requirements and other responsibilities concerning bid approaches.
The consequences of becoming subject to the Code include the application of mandatory bid rules, which mean that Panel waiver and shareholder consent is needed for an increase in a party or concert party’s shareholding to over 30 per cent, or any increase between 30 per cent and 50 per cent. The implications, including for an investor with convertible securities which, if exercised, would trigger a mandatory bid, need to be considered with advisers and the Panel.
Articles of Association
An affected company’s articles should be reviewed to identify any provisions that might replicate or, more importantly, conflict with the provisions of the Code. Any such provisions should be removed by shareholder resolution.
Making an Announcement
Where companies have publicly stated that the Code does not apply to them, e.g., in their AIM admission document, they will need to announce (on, or prior to, 30 September) that, with effect from 30 September, the Code will apply.
AIM-listed companies incorporated outside the relevant territories will not be subject to the Code.