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Offers of Securities in Takeover Bids

PART III
PROPOSALS

32. The Commission has formulated four proposals for addressing this matter.

33. The four proposals are outlined in this paper. They relate to the registered prospectus and investment statement. We do not have it in mind to consider granting an exemption in respect of the requirement, where appropriate, to have a trustee and trust deed. The proposals are:
    1. Proposal One - The Commission does not grant an exemption from any of the requirements of the Securities Act or Regulations. To the extent that there is duplication, the Takeovers Panel considers whether to grant exemptions under its own equivalent powers.

    2. Proposal Two - The Commission grants all offerors a partial exemption for takeover offers offering securities, exempting from specific provisions in the Securities Regulations where they are duplicated in the Takeovers Code or are otherwise inappropriate.

    3. Proposal Three - The Commission grants a partial exemption for takeover offerors offering listed securities, exempting the offeror and issuer from most if not all disclosure provisions of the Securities Regulations on the condition that the prospectus contains information as generally required in clause 18(1) of Schedule 1 of the Code. Takeovers involving securities other than listed securities would receive the same exemption as outlined in Proposal Two.

    4. Proposal Four - The Commission grants a full exemption from the requirement to register a prospectus for takeover offerors offering listed securities, on the condition that the takeover offer document contains the type of information generally required under clause 18(1) of Schedule 1 of the Code, an exemption similar to that granted in the Securities Act (Amalgamations) Exemption Notice 2000 (SR 2000/168). Other takeover offerors would receive the same exemption as outlined in Proposal Two above.

34. One option for the Commission is not to grant an exemption, leaving the process to the Takeovers Panel to grant exemptions as it sees fit. The Takeovers Panel, under section 45 of the Takeovers Act 1993, has the power to grant exemptions from any provision of the Takeovers Code.

35. The advantages of this would be:
    1. it would not compromise the operation of securities law in respect of an offer of securities to the public to which the law clearly applied; and

    2. it would leave it to the primary takeovers regulator, the Panel, to decide what adjustments should be made, whether by amendment to, or exemption from, the Code, to meet the reasonable needs of the business community and the investing public in respect of takeover offers.

36. Proposal Two involves granting a limited number of exemptions from the prospectus and investment statement requirements where they apply.

37. This proposal would treat all takeover offerors in the same way, and so would not make a distinction between categories of offerors. It would involve:
    1. requiring all offerors to register a prospectus, but granting an exemption from selected aspects of the prospectus disclosure requirements;

    2. requiring all offerors to provide an investment statement, but granting an exemption from selected parts of the Schedule 3D requirements;

    3. in the case of debt securities, requiring all takeover offerors to register a trust deed and appoint a trustee.

38. It appears that there may be provisions in the First Schedule to the Securities Regulations that could be seen as being unnecessary or less than useful when equity securities are being offered as consideration for a takeover offer. Likewise there are similar provisions in the Second Schedule in the context of offers of debt securities. The exemption would be limited to these matters.

39. Appendix B contains a preliminary indicative list of the provisions of the Schedules that could be the subject of exemptions.

40. The advantage of this proposal would be that it ensured substantial compliance with securities law and avoided unnecessary duplication of obligation arising under the two bodies of applicable law.