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Offers of Securities in Takeover Bids

PART IV
CONSEQUENCES OF EXEMPTIONS

Questions relating to the disclosure of information can be rationalised to the extent that this may be necessary by use of the exemption power. However, if the Commission were to grant an exemption from the requirement to register a prospectus, then the civil and criminal liability provisions, the rules about voidness, the Commission's intervention powers and the Registrar's powers to decline to register the prospectus as set out in the Securities Act, would no longer apply.
It seems to us that dispensing with the requirement to register a prospectus may reduce the compliance costs for issuers, but it would remove the protections provided to holders of securities under Part II of the Securities Act.

Any exemption from the obligation to prepare an investment statement would be subject to the condition that elsewhere in the takeover offer documentation there is a statement providing key information that is likely to assist a prudent but non-expert member of the public to decide whether or not to accept the takeover offer. For example, the answer to the question "What are my risks?" should be included. It is possible that formal exemption from the investment statement requirement may not achieve a great deal.
Whether or not there is an exemption for the investment statement, the takeover offer documents would come within the Act's definition of "advertisements" in section 2A(1), where they relate to offers of securities. The advertisement liability provisions would apply. However, the Commission would not then have the dual powers of suspension and prohibition that it possesses in relation to an investment statement, and would rely, should the need arise, on the rather more blunt power of immediate prohibition.

PART V
COMMISSION PREFERENCE

The Commission has not yet made a decision whether to grant any exemption or, if it does, what the exemption might be.
However, it believes it is important to ensure that good quality information is available in offers of securities in takeovers, to standards set by reference to the core provisions of securities law.
It believes that there should be comparable rules about liability for false or misleading offer documents and comparable powers for the Commission to intervene where this is appropriate under securities law, notwithstanding that the Takeovers Panel also has powers of intervention under the Takeovers Act and Takeovers Code.