Guernsey to Adopt City Code on Takeovers and Mergers - International Law Office

Panel on Takeovers and Mergers
Fair and Equal Treatment of Shareholders
Consistency of Regulation
Applicability
Comment


The Companies Law 2008, which came into force on July 1 2008, provided the basis for the introduction of secondary legislation conferring functions on the Panel on Takeovers and Mergers in the supervision of takeover and merger activity in Guernsey. The Companies (Panel on Takeovers and Mergers) Ordinance 2009 will come into force on July 1 2009.

Panel on Takeovers and Mergers

The panel is an independent UK body formed in 1968 to regulate takeovers and mergers in the City of London. It has supervised takeovers and mergers involving Guernsey companies on an informal, extra-statutory basis since its formation, but has rarely intervened.

The panel regulates takeovers and mergers by administering the City Code on Takeovers and Mergers. Its composition and powers have evolved as circumstances have developed in the marketplace. The panel's statutory functions in the United Kingdom are set out in Part 28, Chapter 1 of the Companies Act 2006.

At present, the number of takeovers and mergers of Guernsey companies would not justify the resources required to operate a panel dealing only with Guernsey companies, although such a panel may be established in future.

Fair and Equal Treatment of Shareholders

In the past, sceptics have suggested that Guernsey's formal adoption of the code would simply be a means of regulating competition by the back door. However, the government has emphasized that the panel's supervision of takeovers and mergers will focus primarily on ensuring the fair and equal treatment of all shareholders during a takeover or merger, and that it will not address competition issues.

Consistency of Regulation

The ordinance draws heavily on Part 28, Chapter 1 of the act. This is in line with Jersey and the Isle of Man. As the panel will also supervise takeovers and mergers in those jurisdictions, the legislation across these jurisdictions must be consistent so that the panel can apply the same operational procedures across the board.

Applicability

The code will apply to:

• offers for all companies - other than open-ended investment companies - that are registered (and have their registered office) in the United Kingdom, the Channel Islands or the Isle of Man and that have securities admitted to trading on a regulated market in the United Kingdom or on a stock exchange in the Channel Islands or the Isle of Man;
• closed-ended Guernsey funds listed on the London Stock Exchange, AIM or the Channel Islands Stock Exchange;
• all other offers for public companies which have their registered offices in the United Kingdom, Channel Islands or the Isle of Man and which are considered by the panel to have their place of central management and control in those jurisdictions - private companies will also be covered in certain limited circumstances, depending on their previous listings, marketing arrangements and issue of prospectuses; and
• statutory and chartered companies (where appropriate).

Comment

Although the code will now be placed on a statutory footing, since the panel has already been enforcing the code in relation to Guernsey takeovers and mergers on an informal basis, the status quo will remain.

For further information on this topic please contact Sean Cheong or Sam Dingle at Collas Day by telephone (+44 1481 723 191) or by fax (+44 1481 711 880) or by email (sean.cheong@collasday.com or sdingle@collasday.com).