• PARAGRAPH 9 PARAGRAPH 9 THE MANDATORY OFFER AND ITS TERMS RULE 9

    • 9.1 9.1 WHEN A MANDATORY OFFER IS REQUIRED AND WHO IS PRIMARILY RESPONSIBLE FOR MAKING IT

      Except with the consent of the Panel, when:

      (a) any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares in which persons acting in concert with him are interested) carry 30% or more of the voting rights of a company; or
      (b) any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30% of the voting rights of a company but does not hold shares carrying more than 50% of such voting rights and such person, or any person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested,

      such person shall extend offers, on the basis set out in Paragraph 9.4, to the holders of any class of equity share capital whether voting or non-voting and also to the holders of any other class of transferable securities carrying voting rights. Offers for different classes of equity share capital must be comparable; the Panel should be consulted in advance in such cases.

      An offer will not be required under this Paragraph where control of the Target is acquired as a result of a voluntary offer made in accordance with the Takeover Rules to all the holders of voting equity share capital and other transferable securities carrying voting rights.

      • Guidance Notes on Paragraph 9.1

        Whitewash Procedure

        When the issue of new securities as consideration for an acquisition or a cash subscription would otherwise result in an obligation to make a general offer under this Paragraph, the Panel will normally waive the obligation if there is an independent vote at a shareholders' meeting. The requirement for a general offer will also be waived, provided there has been a vote of independent shareholders, in cases involving the underwriting of an issue of shares. If an underwriter incurs an obligation under this Paragraph unexpectedly, for example as a result of an inability to sub-underwrite all or part of his liability, the Panel should be consulted.

        The appropriate provisions of the Takeover Rules apply to whitewash proposals. Full details of the potential number and percentage of shares in which the person or group of persons acting in concert might become interested (together with details of the different interests concerned) must be disclosed in the document published in connection with the issue of the new securities, which must also include competent independent advice on the proposals which the shareholders are being asked to approve, together with a statement that the Panel has agreed to waive any consequent obligation under this Paragraph to make a general offer. The resolution must be made the subject of a poll. In addition, unless the person or group of persons acting in concert has entered into an agreement with the company not to make an offer, or has made a statement in the document that it does not intend to make an offer, the document must contain a statement that the person or group will not be restricted from making an offer for the company in the event that the proposals are approved at the shareholders' meeting. The Panel must be consulted and a proof document submitted at an early stage.

        When a person or group of persons acting in concert may, as a result of such arrangements, come to hold shares carrying more than 50% of the voting rights of the company, specific and prominent reference to the possibility must be contained in the document and to the fact that the person or group will be able to acquire interests in further shares without incurring any further obligation under Paragraph 9 to make a general offer.

        When a waiver has been granted, as described above, in respect of convertible securities, options or rights to subscribe for shares, details, including the fact of the waiver and the maximum number of securities that may be issued as a result, should be included in the company's annual report and accounts until the securities in respect of which the waiver has been granted have been issued or it is confirmed that no such issue will be made.

        Notwithstanding the fact that the issue of new securities is made conditional upon the prior approval of a majority of the shareholders independent of the transaction at a general meeting of the company:

        (a) the Panel will not normally waive an obligation under this Paragraph if the person to whom the new securities are to be issued or any persons acting in concert with him have acquired any interest in shares in the company in the 12 months prior to the publication of the circular relating to the proposals but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of the company in relation to the proposed issue of new securities;
        (b) a waiver will be invalidated if any acquisitions of interests in shares are made in the period between the publication of the circular and the shareholders' meeting.

        In exceptional circumstances, the Panel may consider waiving the requirement for a general offer where the approval of independent shareholders to the transfer of existing shares from one shareholder to another is obtained.

    • 9.2 OBLIGATIONS OF OTHER PERSONS

      In addition to the person specified in Paragraph 9.1, each of the principal members of a group of persons acting in concert with him may, according to the circumstances of the case, have the obligation to extend an offer.

    • 9.3 CONDITIONS AND CONSENTS

      Except with the consent of the Panel:

      (a) offers made under Paragraph 9 must be conditional only upon the Bidder having received acceptances in respect of shares which, together with shares acquired or agreed to be acquired before or during the offer, will result in the Bidder and any person acting in concert with it holding shares carrying more than 50% of the voting rights; and
      (b) no acquisition of any interest in shares which would give rise to a requirement for an offer under this Paragraph may be made if the making or implementation of such offer would or might be dependent on the passing of a resolution at any meeting of shareholders of the Bidder or upon any other conditions, consents or arrangements.

    • 9.4 CONSIDERATION TO BE OFFERED

      (a) An offer made under Paragraph 9 must, in respect of each class of share capital involved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the Bidder or any person acting in concert with it for any interest in shares of that class during the 12 months prior to the announcement of that offer. The Panel should be consulted where there is more than one class of share capital involved.
      (b) If, after an announcement of an offer made under Paragraph 9 for a class of share capital and before the offer closes for acceptance, the Bidder or any person acting in concert with it acquires any interest in shares of that class at above the offer price, it shall increase its offer for that class to not less than the highest price paid for the interest in shares so acquired. Immediately after the acquisition, an appropriate announcement must be made in accordance with Paragraph 7.1.
      (c) In certain circumstances, the Panel may determine that the highest price calculated under paragraphs (a) and (b) should be adjusted.
      (d) The cash offer or the cash alternative must remain open after the offer has become unconditional as to acceptances for not less than 14 days after the date on which it would otherwise have expired (see Paragraph 31.4).

    • 9.5 OBLIGATIONS OF DIRECTORS

      When directors (and their close relatives and related trusts) sell shares to a person (or enter into options, derivatives or other transactions) as a result of which that person is required to make an offer under this Paragraph, the directors must ensure that as a condition of the sale (or other relevant transaction) the person undertakes to fulfil his obligations under the Paragraph. In addition, except with the consent of the Panel, such directors should not resign from the board until the first closing date of the offer or the date when the offer becomes wholly unconditional, whichever is the later.

    • 9.6 VOTING RESTRICTIONS AND DISPOSAL OF INTERESTS

      Where the Panel agrees to the disposal of interests in shares by a person as an alternative to making an offer pursuant to Paragraph 9.1, the Panel must be consulted as to the interests required to be disposed of and the application, pending completion of the disposal, of restrictions on the exercise of the voting rights (or the procurement of the exercise of the voting rights) attaching to the shares in which that person and persons acting in concert with that person are interested. Similarly, where an offer made pursuant to Paragraph 9.1 lapses for a reason other than the acceptance condition not being satisfied, the Panel must be consulted regarding the ability of the Bidder and any persons acting in concert with it to exercise, or procure the exercise of, the voting rights attaching to the shares of the Target in which they are interested.