Takeovers Code - Exemption for Small Companies

The Takeovers Code helps to protect shareholders in takeover situations, but the wide ambit of the Code unintentionally hamstrings small, high growth companies in the process. The Takeovers Panel is looking at creating an exemption for small companies, and has been consulting with industry on potential solutions. The Panel's second consultation paper is here.

You can read our full submissions here. In brief:

  • The Panel’s proposed exemption only relates to capital raising transactions. We are equally concerned about the disproportionate or prohibitive costs involved with other change of control transactions. We believe the Panel's proposed exemption only solves a small subset of the problems that have been demonstrated.
  • To provide effective relief for small Code companies, we recommend that the proposed exemption is extended to cover all transactions, unless either the board or 10% or more of voting rights opt for normal Code compliance for a particular transaction.
  • This extended exemption would rightly place control within the hands of the shareholders the regulation is designed to protect. The board and shareholders can then make commercial decisions about whether normal Code compliance is preferable for each applicable transaction.