The Takeover Rules
The Takeover Rules comprise rules made by the Irish Takeover Panel under the powers granted to it by the 1997 Act and by the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, as amended (“Regulations”).
The Panel is designated under the Regulations as the competent authority for the purpose of Article 4(1) of the Directive.
The Regulations, which were made by the Minister for Enterprise, Trade and Employment, came into operation on 20 May 2006.
Regulation 4(1) of the Regulations applies the 1997 Act, subject to the Regulations, to each company a takeover bid (as defined in the Regulations) in respect of which the Panel has jurisdiction to supervise under the Regulations. Under Regulation 4(3), references to a “relevant company” in the 1997 Act include references to each company a bid for which the Panel has jurisdiction to supervise.
The Rules, of which there are 41, have been made principally to ensure that takeovers (including takeover bids as defined in the Regulations) and other relevant transactions comply with the principles (“General Principles”) set out in the Schedule to the 1997 Act.
The General Principles are set out below. All of the General Principles, with the exception of General Principle 7, derive from the Directive.
- All holders of the securities of an offeree of the same class must be afforded equivalent treatment; moreover, if a person acquires control of a company, the other holders of securities must be protected.
- The holders of the securities of an offeree must have sufficient time and information to enable them to reach a properly informed decision on the offer; where it advises the holders of securities, the board of the offeree must give its views on the effects of implementation of the offer on employment, conditions of employment and the locations of the offeree’s places of business.
- The board of an offeree must act in the interests of the company as a whole and must not deny the holders of securities the opportunity to decide on the merits of the offer.
- False markets must not be created in the securities of the offeree, of the offeror or of any other company concerned by the offer in such a way that the rise or fall of the prices of the securities becomes artificial and the normal functioning of the markets is distorted.
- An offeror must announce an offer only after ensuring that he or she can fulfil in full any cash consideration, if such is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration.
- An offeree must not be hindered in the conduct of its affairs for longer than is reasonable by an offer for its securities.
- A substantial acquisition of securities (whether such acquisition is to be effected by one transaction or a series of transactions) shall take place only at an acceptable speed and shall be subject to adequate and timely disclosure.
The Rules also provide an orderly framework within which takeovers are conducted. They are not concerned with the financial or commercial advantages or disadvantages of a takeover, which are matters for the companies concerned and their shareholders. Nor are the Rules concerned with issues such as competition and mergers policies, which are regulated under different legislation.
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