Paragraph 4 Right of minority shareholder to be bought out by offeror

(1)

Sub-paragraphs (2) and (3) apply in a case where a takeover offer relates to all the shares in a company.

For this purpose a takeover offer relates to all the shares in a company if it is an offer to acquire all the shares in the company within the meaning of paragraph 1.

(2)

The holder of any voting shares to which the offer relates who has not accepted the offer may require the offeror to acquire those shares if, at any time before the end of the period within which the offer can be accepted—

(a)

the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares to which the offer relates; and

(b)

those shares, with or without any other shares in the company which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met)—

(i)

amount to not less than nine-tenths in value of all the voting shares in the company (or would do so but for paragraph 10(1)); and

(ii)

carry not less than nine-tenths of the voting rights in the company (or would do so but for paragraph 10(1)).

(3)

The holder of any non-voting shares to which the offer relates who has not accepted the offer may require the offeror to acquire those shares if, at any time before the end of the period within which the offer can be accepted—

(a)

the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares to which the offer relates; and

(b)

those shares, with or without any other shares in the company which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met), amount to not less than nine-tenths in value of all the shares in the company (or would do so but for paragraph 10(1)).

(4)

If a takeover offer relates to shares of any class or classes and at any time before the end of the period within which the offer can be accepted—

(a)

the offeror has by virtue of acceptances of the offer acquired or unconditionally contracted to acquire some (but not all) of the shares of any class to which the offer relates, and

(b)

those shares, with or without any other shares of that class which he has acquired or contracted to acquire (whether unconditionally or subject to conditions being met)—

(i)

amount to not less than nine-tenths in value of all the shares of that class, and

(ii)

in a case where the shares of that class are voting shares, carry not less than nine-tenths of the voting rights carried by the shares of that class,

the holder of any shares of that class to which the offer relates who has not accepted the offer may require the offeror to acquire those shares.

(5)

For the purposes of sub-paragraphs (2), (3) and (4), in calculating nine-tenths of the value of all the shares in the company, or all the shares of any class or classes of shares of the company, any shares held by the company as treasury shares shall be treated as having been acquired by the offeror.

(6)

Rights conferred on the holder of shares by sub-paragraph (2), (3) or (4) are exercisable by a written communication addressed to the offeror.

(7)

Rights conferred on the holder of shares by sub-paragraph (2), (3) or (4) are not exercisable after the end of the period of three months from—

(a)

the end of the period within which the offer can be accepted; or

(b)

if later, the date of the notice that must be given under sub-paragraph (8).

(8)

Within one month of the time specified in sub-paragraph (2), (3) or (4), as the case may be, the offeror shall give any shareholder who has not accepted the offer notice in the manner prescribed by regulation 4 of the Companies (Forms) Regulations 1985^f1 for the purposes of section 430A(3) of the Companies Act 1985, (or in the case of Northern Ireland by regulation 4 of the Companies (Forms) Regulations (Northern Ireland) 1986^f2 for the purposes of Article 423A(3) of the Companies (Northern Ireland) Order 1986), of—

(a)

the rights that are exercisable by the shareholder under that sub-paragraph, and

(b)

the period within which the rights are exercisable,

and if the notice is given before the end of the period within which the offer can be accepted, it shall state that the offer is still open for acceptance.

(9)

Sub-paragraph (10) applies where—

(a)

a shareholder exercises rights conferred on him by sub-paragraph (2), (3) or (4);

(b)

at the time when he does so, there are shares in the company which the offeror has contracted to acquire subject to conditions being met, and in relation to which the contract has not become unconditional; and

(c)

the requirement imposed by paragraph (b) of sub-paragraph (2), (3) or (4) (as the case may be) would not be satisfied if those shares were not taken into account.

(10)

The shareholder shall be treated for the purposes of paragraph 5 as not having exercised his rights under this paragraph unless the requirement imposed by paragraph (b) of sub-paragraph (2), (3) or (4) (as the case may be) would be satisfied if—

(a)

the reference in paragraph (b) of that sub-paragraph to other shares in the company which the offeror has contracted to acquire unconditionally or subject to conditions being met were a reference to such shares which he has unconditionally contracted to acquire; and

(b)

the reference in that sub-paragraph to the period within which the offer can be accepted were a reference to the period referred to in sub-paragraph (7).

(11)

Sub-paragraph (8) does not apply if the offeror has given the shareholder a notice in respect of the shares in question under paragraph 2.

(12)

If the offeror fails to comply with sub-paragraph (8) he and, if the offeror is a company, every officer of the company who is in default or to whose neglect the failure is attributable, commits an offence.

(13)

A person who commits an offence under sub-paragraph (12), but would have committed an offence under section 430A(6)^f3 of the Companies Act 1985 (or as the case may be, Article 423A(6)^f4 of the Companies (Northern Ireland) Order 1986) had that section (or Article) not been disapplied by regulation 30, is liable on conviction to the penalties in that section (or Article).

(14)

In all other cases a person who commits an offence under sub-paragraph (12) is liable—

(a)

on conviction on indictment, to a fine;

(b)

on summary conviction, to a fine not exceeding the statutory maximum;

(c)

for continued contravention, to a daily default fine not exceeding £100.

(15)

If an offeror other than a company is charged with an offence for failing to comply with sub-paragraph (8) it is a defence for him to prove that he took all reasonable steps for securing compliance with that sub-paragraph.

Annotations

Footnotes

f1: S.I. 1985/854 as amended by S.I. 1987/752.
f2: S.R. 1986/287 as amended by S.R. 1991/412.
f3: Section 430A(6) was substituted by section 172 of, and by Schedule 12 to, the Financial Services Act 1986 (c. 60).
f4: Article 423A(6) was substituted by Article 26 of S.I. 1989/2404 (N.I. 18).