Takeover Disclosures – Highwire Extensions

Introduction

Many jurisdictions have enhanced disclosure requirements (over and above those which comprise the substantial shareholder disclosure regime) which apply to shareholders generally who hold or deal in the securities of a bidder or a target in an offer period.

Often these thresholds can be much lower than the thresholds for disclosing substantial shareholdings.

The reporting obligations apply because you hold securities in an affected target or bidder. It doesn’t matter if you are involved in the bid.

What jurisdictions have heightened disclosure rules?

Europe: Austria, Belgium, Cyprus, Czech Republic, France, Greece, Ireland, Spain, Switzerland, and United Kingdom.

Middle East and Africa: Ghana, Qatar, Tunisia and Zambia.

Americas: Brazil and Canada.

Asia-Pacific: Australia, Bangladesh, Hong Kong, Malaysia and Singapore.

Similar Rules

Ireland Takeover Rule 8.

Some countries with low thresholds – Austria (2%) Greece (0.5%); France (1%); Belgium (1%); Canada (5%).

Other countries have thresholds that have a similar initial reporting percentage as the major shareholding rules but use a different denominator and require separate reporting (e.g. Cyprus – 5%).

Identifying Relevant Companies

The following jurisdictions provide standardised tables:

Belgium, Hong Kong, United Kingdom, France, Ireland, Switzerland, Greece

Many countries do not publish a list of companies in an offer period, requiring diligent research, including monitoring circulars and company announcement from several sources:

Singapore
Australia
Malaysia
Canada
Egypt
Cyprus

UK Takeover Rule 8.3

Background

Rule 8 of the UK Takeover Code (the “Code”) sets out the circumstances in which Dealing Disclosures and/or Opening Position Disclosures are required to be made by:

the parties to an offer;
persons acting in concert with the parties to an offer;
persons with an interest in relevant securities of 1% or more; and
exempt principal traders (“EPTs”) connected with the parties to an offer.

Here we are concerned with persons with an interest in relevant securities of 1% or more. There are requirements for:

Opening Position Disclosures; and
Dealing Disclosures.

Summary of Requirements

Opening Position Disclosure

Under Rule 8.3 (a), an Opening Position Disclosure must be made by any person interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror.

Timeframe for disclosure:

The Disclosure must be made no later than 3.30 pm on the 10th business day following the commencement of the offer period or the announcement that first identifies an offeror, as the case may be.

Public Dealing Disclosure

Under, Rule 8.3(b) , Public Dealing Disclosure must be made by any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror if the person deals in any relevant securities of the offeree company or of any securities exchange offeror.

This means that a Disclosure will be required where, for example, you own greater than 1% in the offeror but only 0.2% in the offeree, but have a transaction to increase that holding to 0.3% in the offferee or, for example, reduce your holding in the offeree to 0.15%. Equally, you would make a disclosure where you have greater than 1% in the offeree but less than 1% in the offeror and then make a trade in respect of the offeror.

Timeframe for disclosure:

The Disclosure must be made no later than 3.30 pm on the business day following the date of the relevant dealing.

Relevant Stocks – The Disclosure Table

The final version of the Disclosure Table is issued by 5.30 pm each business day at: https://www.thetakeoverpanel.org.uk/disclosure/disclosure-table.

The final version will be marked “Final” and persons required to make Dealing Disclosures and Opening Position Disclosures are advised to use that final version.

Exception to Disclosure requirement

Where an offeror is marked “Disclosure of dealings and positions in this offeror is not required”, dealings and positions in relevant securities of that offeror are not required to be disclosed under Rule 8. This is generally because it has been announced that the offer or possible offer is, or is likely to be, solely in cash.

The Denominator

The denominator to be used is the Number of Shares in Issue (NSI) as published in the Takeover Table. This should be the same as the Issued Capital, but occasionally there may be differences due to timing differences etc.

Content of Disclosures - Disclosure forms

Disclosure forms are available from the Takeover Panel website at: https://www.thetakeoverpanel.org.uk/disclosure/disclosure-forms.

The same Form 8.3 is used for both Opening Position Disclosures and Dealing Disclosures.

The form consists of 4 sections. Part 3 needs to be filled in for Dealing Disclosures, but not for Opening Position Disclosures.

Method of Disclosure

There is no longer a requirement to make a disclosure to the Takeover Panel. Instead, Public Opening Position Disclosures and Public Dealing Disclosures required under Rule 8 of the Code must be made to an approved Regulatory Information Service (RIS).

Some Local Knowledge

The following points are not in the Takeover Code provisions, but reflect Funds-Axis understanding as confirmed directly with the Takeover Panel:

The stock and Issuer Name appearing in section 1c should appear the same as per the Takeover Table, rather than being the customised naming conventions from your source systems or other data providers (e.g. Bloomberg, Reuters etc).
Truncation to decimal places:
– The percentage of NSI in section 2a and the prices in section 3 should be truncated (as opposed to rounded) to 2 decimal places.
Part 3 on Deals:
– Deals should include details of actual deals, not an aggregated deal amount with price averaging.
– Deals executed at same price can be aggregated.
– Where a single deal is executed and then allocated to a number of funds, it should be presented as a single deal.
Amendments can be made by re-submitting the amended Form 8.3 and entering text at the top of the disclosure form, either “Amendment to section [ ] of the disclosure released on [ ] 2017” or “Amendment to section [ ] of RIS No. [ ] released on [ ] 2017”. The amended form is then submitted through the RIS, the same as with an original notification. There are no special forms and no special procedures to be followed at the RIS in respect of amendments.