AN EXPLORATION OF WHETHER THE SUBSTANTIVE LAW GOVERNING CORPORATE TAKEOVERS IN THE UK IS EFFECTIVE IN ACHIEVING EQUALITY OF TREATMENT FOR SHAREHOLDERS
Keywords:
EXPLORATION, CORPORATE TAKEOVERS, UKAbstract
Takeover regulation in the UK has historically been shareholder-centric and shareholder primacy has been the core principle of UK’s takeover regulation. This article primarily examines the substantive law governing corporate takeovers in the United Kingdom and critically analyses whether the substantive law is effective in achieving equality and fair treatment of all shareholders involved in the takeover. This is followed by an exploration of the safeguards in place which ensure real time minority shareholder protection and the relating case law which further bolster the development of the law by providing clarity on certain issues relating to the safeguards. Furthermore, the article also analyses the proposed amendments and suggestions to the current UK regime. The proposed amendments that are examined consist mainly of the amendments and arguments discussed in the Takeover Panel’s Consultation paper which was published after Kraft Food Inc.’s controversial takeover of Cadbury Plc in 2010.
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References
i Recital 3, Directive 2004/25/EC; (ex Article 44 TEC).
ii Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European company
and financial law review. 10 (3). pp. 432-460.
iii Percival v Wright [1902] 2 Ch 421
iv Andrew Johnston, ‘Takeover regulation: historical and theoretical perspectives on the City Code’ (2007)
C.L.J. 2007, 66(2), 422-460
v The Takeover Directive 2004/25 [2004] Article 3, General Principle 1.
vi J Payne, ‘Minority shareholder protection in takeovers: A UK perspective’ (2011) ECFR 145, 155.
vii City Code on Takeovers and Mergers (City Code), General Principle 1.
viii Ibid, Rule 14.
ix Ibid, Rule 6.1
x
Ibid, Rule 6.2
xi Ibid, Rules 23, 24, 25.
xii Ibid, Rule 31.1
xiii Ibid, Rule 32.3
xiv Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460.
xv Edmund-Philipp Schuster, ‘The Mandatory Bid Rule: Efficient, After All?’ (2013) 76(3) MLR 529–563
xvi Takeover Directive, Article 5(1)
xvii City Code on Takeovers and Mergers (City Code), Rule 9.
xviii Takeover Directive, Article 5(4)
xix Edmund-Philipp Schuster, ‘The Mandatory Bid Rule: Efficient, After All?’ (2013) 76(3) MLR 529–563
xx Klaus J. Hopt, ‘European takeover reform of 2012/2013 - time to re-examine the mandatory bid’ (2014)
European Business Organization Law Review
xxi Klaus J. Hopt, ‘European takeover reform of 2012/2013 - time to re-examine the mandatory bid’ (2014)
European Business Organization Law Review
xxii Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
xxiii Companies Act 2006, s 979
xxiv Ibid, s 981(2)
xxv Ibid, s 986
xxvi Ibid, s 983
xxvii Ibid, ss 983-985
xxviii Sealy, L. and Worthington, S. (2016). Cases and Materials in Company Law. 11th ed. OUP.
xxix Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
xxx M Siems (2008) ‘Convergence in Shareholder Law’ (Cambridge, Cambridge University Press) 209.
xxxi Re Bugle Press Ltd. [1961] Ch 270.
xxxii Re Bugle Press Ltd [1961] Ch 270, 276–277 Buckley J said: ‘where the 90 per cent majority who accept the
offer are unconnected with the persons who are concerned with making the offer, the court pays the greatest
attention to the views of that majority. In all commercial matters, where commercial people are much better able
to judge of their own affairs than the court is able to do, the court is accustomed to pay the greatest attention to
what commercial people who are concerned with the transaction in fact decide.’
xxxiii Re Gierson, Oldham and Adams Ltd [1968] Ch 17.
xxxiv Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
xxxv Ibid.
xxxvi Re Press Caps [1949] Ch 434 at 446 per Wynn-Parry J.
xxxvii Ferrarini and others (eds) (2004) ‘Reforming Company and Takeover Law in Europe’ (OUP) 642.
xxxviii
Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
xxxix T Tridimas, (1991) ‘Self-regulation and investor protection in the UK: the takeover panel and the market for
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xl Modern Company Law for a Competitive Economy – Final Report (DTI, London July 2001) 5.
xli Percival v Wright [1902] 2 Ch 421
xlii Heron International Ltd v Lord Garde [1982] Com. L.R. 108
xliii Re a Company (No. 008699 of 1985) [1986] 2 B.C.C 99024
xliv Fiske Nominees Ltd v Dwyka Diamond Ltd [2002] 2 BCLC 123
xlv Re Charterhouse Capital Ltd [2015] B.C.C 574
xlvi Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
xlvii Easterbrook and Fischel, (1982) ‘Corporate control transactions’ 91 Yale LJ 698, 712–714.
xlviii Ibid.
xlix Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European
company and financial law review. 10 (3). pp. 432-460
l Companies Act 2006, s 983(5)
li Brown v British Abrasive Wheel Co Ltd [1919] 1 Ch 290.
lii Dafen Tinplate Co Ltd v Llanelly Steel Co Ltd [1920] 2 Ch 124.
liii Dafen Tinplate Co Ltd [1920] 2 Ch 124 at 141
liv Sidebottom v Kershaw Leese & Co Ltd [1920] 1 Ch 154.
lv Mukwiri, Jonathan (2013) ‘Takeovers and incidental protection of minority shareholders.’ European company
and financial law review. 10 (3). pp. 432-460
lvi Georgina Tsagas (2014) ‘A Long-Term Vision for UK Firms? Revisiting the Target Director's Advisory Role
Since the Takeover of Cadbury PLC’, Journal of Corporate Law Studies, 14:1, 241-275
lvii Sunday Times, January 19, 2010 and Daily Mail, January 20, 2010.
lviii Georgina Tsagas (2014) ‘A Long-Term Vision for UK Firms? Revisiting the Target Director's Advisory Role
Since the Takeover of Cadbury PLC’, Journal of Corporate Law Studies, 14:1, 241-275
lix Blanaid Clarke (2011) ‘Reviewing takeover regulation in the wake of the Cadbury acquisition - regulation in a
twirl’, Journal of Business Law
lx Panel Consultation Paper, Review of Certain Aspects of the Regulation of Takeover Bids 2010/2.
lxi Blanaid Clarke (2011) ‘Reviewing takeover regulation in the wake of the Cadbury acquisition - regulation in a
twirl’, Journal of Business Law
lxii Panel Consultation Paper, Review of Certain Aspects of the Regulation of Takeover Bids 2010/2.
lxiii Panel Response Statement, Review of Certain Aspects of the Regulation of Takeover Bids 2010/22 para.6.16
lxiv Panel Response Statement, Review of Certain Aspects of the Regulation of Takeover Bids 2010/22 para.5.26.
lxv Panel Response Statement, Review of Certain Aspects of the Regulation of Takeover Bids 2010/22, para.5.32.
lxvi Blanaid Clarke (2011) ‘Reviewing takeover regulation in the wake of the Cadbury acquisition - regulation in
a twirl’, Journal of Business Law
lxvii Panel Consultation Paper, Review of Certain Aspects of the Regulation of Takeover Bids 2010/2 para.5.19.
lxviii Mukwiri, Jonathan (2013) ‘Takeovers and incidental
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