The Irish Takeover Panel published a consultation paper proposing extensive changes to the Irish Takeover Rules on 21 December 2021. Submissions closed on 28 February 2022.
The Panel published a response statement on 20 May 2022 indicating that it would take into account a number of the submissions received from interested parties. We expect that the changes to the Irish Takeover Rules as reflected in the response statement will be adopted shortly, but the adoption of new Rules as of a specified date has not yet been announced.
A number of the proposed Rule changes are in the nature of updating, such as:
- to take account of migration of participating securities to the Euroclear Bank system of intermediated share ownership completed for the Irish equity securities market as a whole in 2020
- to update statutory references, and
- to update the position on the use of electronic communications, websites, social media, videos and information (including financial information) disclosed by weblink.
However, a number of material changes, which will more closely align the Irish Takeover Rules in some respects with the UK’s City Code on Takeovers and Mergers, are being proposed. There will also be attendant changes to the relevant Notes, including the following (non-exhaustive) changes:
Strategic review announcements
Rule 2.2(f) will be amended to treat a strategic review announcement which includes reference to an offer as an option as normally involving the commencement of an offer period.
Rule 2.4 & 2.6 will be amended to include a new 42 day PUSU (put up or shut up) regime for any identified offeror, longer than the 28 day period which has been in place in the UK under the City Code for some time. Rule 2.8(c)(i) will also be amended to reduce the period during which the post PUSU restrictions apply from 12 months to 6 months. This change will bring Rule 2.8 into line with the similar rule in the City Code.
Contents of ‘firm intention’ announcement
Rule 2.7 (existing Rule 2.5) will require the offeror to address in the firm intention announcement certain matters (a number of which are provided for in the current Rule 24.1) regarding its intentions for the offeree and its employees and its intentions for itself and its own employees.
Restriction on certain share acquisitions
Rule 4.6 will be amended to restrict acquisitions of interests in shares in an offeree by an asset acquiror in competition with an offer.
Opening position disclosure
Rule 8.3 requiring disclosure of interests is being amended to require an opening position disclosure by the offeree, a securities exchange offeror, a 1%+ shareholder in the offeree or a securities exchange offeror and certain exempt principal traders connected with the offeror or offeree.
No major changes to Rule 9.1 relating to mandatory offers are being made. However, the note to Rule 9.1 is being amended to draw attention to the fact that the Panel will when considering whether shareholders voting together are acting in concert have regard to any statement by ESMA on shareholder co-operation and acting in concert with respect to the EU Takeover Bids Directive. This has been the case in practice in any event.
A new Rule 13.4 is proposed which provides that where an offer is made subject to a financing condition by means of an offer of new securities, it may only itself be subject to a condition required as a matter of law or regulation in order to issue such securities or to have them listed or admitted to trading. Rule 13.4 also states that the Panel must be consulted in advance on these conditions.
Shareholder approval of frustrating action
Rule 21.1(b) is being replaced by a more detailed rule which sets out the requirements with which an offeree is required to comply when seeking shareholder approval as an exception to the prohibition on frustrating actions in Rule 21.1.
Rule 28 is proposed to be completely revised. The new Rule is, in the main, based on the principles underpinning Rule 28 of the City Code. Rule 27.2 will require that where any document (which refers to the key documents in the offer process, e.g. the firm intention announcement, offer document, response circular etc) or announcement published by the offeror or the offeree includes:
- a profit forecast,
- a quantified financial benefits statement, or
- an asset valuation,
any further document after that point published by that party in connection with the offer must, unless superseded by information included in the new document, include certain confirmations about continuing validity.
Rule 29 relating to asset valuations again is being broadly brought into line with the asset valuation rules under the City Code (see above description of Rule 27.2).
Distribution of announcements and documents
Rule 30 is a new Rule which amends the requirements for making announcements and distributing documentation. The amended rule will require that if an announcement is published at a time when the relevant RIS is not open for business, the announcement must be distributed to not less than two newswire services. These newswire services must be operating in the primary market on which the relevant securities concerned are quoted.
Rule 20.5 (videos)
The Panel proposes to amend this new rule, which seeks to regulate the use of videos during the course of an offer. The amendment to the rule seeks to:
- prevent material new information and significant new opinions relating to an offer being disclosed via videos,
- allow an offeror and an offeree to publish a video relating to its financial performance subject to certain protections; and
- allow for an exception to the publishing requirements set out in Rule 20.5(b) for videos published for, and accessible only by, employees in their capacity as such.
Rule 20.6 (social media)
Rule 20.6 restricts social media usage during the course of an offer. The rule will be amended in two respects. Firstly, taking into account the character limit on social media platforms 20.6(d) is being amended so that a notification of a link to a web page on which an announcement, document or video has been published does not need to include a summary of the provisions of Rule 8. A new 20.6(e) is also being added to allow advertisements which comply with the requirements of Rule 19.4 to be published on social media platforms.
Rule 21.1 (frustrating action/share buyback programmes)
Rule 21.1 will be amended and a new note will be added to the rule. The Rule will be amended to provide an express exception, to be set out in Rule 21.1(c), to the requirement for Panel consent in respect of share buyback programmes where the purchases/redemptions are in pursuance of a contract entered into before the relevant time period under Rule 21.1(a).
Rule 24.3(a) and (b) (financial and other information and cash confirmation)
This Rule requires cash offerors to disclose:
- a summary of the principal contents of material contracts
- details of any current credit ratings and outlooks, and
- details of any debt facilities entered into in order to finance the offer.
The Panel has decided that the requirements under Rules 24.3(a)(vi) and 24.3(b)(xvi) to disclose the principal contents of material contracts and any current credit ratings and outlooks respectively of offerors should be limited to securities exchange offerors. Its reason for doing so is the reliance placed on the requirement under General Principle 5 to ensure that any cash consideration must be available and the corresponding significant responsibilities accepted by financial advisers to offerors in making cash confirmation statements under Rule 2.7(d) and Rule 24.8.
For more information on the likely impact of the changes to the Irish M&A landscape, contact a member of our Corporate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.