Corporate Practice point - concert parties

04/03/2008

A private company seeking a listing on a public exchange will often insert a public company above it, its shareholders carrying out a share for share exchange. The Takeover Panel has a working assumption that where all shareholders in the limited company exchange their shares for shares in the plc, a concert party is present for the purposes of the City Code on Takeovers and Mergers (the "Takeover Code"). The existence of the concert party must be disclosed in the prospectus or admission document (whichever is applicable), together with an explanation of the Takeover Code implications.

On a small fundraising, for example, where the members of the concert party will hold more than 50% of the company's shares following admission to the public exchange, such a group would be able to increase their aggregate interest in shares without incurring any further obligations under Rule 9 of the Code to make a general offer to the other shareholders to acquire the balance of shares. (Individual members of the concert party would not, however, be able to increase their percentage shareholding through or between a Rule 9 threshold without carrying out a "whitewash procedure" and obtaining Panel consent.)

Contact: maustin@city-law.net

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