Takeover Directive: interim implementation

On 3 March 2006 the DTI published a note stating that it proposes to implement the Takeover Directive on an interim basis through regulations which will come into effect on 20 May (the date by which the Directive must be implemented) and cease to have effect on the date the relevant provisions of the Company Law Reform Bill come into force (for background, see PLC Legal updates, Takeover Directive: Panel consultation on implementation and Company Law Reform: publication of Bill). The DTI states that the Regulations will substantially mirror Part 22 of the Bill, however: (1) generally, they will only apply to bids covered by the Directive - the Bill will apply to other transactions which may have an effect on the ownership or control of companies, such as takeovers of public companies whose shares are not traded on a regulated market and mergers; (2) the Panel's new powers will not apply transactions falling outside the Directive's scope; (3) they will not give the Panel power to make rules which have statutory effect, so the Panel will not, during the interim period, be able to adopt amendments to the Takeover Code in so far as they relate to matters contained in the Directive; (4) in relation to squeeze-out and sell-out, they will only contain those provisions necessary to give effect to the Directive - further changes being made by the Bill will not be included; and (5) certain offence provisions under the Regulations will be restricted to matters covered by the Directive, and penalties will be restricted by the European Communities Act 1972 under which the Regulations will be made. Draft regulations should be available in March. The DTI expects that the related amendments to the Code will be made before the Regulations become law.


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