Statement of reasons
This notice applies to acts and omissions occurring on or after 2 December 2008 and expires on 31 December 2011.
Cynotech Holdings Limited (Cynotech) is a code company. The Takeovers Panel (the Panel) has granted retrospective exemptions to—
each person named in the Schedule (which includes Cynotech Securities Limited, Newmarket Securities Limited, 13 members of the Hawkins family, and Cathy Hutchinson (the specified persons)) from rule 7(d) of the Takeovers Code (the Code) in respect of the allotment of voting securities in Cynotech resulting from the conversion of convertible preference shares and the exercise of warrants held by the specified persons, to the extent that the notice of meeting of shareholders of Cynotch to approve the allotment of the voting securities did not comply with rule 16(b) of the Code:
Cynotech from rule 16(b) of the Code in respect of the notice of meeting.
As at 2 December 2008, the specified persons collectively held 23.10% of the total voting securities in Cynotech on issue and each was an associate of the others for the purposes of the Code.
The specified persons also collectively held—
4 777 776 convertible preference shares in Cynotech (21.83% of the total preference shares on issue) and wanted to have the ability to convert all of their convertible preference shares into 4 777 776 fully paid ordinary shares between 16 December 2008 and the final conversion date of 22 December 2010; and
7 022 474 warrants in Cynotech (24.96% of the total warrants on issue) and wanted to have the ability to exercise their warrants on 1 or more of the exercise dates of 27 June 2009, 27 June 2010, and 27 June 2011.
As the specified persons collectively held more than 20% of the total voting rights on issue and the allotment of voting securities on the conversion of convertible preference shares or the exercise of the warrants by any of them would result in an increase in that person's holding or control above 20%, shareholder approval for the allotments had to be obtained under rule 7(d) of the Code.
A notice of meeting containing a proposed resolution in respect of an allotment of securities pursuant to rule 7(d) of the Code must contain, or be accompanied by, the information specified in rule 16 of the Code.
A notice of meeting was issued on 2 December 2008 seeking shareholder approval of the allotments under rule 7(d) of the Code.
Cynotech was unable to comply with rule 16(b) of the Code, in relation to the allotment of voting securities as a result of the conversion of convertible preference shares and the exercise of warrants held by the specified persons, because it was unable to state in the notice of meeting—
Cynotech did not know the precise number of voting securities that might have been on issue, and therefore could not calculate the precise percentages required to be disclosed in the notice of meeting under rule 16(b) of the Code, because of the following:
the possibility that shareholders may have approved all the resolutions but that the specified persons might not exercise their rights to convert their convertible preference shares and exercise their warrants, or might not exercise those rights in relation to all convertible preference shares and warrants held by them:
The Panel considers that it is appropriate to grant the exemptions to Cynotech and the specified persons and that the exemptions are consistent with the objectives of the Code because—