Note: The following statement of reasons should be read in conjunction with the statement(s) of reasons appended to the:

• Takeovers Code (Voting Agreements for Schemes of Arrangement) Exemption Amendment Notice 2021

This notice applies to acts or omissions occurring on or after 21 September 2020.

This notice exempts a person from rule 6(1) of the Takeovers Code (the Code) in respect of any increase in the person’s voting control in a code company that results from a voting agreement.

A voting agreement is a contract or deed entered into by a holder or controller of voting rights in a code company that creates a commitment for that person to vote, or to procure a vote, for or against a proposed scheme of arrangement under Part 15 of the Companies Act 1993. A person who may enforce the commitment (and any upstream party of that person) will increase their voting control in the code company because the voting agreement allows them to indirectly control the exercise of voting rights.

The exemption is subject to terms and conditions, including requiring—

• material information relating to the voting agreement to be disclosed to the Takeovers Panel (the Panel) and the code company. This is intended to facilitate disclosure of this information to the shareholders of the code company; and

• a voting agreement to relate to a specific scheme of arrangement.

Under section 236A of the Companies Act 1993, an applicant for an order under Part 15 of that Act may file a statement from the Panel indicating that the Panel has no objection to an order (a no-objection statement). The Panel may require a code company to disclose material information to its shareholders before it issues a no-objection statement.

The Takeovers Panel considers it appropriate to grant the exemption, and considers the exemption to be consistent with the objectives of the Code, because—

• the disclosure to the Panel and the code company required by the conditions of the exemption, the Panel’s requirement that the code company promptly disclose material information to its shareholders in order for the Panel to issue a no-objection statement, and, where applicable, the disclosure required by subpart 5 of Part 5 of the Financial Markets Conduct Act 2013 ensure that shareholders of the code company who are not party to a voting agreement may decide on the merits of the scheme on an informed basis. This provision of information to shareholders assists in ensuring that shareholders are treated fairly, and recognises that shareholders must ultimately decide for themselves the merits of a scheme; and

• the effect of the exemption is to enable scheme participants to enter into enforceable obligations that provide certainty about the success or otherwise of the scheme equivalent to the certainty that may be provided by lock-up agreements in respect of takeover offers, and the ability to obtain certainty about the success or otherwise of a scheme encourages competition for the control of code companies; and

• permitting persons to enter into voting agreements in respect of schemes would not disadvantage the shareholders of the code company as all shareholders will have an opportunity to vote on the scheme. This assists in ensuring that shareholders are treated fairly; and

• the exemption avoids unnecessary compliance costs that would be incurred if it were not granted. This encourages the efficient allocation of resources, and assists in maintaining a proper relation between the costs of compliance with the Code and the benefits resulting from it.

Note: The preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to the:

• Takeovers Code (Voting Agreements for Schemes of Arrangement) Exemption Amendment Notice 2021