On 21 December 2021, the Irish Takeover Panel (the “Panel”) published a series of proposed amendments to the Irish Takeover Rules (the “Rules”) and the Substantial Acquisition Rules (the “SARs”).[1]
Overview
The Rules and SARs regulate the conduct of takeovers and acquisitions of securities of Irish-incorporated public limited companies that are listed on certain exchanges (including the New York Stock Exchange, NASDAQ, the London Stock Exchange and Euronext Dublin). The Rules and the SARs were last amended in 2013 and 2007, respectively, and the Panel now proposes various amendments to update the Rules and SARs to reflect developments in takeover practice and changes in legislation.
Many of the proposed changes draw on similar ‘tried and tested’ amendments that have been made in recent years to the UK’s corresponding regulatory regime, the Code on Takeovers and Mergers. However, while the proposed amendments would bring some of the Irish Rules and SARs more in line with their UK counterparts, many key differences will remain, reflecting certain distinct aspects of takeover practice in Ireland.
Key proposed amendments
Some of the key amendments proposed involving the early stages of the takeover are summarised as follows:
- Identification of potential bidders and put-up or shut-up: To reduce uncertainty, the Panel proposes introducing a default “put-up or shut-up” (PUSU) period of 28 days after a potential bidder is publically identified. Before the expiry of this 28 day period, the potential bidder must either ‘put up’ (ie, announce a firm intention to make an offer for the target) or ‘shut up’ (ie, announce that it will not proceed with an offer, barring the potential bidder from making an offer for 12 months). Under the new regime, if a target announces a possible offer for its securities, it no longer has the option to conceal the potential bidder’s name – the target must identify any potential bidders that the target is in talks with / has received an approach from (unless the target has unequivocally rejected the approach), triggering the PUSU period for those potential bidders.
- Announcement of a ‘strategic review’: The Panel proposes clarifying in the Notes to the Rules that if a company announces a strategic review and expressly mentions the possibility of receiving an offer / seeking an offer as options under consideration, the Panel will normally consider this to begin an ‘offer period’ for the company. Commencing an offer period will trigger the extensive restrictions that the Rules place on the freedom of action of both the company and potential bidders, as well as various disclosure requirements (see below).
- Opening positions disclosures: The Rules currently require that from the time of the announcement of an offer or possible offer, the bidder, the target and persons interested in 1% or more of securities of the target and, in a securities exchange offer, the bidder (“1%+ Holders”), must publicly announce their dealings in those securities. The new Rules propose introducing a further requirement that the bidder, the target and 1%+ Holders must also make an ‘opening position disclosure’, detailing their interests (including short positions) in those securities, shortly after an offer or possible offer is announced.
- Target employees’ opinion on a takeover: The current Rules require that, provided it is received in good time, a target must append to a target’s response circular a separate opinion from the representatives of its employees on the effects of the offer on employment. The Panel’s consultation paper proposes two measures to increase employee participation in the process: first, the new Rules will require that the employees or their representatives be informed of their right to have their opinion appended to a response circular; and second, the new proposed Rules provide that if the opinion is not received in good time before the circular is sent to shareholders, the target must publish the employee opinion online on receipt of the opinion and make an announcement.
- Fewer requirements for hardcopy offer documents etc: The proposed new Rules would also introduce a welcome move away from requiring hardcopies of takeover documents to be sent to shareholders, by facilitating email distribution as well as the use of short form ‘website notifications’, which notify shareholders that documents have been published online.
The Panel’s consultation paper also proposes other substantive amendments to the Rules, including a revised regime for profit forecasts and “quantified financial benefit statements”, as well as amendments relating to the rules for shareholder engagement / communications during an offer period.
Next steps
The Panel has invited comments on its consultation paper before the deadline of 28 February 2022. We would recommend that interested parties review the consultation paper to determine the impact that the proposed changes will have on their business or practice and whether a submission to the Panel would be appropriate.
If you have any queries in relation to the proposed amendments to the Rules or SARs or if you would like assistance in preparing a submission to the Panel as part of its consultation process, please contact David Fitzgibbon or David Jones.
[1] Consultation