UK Law and Practice Contributed by: Carly Gulliver, Giles Distin, David Anderson, James Dawson, George Danczak and Elvan Hussein, Addleshaw Goddard
Further Financial Information Required by the Takeover Panel For certain bidders (eg, those not incorporated under the UK Companies Act 2006 and/or not listed or trad- ed on a UK stock exchange), the Takeover Panel may require the disclosure of further information, includ- ing financial information, on the bidder and potentially also on persons investing in the bidder in connection with it making the offer and significant existing inves- tors in the bidder. 10.4 Disclosure of Transaction Documents Materials to be Disclosed to the Takeover Panel Parties must send electronic copies of the scheme circular, offer documents and key offer announce- ments to the Takeover Panel and to all other parties to an offer. Materials to be Displayed on a Website Such materials, together with a range of other docu- ments and agreements entered into in connection with the offer (eg, shareholder irrevocable undertak- ings and letters of intent, financing agreements and material contracts entered into in connection with the offer), must also be made publicly available by a bid- der and/or the target on websites maintained by them. On a technology M&A (and any other) transaction, the directors’ principal duty is to act in good faith to pro- mote the success of the company for the benefit of its shareholders as a whole. While directors must have regard to the interests of other stakeholders (such as employees, customers and suppliers), this does not create a separate, enforceable duty to those stake- holders. 11.2 Special or Ad Hoc Committees It is common for directors to establish committees in relation to the operational functions of a company – eg, a remuneration committee or a risk commit- tee. Committees of directors can also be used where directors have a conflict of interest in a particular mat- ter. In those instances, the non-conflicted directors need to review information and make decisions about 11. Duties of Directors 11.1 Principal Directors’ Duties
that conflicted matter, and the creation of a separate committee of directors enables them to do this. Where there is a dispute between a company and some of its shareholders who have directors appointed to the board, a separate committee enables the directors of a company to continue to receive and review legal advice without waiving privilege. 11.3 Board’s Role The extent of the board’s involvement in M&A nego- tiations varies according to the size of the company and the board’s experience with such transactions. In smaller companies, directors are likely to take a more active role in leading the M&A process. In con- trast, larger companies often rely on a specialist M&A team, typically led by one or two directors whose responsibilities include managing such transactions. Larger companies may also have a separate invest- ment committee responsible for approving or rejecting proposed transactions. For UK takeovers offers, under Rule 3 of the Takeover Code, the board of the target company is required to obtain financial advice on whether the final terms of the offer are fair and reasonable, and must disclose the substance of such advice to target shareholders. The advice is typically given by an investment bank or a corporate finance firm that is sufficiently independ- ent and competent to provide the advice. Disclosure of the advice itself is rarely detailed, focusing instead on whether the offer price is fair and reasonable. The target board will often publish its reasons for recom- mending the offer in some detail, which may also include reasons relating not only to the level of the offer price. 11.4 Independent Outside Advice Financial Advice for Directors: Targets Financial advice privately provided to target boards in connection with an offer can take a variety of forms and analyses, and these may differ slightly from advis- er to adviser. Financial Advice for Directors: Bidders A bidder will almost always receive financial advice in respect of the making of its offer, although the sub- stance of that advice is not required to be published and the Takeover Code is not prescriptive regarding
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