Employee benefit trusts—concert party clearance from the Takeover Panel
Produced in partnership with Jeremy Glover of Fenwick Elliott
Employee benefit trusts—concert party clearance from the Takeover Panel

The following Share Incentives practice note Produced in partnership with Jeremy Glover of Fenwick Elliott provides comprehensive and up to date legal information covering:

  • Employee benefit trusts—concert party clearance from the Takeover Panel
  • Relevance of the takeover code to share acquisitions by an EBT
  • Voting rights in relation to shares in an EBT
  • Rule 9.1 of the Code
  • Acting in concert
  • No presumption of concertedness in the normal course
  • Consultation with the Panel
  • IA Principles of Remuneration

Relevance of the takeover code to share acquisitions by an EBT

It may be necessary to consult the Takeover Panel (Panel) in certain circumstances if the trustee of an employee benefit trust (EBT) is acquiring shares in a company.

If the trustee could be considered to be acting in concert with others when it acquires the shares, this could result in the trustee being required to also extend its offer to buy shares to all other shareholders, in accordance with requirements under the City Code on Takeovers and Mergers (Code).

The Panel can be asked to confirm whether the trustee of an EBT will be presumed to be acting in concert for the purposes of these requirements under the Code. In some circumstances, the Code requires that the Panel must be consulted before certain share acquisitions by an EBT, as detailed below.

The Panel’s main functions are to issue and administer the Code and to supervise and regulate takeovers and other matters to which the Code applies. Its central objective is to ensure fair treatment for all shareholders in takeover bids.

The Panel considers that a significant holding of shares by an EBT and/or directors or a controlled shareholder could constitute a barrier to a takeover, particularly in relation to unsolicited bids, since the shares are unavailable to the bidder for the purposes of satisfying the acceptance condition.

The Code

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