Options, convertibles and other securities

The following Corporate practice note provides comprehensive and up to date legal information covering:

Options, convertibles and other securities
Rule 14: Comparable offers—different classes of equity share capital
'Equity share capital' and scope of Rule 14
Conditionality
Terms of comparable offers
Sanctions
Rule 15: Appropriate offers or proposals for convertible securities and options
Rule 15(a): What is an appropriate offer or proposal?
Form of consideration
Independent advice

More...

Procedure and timing
Share options
Interaction with other rules and non-equity voting securities
Rules 14 and 15: squeeze-out rights

Options, convertibles and other securities

Rules 14 and 15 of the Takeover Code (Code) deal with the situation where an offer (principal offer) is made for equity shares of an offeree which has more than one class of share capital, and/or outstanding convertible securities, options, warrants and other rights to subscribe offeree shares.

The Code imposes requirements upon offerors to make offers linked to its principal offer, as follows:

•
if an offeree has more than one class of equity shares, an offeror must make a comparable offer to the holders of each other class
•
if an offer is made for voting equity share capital or other transferable securities carrying voting rights, an offeror must make an appropriate offer or proposal for any outstanding convertible securities or options

The fundamental principle underlying Rules 14 and 15 is equality of treatment, enshrined in General Principle 1:

'All holders of the securities of an offeree company of the same class must be afforded equivalent treatment; if a person acquires control of a company, the other holders of securities must be protected.'

For further information on the nature and main features of voluntary takeover offers in general, and on the offer process itself, see Practice Notes: Voluntary and partial offers, The offer timetable—before 5 July 2021 and The offer timetable—from 5 July 2021.

For information on the bid planning stage generally and relevant

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