Public takeovers: Employees and employee representatives

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

  • Public takeovers: Employees and employee representatives
  • Background
  • Announcements
  • Making offer-related information available to employees
  • Intentions of the offeror with regard to employees
  • Standards of care
  • Post-offer undertakings and intention statements
  • Opinion of the offeree board
  • Employee representatives’ opinion and pension scheme trustees’ opinion
  • Revised offers
  • More...

Public takeovers: Employees and employee representatives

Background

Although all employees of an offeree are likely to have a strong interest in the outcome of the offer, their employment rights are unlikely to be directly affected by a public takeover as there will be no change in their employing company. However, there are a number of requirements under the City Code on Takeovers and Mergers (Code) and the Companies Act 2006 (CA 2006) that the parties to a takeover will need to consider regarding the offeree's employees. One of these requirements is contained in General Principle 2 which states that:

'The holders of the securities of an offeree must have sufficient time and information to enable them to reach a properly informed decision on the takeover bid; where it advises the holders of securities, the board of directors of the offeree company must give its views on the effects of implementation of the takeover bid on employment, conditions of employment and the locations of the company’s places of business.'

A duty to consider employees’ interests is also an element of the wider general duty owed to a company by its directors to promote the success of the company under the CA 2006. The duty requires directors to act in the way they consider, in good faith, would be most likely to promote the success of the company for the

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