Companies Act 2006 – Sections 943
Sections 943 and 944: Rules; Further provisions about rules
1182. The Panel is given the power to make rules in relation to takeover regulation. The
rule-making power is broadly drawn to ensure that the Panel can continue to make rules on
the range of matters presently regulated by the City Code on Takeovers and Mergers. The
following provisions are included:
a) The Panel is placed under an obligation to make rules as required by specified
Articles of the Takeovers Directive. These are the general principles (Article 3.1 of the
Directive), jurisdictional rules (Article 4.2), matters related to the protection of
minority shareholders, mandatory bid and equitable price (Article 5), contents of the
bid documentation (Article 6.1 to 6.3), time allowed for acceptance of a bid and
publication of a bid (Articles 7 and 8), obligations of the management of the target
company (Article 9) and other rules applicable to the conduct of bids (Article 13). In
making rules in relation to these Articles, the Panel will be entitled to exercise
Member State options where these are provided for in the Directive. The Panel’s rules
will not, however, deal with certain matters contained in the Directive such as barriers
to takeovers (Article 11), squeeze-out and sell-out (Articles 15 and 16), and
information to be published by companies in their annual reports (Article 10) which
are more appropriately dealt with in company legislation (and are the subject of
further provision at Chapters 2, 3 and 4 of this Part).
b) The Panel is permitted to make rules on takeover bids (including, but not limited to,
those which are the subject of the Directive), mergers and other transactions affecting
the ownership or control of companies. The power is designed to be broad enough to
cover the existing scope of the Code and sufficiently flexible to take account of future
market developments. Types of matters currently covered by the Code but not covered
by the Directive include the takeovers of companies not traded on a regulated market
and transactions involving a change of control of a like nature to takeovers.
1183. When making rules under this section, the Panel must do so by a committee of the
Panel, except in the case of rules for fees and charges under section 957 which must be made
either by a committee of the Panel or by the Panel itself.
1184. The further provisions about rules that may be made by the Panel under section 944
include the power to grant derogations and waivers, which by virtue of section 943(1) must
respect the general principles laid down in Article 3.1 of the Directive.
1185. Section 944(2) to (7) makes provision as to the form, public availability and
verification of rules made by the Panel.
Section 945: Rulings
1186. This section enables the Panel, including (by virtue of section 942(3)) its Executive,
to make rulings on the interpretation, application or effect of the rules made by the Panel.
1187. To the extent and in the circumstances specified in the rules, a ruling of the Panel has
binding effect unless reviewed by the Hearings Committee or successfully appealed to the
Takeover Appeal Board in accordance with rules made under section 951. It is envisaged that
rules made under sections 943 and 944 will address matters such as notice to parties and right
of representation of persons who might be bound by a Panel ruling.
Section 946: Directions
1188. This section allows the Panel to make provision in its rules for it to give a direction
preventing a person from breaching the rules (including a direction operating on an interimbasis whilst a matter is awaiting determination by the Panel) or otherwise to ensure
compliance with the rules.
Section 947: Power to require documents and information
1189. The Panel has historically had no formal power to require those involved in takeover
activity to provide it with the information the Panel requires to carry out its functions.
Persons authorised under the Financial Services and Markets Act 2000 are required by the
rules of the Financial Services Authority to provide information and assistance to the Panel.
In relation to others, the Panel has relied on the voluntary co-operation of market participants
to provide explanations and documents which are not publicly available.
1190. This section enables the Panel to require the production of such documents and
information as it may reasonably require in the exercise of its functions. The Panel may also
authorise a person to exercise the powers under the section on its behalf, for example, if the
Panel were to appoint a law or accountancy firm to help it collect and analyse documents.
1191. Subsection (7) provides that a lien on a document is not affected by the production of
that document in compliance with a requirement imposed by the Panel or someone authorised
on its behalf. A lien is a legal right to keep possession of a document belonging to someone
else until a claim is satisfied – for example, a claim for payment of professional fees. This
subsection does not entitle a professional to refuse to hand over a document to the Panel but
preserves his rights over those documents.
1192. The section provides that the Panel may require the production of information in hard
copy where it is held in some other form (for instance, electronically on a floppy disk).
1193. The Panel may not compel the production of documents which would be protected
from disclosure in legal proceedings on the grounds of legal professional privilege or
confidentiality of communications.
Sections 948 and 949: Restrictions on disclosure; Offence of disclosure in contravention
of section 948
1194. These sections provide that information obtained by the Panel in the course of
exercising its functions will be subject to restrictions on onward disclosure. Aside from the
desirability of such provisions, so that those providing information to the Panel can do so
knowing that it will not be subject to improper further disclosure, these provisions also meet a
requirement under Article 4.3 of the Directive that Member States shall ensure that
information provided to those employed, or formerly employed, by takeover supervisory
authorities shall not be further divulged: “to any person or authority except under provisions
laid down by law.” Section 948, accordingly, prescribes the conditions under which such
information can be released.
1195. Information concerning the private affairs of an individual or a business provided to
the Panel in connection with its functions may not be disclosed during the individual’s
lifetime or while the business is carried on without the consent of the individual or business
in question except for the purposes of carrying out the Panel’s functions or unless it is
disclosed to a person or for a purpose set out in Schedule 2.
1196. Schedule 2 sets out the “gateways” for disclosure of information obtained by the
Panel in the exercise of its functions which are permitted under section 948, including the
circumstances in which a disclosure to an overseas regulatory authority is permitted. Under
section 948(4) and (5), the Secretary of State has the power to amend the Schedule, but only
to specify persons exercising functions of a public nature or descriptions of disclosure where
the purpose for which the disclosure is permitted is likely to assist in the exercise of a
function of a public nature.
1197. Section 948(6)(a) provides that certain authorities mentioned in subsection (7) are not
bound by the restrictions on disclosure imposed by subsection (2). These bodies are those
other takeover supervisory authorities and financial services regulators with which the Panel
has a duty to co-operate. Subsection (6)(b) provides that persons or bodies obtaining
information from those authorities (whether directly or indirectly) are also not bound by the
restrictions on disclosure imposed by subsection (2). These provisions are necessary to
implement fully Article 4.4 of the Directive. Those bodies mentioned in subsection (7), and
persons and bodies receiving information from them, will themselves be subject to
restrictions on disclosure that will mirror those imposed by section 948, and so information
originating from the Panel will still be protected from improper further disclosure.
1198. Section 949 makes it an offence to disclose information in contravention of section
948. A person guilty of such an offence is liable on conviction on indictment to two years’
imprisonment or a fine or both; and on summary conviction to twelve months’ imprisonment
(six months in Scotland and Northern Ireland) or a fine or both. Section 949(1) provides a
person with a defence if he can prove that he did not know, and had no reason to suspect, that
the information in question had been provided to the Panel in the exercise of its functions; or
that he took reasonable steps to prevent wrongful disclosure.