Companies Act 2006 – Section 955
Section 955: Enforcement by the court
1211. This section provides a mechanism by which the Panel may, if necessary, apply to the
court in order to enforce Panel rule-based requirements as well as requests for documents and
information under section 947. The Panel may apply to the court either where there is
reasonable likelihood that a person will contravene a requirement imposed by or under the
rules or where a person has failed to comply with such a requirement or with a requirement
imposed under section 947.
1212. It is expected that in accordance with usual practice, the court will not, in exercising
its jurisdiction under this section, rehear substantively the matter or examine the issues giving
rise to the ruling or, as the case may be, the request for documents or information except on
“judicial review principles”, where there has been an error of law or procedure.
1213. The court is given a broad discretion as to the order it may make to secure compliance
with the requirement; but aside from the power granted to the Panel by this section, there is
no right to seek an injunction (or interdict) to prevent a person contravening, or continuing to
contravene, a rule-based requirement or disclosure requirement.
Section 956: No action for breach of statutory duty etc
1214. Compliance with the rules made by the Panel is a matter solely for the Panel. This
section does two things:
a) it excludes new rights of action for breach of statutory duty for contraventions of
requirements imposed by or under rules or a requirement imposed under section 947;
b) in order to ensure certainty, it provides that a contravention of a rule based
requirement does not make a transaction void or unenforceable and (subject to any
provision of the rules) does not affect the validity of any other thing. As currently,
transactions will be capable of being set aside or unravelled in cases of, for example,
misrepresentation or fraud.
Section 957: Fees and charges
1215. This section enables the Panel to make rules for the payment of fees or charges to the
Panel for the purposes of meeting the Panel’s expenses incurred in exercising its functions.
Such fees and charges may be imposed to meet expenses of the Takeover Appeal Board; the
cost of repaying capital and paying interest on loans; and the cost of maintaining adequate
reserves. The rules under this section must be made by the Panel itself or by a committee of
the Panel (section 943(4)).
Section 958: Levy
1216. This section gives the Secretary of State the power to make regulations imposing a
levy for meeting the costs of the Panel. In determining the appropriate rate of the levy, the
Secretary of State must take account of other income received, or expected to be received, by
the Panel (which would include fees and charges under section 957) and may take account of
estimated as well as actual costs of the Panel.
1217. It is anticipated that a levy would only be imposed if the existing voluntary levy
funding arrangements (contributions collected by member firms of the London Stock
Exchange and Ofex currently set at a flat rate charge of £1 on contract notes on all chargeable
transactions with a consideration in excess of £10,000) were no longer viable. The categories
of persons or bodies to which the levy would apply may include only those capable of being
directly affected by the exercise of the Panel’s functions or otherwise having a substantial
interest in the exercise of those functions.
1218. The first regulations made in respect of the levy power – and any further regulations
which change the persons or bodies by whom, or the transactions on which, the levy is
payable – will be subject to the affirmative resolution procedure in both Houses of
Parliament. A draft of an instrument containing such regulations will not be treated as being
hybrid even if otherwise it would be. Any other subsequent regulations will be subject to the
negative resolution procedure.
Section 959: Recovery of fees, charges or levy
1219. This section provides that an amount payable by a person as a consequence of fees
and charges imposed by the Panel under section 957 or as a result of any levy fixed by the
Secretary of State under section 958 will constitute a debt owed by that person to the Panel
and be recoverable by the Panel as a debt.
Miscellaneous and supplementary
Section 960: Panel as party to proceedings
1220. This section provides that, notwithstanding its unincorporated status, the Panel may in
its own name bring proceedings under this Chapter and bring or defend other proceedings.
Section 961: Exemption from liability in damages
1221. This section confers limited immunity on the Panel and those involved in carrying out
its regulatory activities. The immunity provisions are consistent with those recently extended
to the Financial Services Authority and the Financial Reporting Council in the exercise of
their duties under financial services and companies legislation.
1222. The section exempts the Panel, its members, officers and staff (which would include
secondees), and persons authorised under section 947(5) by the Panel to exercise its powers
in relation to requiring documents and information, from liability in damages for things done
or omitted in relation to the Panel’s regulatory activities. (The Takeover Appeal Board
benefits from a common law immunity on account of its exercise of judicial functions.)
1223. Section 961(3) sets out the circumstances where the exemption will not apply – that is
to say, where the act or omission was in bad faith or where it was unlawful under section 6(1)
of the Human Rights Act 1998.
Section 962: Privilege against self-incrimination
1224. This section provides that a statement made by a person to the Panel, or a person
authorised on its behalf, in compliance with a requirement to provide information under
section 947 (or a court order made to secure compliance with such a requirement under
section 955) cannot be used against that person in most types of criminal proceedings. Such
statements can, however, be used in proceedings for offences of making false statements
otherwise than on oath under section 5 of the Perjury Act 1911 and its Scottish and Northern
Irish equivalents. These offences exist to deter and punish the making of false statements and
it would not be possible to prosecute such offences if the false statements themselves could
not be used in evidence against those by whom they were made.
Section 963: Annual reports
1225. As is the Panel’s existing practice, the Panel will be required to publish an annual
report containing annual accounts, setting out how the Panel’s functions were discharged and
including other matters considered by the Panel to be of relevance. Annual reports published
by the Panel are available on the Panel’s website.
Section 964: Amendments to Financial Services and Markets Act 2000
1226. This section repeals section 143 of the Financial Services and Markets Act 2000
(“FSMA”) which, by endorsing the City Code on Takeovers and Mergers, presently provides
a mechanism for the Financial Services Authority to bring disciplinary and enforcement
action against authorised persons for misconduct in relation to the Code. Given that the Code
will be replaced by rules which have legal force as a consequence of the Act, it is considered
that there is no longer a need to maintain section 143.
1227. This will not, however, preclude the Panel from reporting breaches of the Code by
authorised persons in relation to takeover bids to the Financial Services Authority, as at
present, and any such breaches will still be taken into account by the FSA, for example, in
assessing whether such persons are fit and proper to be authorised for business of that kind or
have otherwise complied with their regulatory obligations (for example, whether they are
meeting proper standards of market conduct).
1228. A consequential amendment is made by section 964(3) to preserve the definition of
“consultation procedures” currently contained at section 143(7) for the purposes of the
provisions in section 144 of FSMA relating to price stabilising rules. Additionally, to ensure
consistency with the requirements of Article 4.4 of the Directive as regards the duties of
takeover regulatory and financial services authorities within the EU to co-operate with each
other, the existing disclosure and regulatory co-operation obligations of the Financial
Services Authority under sections 349 and 354 of FSMA are amended to include cooperation
with relevant authorities referred to by the Directive and to remove restrictions on disclosure
to such authorities. These duties reflect the disclosure and co-operation provisions in sections
948 and 950 (including provisions related to the rules on disclosure that apply where
information is passed to other takeover supervisory authorities and financial services
regulators described in relation to section 948(6)).