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Company Law Reform Bill [HL]

moved Amendment No. A173:"Page 440, line 8, at end insert—" ““(3B)   Without prejudice to subsection (4), where the terms of the offer include or have at any time included one or more elective arrangements which provide for the holder of any shares to receive one or more combinations of different types of consideration, such combination or combinations will be included in the choice of consideration set out in the notice.”””” The noble Lord said: We continue in Schedule 3. The purpose of this amendment is to extend the rights of shareholders whose shares are acquired pursuant to a notice under Section 429. Section 430 binds the offeror to acquire shares pursuant to a notice under Section 429 on the terms of the offer. An offeror may choose to make a ““mix and match”” offer to the target company’s shareholders. That means that the shareholders elect to receive shares, cash or a mixture of both—or another type of consideration—in exchange for their shares in the target company. The proportions of cash and shares which the shareholders receive will vary depending on the elections being made by others. The essence of the arrangement is that shareholders can elect to receive different mixes of consideration to the extent that there is a matching election which allows this. This process may apply at different times where an offer period is extended such that at each stage the outcome of what shareholders receive will differ, depending on the elections made by that group of shareholders. The Company Law Review steering group, in its publication Modern Company Law: Final Report, suggested that shareholders whose shares were being bought pursuant to a notice under Section 429 should be offered a choice of consideration, including the consideration arrangements offered under the mix and match offer. Where there was more than one mix and match arrangement, the shareholder should be offered the choice of the outcome of each of those arrangements such that he would be no worse off than had he accepted the offer at any earlier point. On page 47 of Implementation of the European Directive on Takeover Bids—A Consultative Document, the Department of Trade and Industry proposed to introduce this amendment. However, the Bill as it stands fails to do this, and it is our view that the amendment should be included. I beg to move.