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Company Law Reform Bill [HL]

In considering the current sequence of amendments, we move on from provisions relating to squeeze-out, which we have just been discussing, to those relating to sell-out. We are now concerned with the rights of the residual minority shareholders rather than those of the successful takeover bidder. The twin sources of the amendments to Part 13A in the Bill nevertheless mirror those in relation to squeeze-out—namely, the takeovers directive, but this time Article 16—and recommendations of the Company Law Review. The tabled amendments seek to improve the clarity of the drafting of these new provisions. Perhaps the most substantive of the amendments in form, if not in substance, is Amendment No. A173D, which loses the separate provision defining ““takeover offer”” for the purposes of the sell-out provisions. The current draft mirrors the approach of the Companies Act 1985. It splits the notion of ““takeover offer””, defined by cross-reference to Section 428(1) of the Companies Act, from the substantive sell-out provisions that apply to such offers. Amendments Nos. A173C and A173D are certainly more brief in their approach, but one might quibble about whether they remain as clear and precise for the reader. Were these two amendments to be adopted, it might be thought on a first reading of the provisions that the cross-reference was to a meaning of ““company”” at Section 428(1) or, perhaps more logically, the definition of ““all the shares in the company””. It would not be correct to limit the definition of ““all the shares in a company”” to that contained in Section 428(1). The whole of Section 428 must be read to give proper meaning to these words—for example, ““shares”” are defined in Section 428(2). So, on balance, I would rather keep to the existing draft. It strikes me as more conceptually certain and accurate. Similarly, I am not convinced that the other two, more minor, amendments to what would become the new Clause 430A(1A) are real improvements.