Companies Act 2006

“Squeeze-out” U.K.

979 Right of offeror to buy out minority shareholder U.K.

(1) Subsection (2) applies in a case where a takeover offer does not relate to shares of different classes.

(2) If the offeror has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire—

(a) not less than 90% in value of the shares to which the offer relates, and

(b) in a case where the shares to which the offer relates are voting shares, not less than 90% of the voting rights carried by those shares,

he may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he desires to acquire those shares.

(3) Subsection (4) applies in a case where a takeover offer relates to shares of different classes.

(4) If the offeror has, by virtue of acceptances of the offer, acquired or unconditionally contracted to acquire—

(a) not less than 90% in value of the shares of any class to which the offer relates, and

(b) in a case where the shares of that class are voting shares, not less than 90% of the voting rights carried by those shares,

he may give notice to the holder of any shares of that class to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he desires to acquire those shares.

(5) In the case of a takeover offer which includes among the shares to which it relates—

(a) shares that are allotted after the date of the offer, or

(b) relevant treasury shares (within the meaning of section 974) that cease to be held as treasury shares after the date of the offer,

the offeror's entitlement to give a notice under subsection (2) or (4) on any particular date shall be determined as if the shares to which the offer relates did not include any allotted, or ceasing to be held as treasury shares, on or after that date.

(6) Subsection (7) applies where—

(a) the requirements for the giving of a notice under subsection (2) or (4) are satisfied, and

(b) there are shares in the company which the offeror, or an associate of his, has contracted to acquire subject to conditions being met, and in relation to which the contract has not become unconditional.

(7) The offeror's entitlement to give a notice under subsection (2) or (4) shall be determined as if—

(a) the shares to which the offer relates included shares falling within paragraph (b) of subsection (6), and

(b) in relation to shares falling within that paragraph, the words “by virtue of acceptances of the offer” in subsection (2) or (4) were omitted.

(8) Where—

(a) a takeover offer is made,

(b) during the period beginning with the date of the offer and ending when the offer can no longer be accepted, the offeror—

(i) acquires or unconditionally contracts to acquire any of the shares to which the offer relates, but

(ii) does not do so by virtue of acceptances of the offer, and

(c) subsection (10) applies,

then for the purposes of this section those shares are not excluded by section 977(1) from those to which the offer relates, and the offeror is treated as having acquired or contracted to acquire them by virtue of acceptances of the offer.

(9) Where—

(a) a takeover offer is made,

(b) during the period beginning with the date of the offer and ending when the offer can no longer be accepted, an associate of the offeror acquires or unconditionally contracts to acquire any of the shares to which the offer relates, and

(c) subsection (10) applies,

then for the purposes of this section those shares are not excluded by section 977(2) from those to which the offer relates.

(10) This subsection applies if—

(a) at the time the shares are acquired or contracted to be acquired as mentioned in subsection (8) or (9) (as the case may be), the value of the consideration for which they are acquired or contracted to be acquired (“the acquisition consideration”) does not exceed the value of the consideration specified in the terms of the offer, or

(b) those terms are subsequently revised so that when the revision is announced the value of the acquisition consideration, at the time mentioned in paragraph (a), no longer exceeds the value of the consideration specified in those terms.

Modifications etc. (not altering text)

C1 Ss. 974-991 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 14(2) (with transitional provisions and savings in regs. 7, 9, Sch. 2)

980 Further provision about notices given under section 979 U.K.

(1) A notice under section 979 must be given in the prescribed manner.

(2) No notice may be given under section 979(2) or (4) after the end of—

(a) the period of three months beginning with the day after the last day on which the offer can be accepted, or

(b) the period of six months beginning with the date of the offer, where that period ends earlier and the offer is one to which subsection (3) below applies.

(3) This subsection applies to an offer if the time allowed for acceptance of the offer is not governed by rules under section 943(1) that give effect to Article 7 of the Takeovers Directive.

In this subsection “the Takeovers Directive” has the same meaning as in section 943.

(4) At the time when the offeror first gives a notice under section 979 in relation to an offer, he must send to the company—

(a) a copy of the notice, and

(b) a statutory declaration by him in the prescribed form, stating that the conditions for the giving of the notice are satisfied.

(5) Where the offeror is a company (whether or not a company within the meaning of this Act) the statutory declaration must be signed by a director.

(6) A person commits an offence if—

(a) he fails to send a copy of a notice or a statutory declaration as required by subsection (4), or

(b) he makes such a declaration for the purposes of that subsection knowing it to be false or without having reasonable grounds for believing it to be true.

(7) It is a defence for a person charged with an offence for failing to send a copy of a notice as required by subsection (4) to prove that he took reasonable steps for securing compliance with that subsection.

(8) A person guilty of an offence under this section is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

(b) on summary conviction—

(i) in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding [F1 one-fiftieth of the statutory maximum][F1 one-fiftieth of the greater of £5,000 or the amount corresponding to level 4 on the standard scale for summary offences];

(ii) in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both) and, for continued contravention, a daily default fine not exceeding one-fiftieth of the statutory maximum.

Textual Amendments

F1 Words in s. 980(8)(b)(i) substituted (E.W.) (12.3.2015) by The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Fines on Summary Conviction) Regulations 2015 (S.I. 2015/664), reg. 1(1), Sch. 3 para. 9(20) (with reg. 5(1))

Modifications etc. (not altering text)

C2 Ss. 974-991 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 14(2) (with transitional provisions and savings in regs. 7, 9, Sch. 2)

Commencement Information

I1 S. 980 wholly in force at 6.4.2007; s. 980 not in force at Royal Assent, see s. 1300; s. 980 in force for specified purposes at 20.1.2007 by S.I. 2006/3428, art. 3(3) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5); s. 980 in force at 6.4.2007 by S.I. 2007/1093, art. 2(1)(b) (with art. 11(1))

981 Effect of notice under section 979 U.K.

(1) Subject to section 986 (applications to the court), this section applies where the offeror gives a shareholder a notice under section 979.

(2) The offeror is entitled and bound to acquire the shares to which the notice relates on the terms of the offer.

(3) Where the terms of an offer are such as to give the shareholder a choice of consideration, the notice must give particulars of the choice and state—

(a) that the shareholder may, within six weeks from the date of the notice, indicate his choice by a written communication sent to the offeror at an address specified in the notice, and

(b) which consideration specified in the offer will apply if he does not indicate a choice.

The reference in subsection (2) to the terms of the offer is to be read accordingly.

(4) Subsection (3) applies whether or not any time-limit or other conditions applicable to the choice under the terms of the offer can still be complied with.

(5) If the consideration offered to or (as the case may be) chosen by the shareholder—

(a) is not cash and the offeror is no longer able to provide it, or

(b) was to have been provided by a third party who is no longer bound or able to provide it,

the consideration is to be taken to consist of an amount of cash, payable by the offeror, which at the date of the notice is equivalent to the consideration offered or (as the case may be) chosen.

(6) At the end of six weeks from the date of the notice the offeror must immediately—

(a) send a copy of the notice to the company, and

(b) pay or transfer to the company the consideration for the shares to which the notice relates.

Where the consideration consists of shares or securities to be allotted by the offeror, the reference in paragraph (b) to the transfer of the consideration is to be read as a reference to the allotment of the shares or securities to the company.

(7) If the shares to which the notice relates are registered, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by an instrument of transfer executed on behalf of the holder of the shares by a person appointed by the offeror.

On receipt of that instrument the company must register the offeror as the holder of those shares.

(8) If the shares to which the notice relates are transferable by the delivery of warrants or other instruments, the copy of the notice sent to the company under subsection (6)(a) must be accompanied by a statement to that effect.

On receipt of that statement the company must issue the offeror with warrants or other instruments in respect of the shares, and those already in issue in respect of the shares become void.

(9) The company must hold any money or other consideration received by it under subsection (6)(b) on trust for the person who, before the offeror acquired them, was entitled to the shares in respect of which the money or other consideration was received.

Section 982 contains further provision about how the company should deal with such money or other consideration.

Modifications etc. (not altering text)

C3 Ss. 974-991 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 14(2) (with transitional provisions and savings in regs. 7, 9, Sch. 2)

982 Further provision about consideration held on trust under section 981(9) U.K.

(1) This section applies where an offeror pays or transfers consideration to the company under section 981(6).

(2) The company must pay into a separate bank account that complies with subsection (3)—

(a) any money it receives under paragraph (b) of section 981(6), and

(b) any dividend or other sum accruing from any other consideration it receives under that paragraph.

(3) A bank account complies with this subsection if the balance on the account—

(a) bears interest at an appropriate rate, and

(b) can be withdrawn by such notice (if any) as is appropriate.

(4) If—

(a) the person entitled to the consideration held on trust by virtue of section 981(9) cannot be found, and

(b) subsection (5) applies,

the consideration (together with any interest, dividend or other benefit that has accrued from it) must be paid into court.

(5) This subsection applies where—

(a) reasonable enquiries have been made at reasonable intervals to find the person, and

(b) twelve years have elapsed since the consideration was received, or the company is wound up.

(6) In relation to a company registered in Scotland, subsections (7) and (8) apply instead of subsection (4).

(7) If the person entitled to the consideration held on trust by virtue of section 981(9) cannot be found and subsection (5) applies—

(a) the trust terminates,

(b) the company or (if the company is wound up) the liquidator must sell any consideration other than cash and any benefit other than cash that has accrued from the consideration, and

(c) a sum representing—

(i) the consideration so far as it is cash,

(ii) the proceeds of any sale under paragraph (b), and

(iii) any interest, dividend or other benefit that has accrued from the consideration,

must be deposited in the name of the Accountant of Court in a separate bank account complying with subsection (3) and the receipt for the deposit must be transmitted to the Accountant of Court.

(8) Section 58 of the Bankruptcy (Scotland) Act 1985 (c. 66) (so far as consistent with this Act) applies (with any necessary modifications) to sums deposited under subsection (7) as it applies to sums deposited under section 57(1)(a) of that Act.

(9) The expenses of any such enquiries as are mentioned in subsection (5) may be paid out of the money or other property held on trust for the person to whom the enquiry relates.

Modifications etc. (not altering text)

C4 Ss. 974-991 applied (with modifications) (1.10.2009) by The Unregistered Companies Regulations 2009 (S.I. 2009/2436), regs. 3-5, Sch. 1 para. 14(2) (with transitional provisions and savings in regs. 7, 9, Sch. 2)