The Alternative Investment Fund Managers Regulations 2013

Asset stripping U.K.

43.—(1) When an AIF acquires control of a non‑listed company or an issuer, for a period of 24 months following the acquisition of control, the AIFM managing the AIF—

(a) must not facilitate, support or instruct any distribution, capital reduction, share redemption or acquisition by the company or issuer of its own shares;

(b) in so far as the AIFM is authorised to vote on behalf of the AIF at the meetings of the governing body of the company or issuer, must not vote in favour of a distribution, capital reduction, share redemption or acquisition by the company or issuer of its own shares; and

(c) in any event must use its best efforts to prevent distributions, capital reductions, share redemptions or the acquisition by the company or issuer of its own shares.

(2) In paragraph (1) “distribution” means a distribution to shareholders, including a payment of dividends and of interest relating to shares—

(a) made when on the closing date of the last financial year the net assets as set out in the company or issuer's annual accounts are, or following such a distribution would become, lower than the amount of the subscribed capital plus those reserves which may be not distributed under the law or the statutes, on the understanding that where the uncalled part of the subscribed capital is not included in the assets shown in the balance sheet, this amount must be deducted from the amount of subscribed capital; or

(b) the amount of which would exceed the amount of the profits at the end of the last financial year plus any profits brought forward and sums drawn from reserves available for this purpose, less any losses brought forward and sums placed to reserve in accordance with the law or the statutes.

(3) In paragraph (1) “capital reduction” does not include a reduction in subscribed capital, the purpose of which is—

(a) to offset losses incurred; or

(b) to include sums of money in a non-distributable reserve, provided that, following that operation, the amount of such reserve is not more than 10% of the reduced subscribed capital.

(4) In paragraph (1) “share redemption” or “acquisition by the company or issuer of its own shares”—

(a) refers to a redemption or acquisition of shares, including shares previously acquired by the company or issuer and held by it, and shares acquired by a person acting in that person's own name but on the company or issuer's behalf, that would have the effect of reducing the net assets below the amount mentioned in paragraph (2)(a); but

(b) does not include an acquisition of shares in the circumstances described in Article 20.1(b) to 20.1(h) of the second company law directive.

(5) In this regulation—

“law” means the law applicable to the company or issuer in the EEA State in which it is registered;

“second company law directive” means the second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards in respect of the formation of public limited liability companies and the maintenance and alteration of their capital M1 ;

“statutes” means the instruments of incorporation of the company or issuer.

Marginal Citations

M1 OJ L 26, 31.01.1977, p.1.