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On 8 October 2015 the Code Committee of the Takeover Panel published Practice Statement No 30 in relation to the information required for the purpose of obtaining regulatory consents.
Under Rule 20.2 of the Takeover Code, any information given to one bidder (the first bidder) must be given equally and promptly to another bidder, even if the competing offer is less welcome.
The Practice Statement explains how the Panel considers that the requirements of Rule 20.2 may be complied with in relation to the supply of sensitive information to certain lawyers or economists advising the first bidder on an “outside counsel only” basis for the purposes of enabling them to consider the need for and, where necessary, obtain the consent of a competition authority or other regulatory body, but where the target does not wish to provide (or may be constrained by applicable law or regulation from providing) the sensitive information directly to the first bidder or any competing bidder.
Normal practice is for the sensitive information to be provided to the lawyers or economists advising the competing bidder on the same "outside counsel only" basis. On this basis, the sensitive information will not need to be provided directly to the competing bidder. Appropriate measures must be shown to the Panel to have been implemented in order to ensure that the sensitive information will not be obtained by the first bidder or its other advisers. The new Practice Statement sets out how this can be done and Panel consent must be acquired before any sensitive information is transmitted.
The Panel will consider all factors when deciding whether to agree to apply Rule 20.2 in any specific case, including the following:
Recipients of the sensitive information
The team receiving information should comprise a small team of identified lawyers and/or economists and should not include any directors or employees of the bidder or any other advisors (the clean team).
Arrangements to protect the confidentiality of the sensitive information
The Panel considers that the establishment of effective procedures and information barriers is essential to ensuring that the sensitive information is not obtained by anyone outside the clean team and, where the clean team comprises individuals in different firms or offices in relevant jurisdictions, all advice to be provided to a bidder by any member of the clean team should be reviewed in advance by a designated responsible member of the clean team at the principal firm advising on the relevant regulatory issues to ensure that this requirement is adhered to. Also, any correspondence with regulators that will be reviewed by the bidder should have any sensitive information redacted.
Details to be provided to the Panel
The new Practice Statement sets out details and confirmations which should be given to the Panel in writing in order for it to consider whether to apply Rule 20.2. These include:
- details of the clean team;
- the name of the individual at each firm represented on the clean team who has taken responsibility for ensuring that the procedures and information barriers will be implemented and complied with by that firm;
- various confirmations from the bidder, including that it waives any right to request sensitive information from its advisers and waives any rights to any information under any professional obligations of any member of the clean team, that no director or employee of the bidder will receive or have access to any sensitive information until the offer becomes unconditional in all respects and that it will inform the Panel if any such information comes into its possession; and
- various confirmations from the firms on the clean team including that such firm will not disclose any sensitive information to the bidder or any person outside the clean team other than the relevant regulatory authorities and that effective information barriers and procedures have been implemented in order to ensure that the sensitive information may only be accessed by members of the clean team.
Equality of treatment of other bidders
The Panel notes that, as the same information is only to be supplied on request, the target company is not required to provide information to the clean team advising a competing bidder which was not provided to the clean team advising the first bidder (for example, any specific information which may be relevant to the particular competition issues relating to the competing bidder’s offer, but which is not relevant to the first bidder’s offer), nor is the target company required to provide information which was provided to the clean team advising the first bidder but not requested by the competing bidder.