The Code allows the Panel to jointly regulate takeover offers involving a target company having its registered office in the UK, but which is listed elsewhere in the EU or which has its registered office in another EEA member state but is listed in the UK. It is likely that these provisions will be deleted.
Separately, the Conservative Party Manifesto for the last General Election envisaged strengthening certain areas of the Code and the UK’s other merger control legislation to:
Provide an increased level of disclosure at the outset of a deal about a bidder’s intentions towards the target company.
Ensure promises and undertakings made during a bid can be legally enforced.
Expand the ability for the Government to freeze a bid process to allow greater scrutiny.
Given the General Election has resulted in a minority Conservative government it remains to be seen whether and if so, to what extent each of these manifesto commitments will be implemented.
Public Offer of Securities
The EU Prospectus Directive adopted in 2003 governs public offers of securities and admissions to trading on regulated markets. Whilst Brexit will require UK rules to be updated to delete references to EU legislation, no significant overhaul is expected (at least in the short term). Nonetheless, the following areas will be under review:
In relation to listing and the issue of shares by public companies in the UK and the EU, the system of passporting is potentially very beneficial.
Following Brexit, UK incorporated issuers may well be classified as third country state issuers. Essentially, the loss of the passport could result in increased cost and uncertainty as UK incorporated issuers are forced to comply with the requirements of a non-UK competent authority.
In practice, the impact may prove to be less significant as typically, very few prospectuses approved in the UK are passported into other EU jurisdictions.
The exemptions contained in the UK Prospectus Rules currently mirror that of the Prospectus Directive and a number of transactions are often structured to fall within one or more of these exemptions. Whilst it is unlikely that these exemptions will be altered in the immediate future, there is the possibility that new exemptions might be introduced or existing ones updated to benefit smaller or AIM companies, or to attract international investment into the UK.
Effect of the Market Abuse Regulation
Following Brexit, the EU Market Abuse Regulation (MAR) will cease to apply in the UK, and the UK government will have the option of implementing the provisions of MAR by passing equivalent domestic legislation or grandfathering the existing regulation. This seems likely given that MAR was derived largely from the existing UK market abuse regime and that an equivalent regime is likely to be a requirement if the UK is to continue to have access to the single market.
- Consider for disclosure in any new prospectus, a Brexit-related risk factor, particularly if an issuer’s business is likely to be adversely affected by Brexit, the uncertainty of the eventual regulatory environment or market volatility.
- In relation to future equity offerings and listings, bear in mind the additional administrative procedures that may be required to approve prospectuses in EU member states.