Appointed Day Act for the Companies (Takeovers and Mergers Panel) (Jersey) Law 2009
1. ISSUE AND RECOMMENDATION
1.1. Takeovers and mergers in Jersey have for some time been regulated by the Panel for Takeover and Mergers (“the Panel”), a body based in the UK. The Companies (Takeovers and Mergers Panel) (Jersey) Law 2009 (“the Law”) will put this informal arrangement on a statutory footing. The Law closely mirrors the equivalent UK legislation and will ensure that the Panel continues to act in relation to Jersey companies and has consistent functions and powers in Jersey compared to the other jurisdictions in which they act.
1.2. The Law was adopted by the States on 16 July 2008, sanctioned by the Privy Council on 10 December 2008 and registered in the Royal Court on 2 January 2009. The draft Appointed Day Act brings the Law into force on 1 June 2009.
1.3. It is recommended that the Minister approves the Appointed Day Act and that it be lodged au Greffe for debate by the States at the earliest opportunity.
2. BACKGROUND
2.1. The Panel historically regulated takeovers in both the UK and the Crown Dependencies on an informal basis. Although this is considered to have worked well in practice, the European Union’s Takeover Directive (2004/25/EC) (“the Directive”) requires that the Panel should be recognised by national law.
2.2. Having been placed within a statutory framework in the UK, it was considered appropriate to administer takeovers in Jersey under an equivalent statutory framework.
2.3. After consideration within government, informal consultation with industry and discussions with the Jersey Financial Services Commission (“the Commission”), there was a wide consensus that it was in the interests of the Island that the Panel should act within a statutory framework.
2.4. It is highly desirable that there should be some regulation of takeovers in the interests of shareholders, because this is both likely to encourage investment and also necessary for compliance with international standards. Regulation by the Panel is considered to have worked well in practice in the past. The Panel has considerable expertise in this area which could not be replicated by a specifically Jersey (or even Channel Islands) panel without significant cost implications.
2.5. The strong preference of both industry and government was for Jersey to proceed by introducing its own legislation and the other Crown Dependencies are making similar arrangements.
2.6. The Law was prepared in close consultation with the Panel. The Commission and industry (through Jersey Finance) were also given an opportunity to comment. No objections have been received to the substance of the Law.
3. THE LAW
3.1. In order to ensure that the Panel’s functions and powers under Jersey law are equivalent to those under UK law (which is the basis on which the Panel are willing to continue to supervise Jersey takeovers), the Law closely follows the UK legislation, adapted for the Jersey context.
3.2. Article 2 of the Law empowers the Minister to appoint a body to oversee takeovers and mergers. It is intended that the Minister will appoint the Panel, although it would be possible to appoint another body at some future date if it was no longer thought desirable to continue the Panel’s role as regulator of Jersey takeovers.
3.3. Article 3 requires the Panel to make rules giving effect to the relevant articles of the Directive and enables it to make other rules within its area of competence. It is planned that the Panel’s existing rules, forming The City Code on Takeovers and Mergers, which already give effect to the Directive in the UK, will be adopted under the Law and will thus have a statutory basis in Jersey as in the UK.
3.4. Articles 5-7 give the Panel power to make rulings interpreting its rules, issue directions to secure compliance with its rules and require information and documents to be provided.
3.5. Articles 8 and 9 ensure that information provided to the Panel will be treated in confidence. It can only be disclosed to certain specified persons or in certain specified circumstances, as set out in the Schedule. Article 8 contains provision for the States to amend the Schedule by regulations and it is intended that this should be done so as to refer to the Guernsey and Isle of Man legislation.
3.6. Articles 10 and 11 impose mutual duties of co-operation on the Panel and Commission. Article 10 also requires the Panel to co-operate with equivalent overseas authorities such as the Commission. The Commission has confirmed that it is content with these provisions.
3.7. Provision is also made for reviews and appeals of the Panel’s decisions (Article 12), sanctions for non-compliance with the rules (Article 13), compensation to be ordered (Article 14) and enforcement by the Court (Article 15).
3.8. Articles 17-19 enable the Panel to raise money either through fees and charges or by the raising of a levy on the Order of the Minister. It is not intended to recommend that any such levy is raised in the foreseeable future. No levy is or has been raised under the equivalent UK provision, and we are not aware that there are any plans to do so. However, if the UK were to raise a levy on UK companies, it is anticipated that Jersey may be expected to do likewise, and this provision has therefore been included. However there would be the option if requested to do so to refuse.
3.9. The Law Officers’ Department confirmed that the Law is human rights compliant and the penalties provided in the Law have been approved by the Attorney General.
4. RECOMMENDATION
4.1. It is recommended that the Minister approves the Appointed Day Act and that it be lodged au Greffe for debate by the States at the earliest opportunity.
FINANCE INDUSTRY DEVELOPMENT EXECUTIVE
20 February 2009
gov.je