Regulation of changes in control of voting rights in Takeovers Code companies can be even more important than regulating changes in holding, the Takeovers Panel says.
The latest issue of the Panel's Code Word newsletter gives its views on disaggregation of holding or control.
The Panel says its clear approach in the past has been that rule 6(2)a) of the Code deems those jointly increasing their holding or control of voting rights to have each become the holder or controller of those voting rights only for the purposes of that increase.
"When a person's holding of voting rights changes by way of a holding split, they are considered to have increased from a starting position of 0%. The same is true in respect of a control split."
It says a change of holding without a simultaneous change of control has no real effect on shareholders. However, a change of control with no corresponding change of holding may have significant repercussions for the direction of the company.
"Given that control of voting rights can have a much greater impact on shareholders in Code companies than holding, it would be inconsistent with the objectives of the Code to require shareholder approval (or an exemption) for holding splits (even without a corresponding change in control) while simultaneously allowing any control split to occur without the Code applying."
The Panel says that as such, it considers that control splits should be regulated by the Code, just as holding splits are.