Takeovers by schemes of arrangement

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Investors Chronicle carries a regular feature on current takeover offers. These are always accompanied by a brief explanation of how takeovers work, but this has now been amended as a result of an intervention by UKSA. An additional paragraph now appears concerning schemes of arrangement, which is the way by that far the majority of takeovers are now effected. The new paragraph reads, “Schemes of arrangement are controversial, because they can proceed even if only a minority of shareholders vote in favour of them.” In fact, it is quite often only a minority, because those who hold their shares in a nominee account don’t get a vote as they are not the legal owners of the shares.

This is a scandal that UKSA wants to bring to an end and tackling it formed a significant part of UKSA’s recent representations to the Financial Reporting Council (of which a full report is available in the members only section of this website).