The UKSA policy team is increasingly concerned about takeovers by ‘schemes of arrangement’. Vodafone’s bid for CWW is yet another. This form of takeover, under Part 26 of the Companies Act, enables an acquirer to secure 100% of the shares without the participation of private investors holding shares in nominee accounts (as in ISAs). This is because shares in nominee accounts are legally owned by the account provider, not by the investor and only registered shareholders are legally entitled to vote. Some nominees will facilitate client participation, but not all.
Shareholders in CWW are being telephoned on its behalf to draw attention to the Vodafone offer, which is being recommended by CWW directors, but many private investors using nominee accounts won’t even be receiving details of the offer, let alone being given the right to decide whether the offer is acceptable. Despite this, a majority of just 75% of those who do vote will decide the outcome for all CWW shareholders, unlike a straightforward offer through the front door (ie not under Part 26) which would allow all beneficial owners, not just legal owners, to decide for themselves.
In a further wrinkle, which may mislead even registered shareholders, the offer document, in line with standard practice, urges maximum participation in the voting, ‘so that the Court may be satisfied that the result is a fair representation of Scheme Shareholders’ opinions.’ This is nonsense, because the High Court, which rubber stamps these arrangements, pays no regard to the level of participation, based upon an unchallenged precedent which ruled that absolutely no minimum participation is required. Investors who don’t like the offer need to vote against it, because in this form of takeover abstentions don’t count.
CWW investors using nominee accounts who haven’t been given the opportunity to vote but wish to do so need to contact their nominee account provider now, as proxy voting ends at 11.15 on 16 June. The votes themselves take place at meetings in London on 18 June.