Companies (Takeovers and Mergers Panel) (Jersey) Law 200-.

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A decision made (02/06/2008) regarding: Companies (Takeovers and Mergers Panel) (Jersey) Law 200-.

Decision Reference: MD-E-2008-0114
Decision Summary Title :	Companies (Takeovers and Mergers Panel) (Jersey) Law 200-		Date of Decision Summary:	30 May 2008
Decision Summary Author:	Robert Jones Finance Industry Development Assistant		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	Companies (Takeovers and Mergers Panel) (Jersey) Law 200-		Date of Written Report:	30 May 2008
Written Report Author:	Robert Jones Finance Industry Development Assistant		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Approval of the draft Companies (Takeovers and Mergers Panel) (Jersey) Law 200- (“the Draft Law”) for lodging.
Decision(s): The Minister approved the report and proposition entitled, ‘Draft Companies (Takeovers and Mergers Panel) (Jersey) Law 200-‘ and signed the associated declaration of compatibility with the European Convention on Human Rights. The Minister requested that the report and proposition be lodged au Greffe no later than 3rd June 2008, with a view to securing a date for debate of 15th July 2008.
Reason(s) for Decision: The Law is necessary in order for Jersey companies and shareholders in such to continue to benefit from the protections provided by the Panel on Takeovers and Mergers (“the Panel”). The Law closely follows Chapter 1 of Part 28 of the UK Companies Act 2006, which gave the Panel statutory functions in the UK. This will have the effect of formalising the existing arrangement and will also allow Jersey to show compatibility with the European Union’s Takeover Directive and thus to show compliance with international standards. The Law Officers Department have indicated that the Draft Law does not raise any Human Rights issues and that all tariffs for new offences created are commensurate with similar existing offences.
Resource Implications: There are no measurable financial or manpower costs for the States.
Action required: To approve the Law and the attached report and sign the declaration of compatibility with the European Convention on Human Rights and for the documents to be lodged au Greffe so as to allow the Law to be debated by the States on 15 July.
Signature: Senator P.F.C.Ozouf		Position: Minister
Date Signed:		Date of Decision (If different from Date Signed):

Companies (Takeovers and Mergers Panel) (Jersey) Law 200-.

COMPANIES (TAKEOVERS AND MERGERS PANEL) (JERSEY) LAW 200- (“THE DRAFT LAW”)

1 THE ISSUE AND RECOMMENDATION

It is recommended that the Minister for Economic Development (“the Minister”) should approve the Draft Law and the report attached to it, sign the Decision Summary and the statement of human rights compliance and that the documents should be lodged au Greffe by 3 June 2008 so as to be debated by the States on 15 July 2008.

BACKGROUND

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 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”) required that the Panel, as a designated supervisory authority, should be recognised by national law (Art 4(1) of the Directive). The implementation of the Directive in UK national law was included in the Companies Act 2006, as Chapter 1 of Part 28 (“Chapter 1”).
Now that the Panel has been placed within a statutory framework in the UK, they do not consider it appropriate to continue to administer takeovers in Jersey unless an equivalent framework applies here. There are two possible means of achieving this equivalence. The UK legislation made provision for Chapter 1 to be extended to Jersey by Order-in-Council; alternatively, we could introduce our own legislation.
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 continue to act. 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. Also any alternative to the Panel would require significant expenditure, either by industry or government.
The strong preference of both industry and government was for Jersey to proceed by introducing its own legislation, because of the importance of our independence in financial matters.
The other Crown Dependencies are making similar arrangements. Our understanding is that the Isle of Man is proceeding by Order-in-Council while Guernsey is introducing its own legislation.
The Draft Law has been prepared in close consultation with the Panel. The Commission and industry (through Jersey Finance) have also been given an opportunity to comment. These comments have been incorporated as appropriate and no objections have been received to the substance of the Draft Law.

THE PROPOSED NEW LAW

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 Draft Law closely follows Chapter 1, adapted for the Jersey context.
Article 2 of the Draft 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.
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 envisaged 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.
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.
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. Because of the need for identical disclosure gateways to apply in all relevant jurisdictions (i.e. the UK and the Crown Dependencies) our Schedule cross-refers to the relevant UK 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 once this becomes available.
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. The Commission have confirmed that they are content with these provisions.
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).
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.
The Law Officers’ Department has confirmed that, having considered the human rights implications of the Law, they are satisfied that the Minister may properly sign the declaration of compatibility. They have also confirmed that the penalties provided in the Law have been approved by the Attorney General.

SUMMARY

The Draft Law will put the existing informal arrangements for Jersey takeovers and mergers on a statutory basis. It closely mirrors the equivalent legislation in the UK and will ensure that the Panel has consistent functions and powers across all the jurisdictions regulated by them. It will also allow Jersey to demonstrate equivalence with European requirements for takeover regulation.

RECOMMENDATION

5.1 It is recommended that the Minister should approve the Draft Law and the report attached to it, sign the Decision Summary and the statement of human rights compliance and that the documents should be lodged au Greffe by 3 June 2008 so as to be debated by the States on 15 July 2008.

ROBERT JONES

Finance Industry Development Assistant

30 May 2008