Written question asked by Andrew Hunter (Conservative) on Thursday, 27 June 2002, in the House of Commons. It was due for an answer on Wednesday, 17 July 2002. It was answered by Melanie Johnson (Labour) on Wednesday, 17 July 2002 on behalf of the Department of Trade and Industry.

Dept of Trade and Industry

Question: To ask the Secretary of State for Trade and Industry, if she will make a statement on the operation of Section 429(4) of the Companies Act 1985 and Schedule 12 to the Financial Services Act 1986.

Answer: Mr. Hunter: To ask the Secretary of State for Trade and Industry if she will make a statement on the operation of Section 429(4) of the Companies Act 1985 and Schedule 12 to the Financial Services Act 1986. [66590] Miss Melanie Johnson: Schedule 12 to the Financial Services Act 1986 introduced Part XIII A into the Companies Act 1985 which is designed to deal with the problems of residual minority shareholdings following a successful takeover bid. The principal provisions are: (a) Rights enabling a successful takeover bidder which has acquired not less than 90 per cent. in value of the shares to which the offer relates to compulsorily acquire the remaining residual minority shareholding (known as "squeeze-out" rights); and (b) Equivalent rights to a minority shareholder to require the successful bidder in these circumstances to acquire the shares owned by the minority shareholder ("sell-out" rights). To ensure that these rights are not abused, important safeguards are in place (including strict time limits during which squeeze-out rights and sell-out rights may be exercised, a requirement that the price offered to minority shareholders must be the same as that of the original offer and the right to apply to court in exceptional circumstances). Section 429(4) of the Companies Act lays down the mechanisms by which a successful takeover bidder may exercise squeeze-out rights.

Secondary information