Appendix 1. Rule 9 waivers

Introduction

1. Appendix 1 applies where the Panel is asked to waive the obligation to make an offer under Rule 9 which would otherwise arise where, as a result of the issue of new securities as consideration for an acquisition or a cash subscription or in fulfilment of obligations under an agreement to underwrite the issue of new securities, a person or group of persons acting in concert acquires an interest, or interests, in shares.

2. Where the word “offeror” is used in a particular Rule, it should be taken in the context of a Rule 9 waiver as a reference to the potential controller. Similarly, the phrase “offeree company” should be taken as a reference to the company which is to issue the new securities and in which the actual or potential controlling position will arise.

3. Rule 19, Rule 20, Rule 21.3, Rule 24.15, Rule 26, and Rule 30, where relevant, apply equally to documents and announcements published, and information provided, in connection with a transaction which is the subject of the Rule 9 waiver.

Specific grant of waiver required

In each case, specific grant of a Rule 9 waiver is required. Such grant will be subject to:

1. there having been no disqualifying transactions (as set out in Section 3 below);

2. prior consultation with the Panel by the parties concerned or their advisers;

3. approval in advance by the Panel of the circular setting out the details of the proposals;

4. approval of the proposals by an independent vote, on a poll, at a meeting of the holders of any relevant class of securities, whether or not any such meeting needs to be convened to approve the issue of the securities in question; and

5. disenfranchisement of the potential controller and persons acting in concert with it and of any other non-independent party at any such meeting.

Disqualifying transactions

Notwithstanding that the issue of new securities is made conditional upon the prior approval of independent shareholders:

1. the Panel will not normally agree to grant a Rule 9 waiver if the potential controller or any person acting in concert with it has acquired any interest in shares in the company in the 12 months prior to the proposed publication date of the circular but subsequent to negotiations, discussions or the reaching of understandings or agreements with the directors of the company in relation to the proposed issue of new securities; and

2. a Rule 9 waiver will not be granted, or will be invalidated if any acquisitions of interests in shares are made in the period between the publication of the circular and the shareholders’ meeting.

Rule 9 waiver circular

The circular must contain the following information and statements and comply appropriately with the Rules of the Code as set out below:

1. competent independent advice to the board of the offeree company regarding the transaction, the controlling position which it will create and the effect which this will have on shareholders generally;

2. full details of the number and percentage of shares in which the potential controller and persons acting in concert with it might become interested (together with details of the different interests concerned):

   1. where this is dependent upon the outcome of underwriting arrangements, it should be assumed that the potential controller will, in addition to any other entitlement, take up its full underwriting participation; and

   2. where convertible securities, options or securities with subscription rights are to be issued, the potential controlling position must be indicated on the assumption that only the potential controller will convert or exercise the subscription rights, and will do so in full and at the earliest opportunity (the date of which must also be given);

3. where the maximum potential shareholding resulting from the proposed transaction will exceed 50% of the voting rights of the company, specific and prominent reference to this possibility and to the fact that, subject to Section 7 below, the potential controller may acquire further interests in shares without incurring any further obligation to make an offer under Rule 9;

4. in cases where the potential controlling position will be held by more than one person, the identity of the potential controllers and their individual potential interests in shares in addition to the information required under (j) below;

5. a statement that the Panel has agreed, subject to shareholders’ approval, to waive any obligations to make an offer under Rule 9 which might result from the transaction;

6. a statement that, in the event that the proposals are approved at the shareholders’ meeting, the potential controller will not be restricted from making an offer for the offeree company, unless the potential controller has either:

   1. made a statement that it does not intend to make an offer (see Rule 2.8), in which case full details of the statement must be included in the circular; or

   2. entered into an agreement with the company not to make an offer (see Note 5 on the definition of acting in concert), in which case full details of the standstill agreement must be included in the circular;

7. Rule 16.2 (management incentivisation);

8. Rule 19.2 (responsibility statements, etc.);

9. Rule 21.2 (inducement fees and other offer-related arrangements);

10. Rule 23, Rule 24.2, Rule 24.3, Rule 25.2 and Rule 25.3 (offeror intentions, financial and other information, and opinion of the offeree board). Full details of the assets, if any, being injected must be included;

11. Rule 24.4 and Rule 25.4 (disclosure of interests and dealings). Dealings in respect of Rule 24.4 should be covered for the 12 months prior to the publication of the circular but dealings in respect of Rule 25.4 need not be disclosed as there is no offer period;

12. Rule 24.6 and Rule 24.9 (arrangements in connection with the proposal);

13. Rule 25.5 (service contracts of directors and proposed directors);

14. Rule 25.7 (other information);

15. Rule 26 (documents to be published on a website); and

16. Rule 28 and Rule 29 (profit forecasts, quantified financial benefits statements and asset valuations relating to the offeree company or relating to assets being acquired by the offeree company).­

Underwriting and placing

In cases involving the underwriting or placing of offeree company securities, the Panel must be given details of all the proposed underwriters or placees, including any relevant information to establish whether or not there is a group acting in concert, and the maximum percentage which they could come to hold as a result of implementation of the proposals.

Announcements following shareholders’ approval

1. Following the meeting at which the proposals are considered by shareholders, an announcement must be made by the company giving the result of the meeting and the number and percentage of the company’s shares in which the potential controller is, or is entitled to be, interested as a result.

2. Where the final controlling position is dependent on the results of underwriting, the company must make an announcement following the issue of the new securities stating the number and percentage of shares in which the potential controller is interested at that time.

3. Where convertible securities, options or securities with subscription rights are to be issued:

   1. the announcement of the potential controlling position must be made on the basis of the assumptions described in Section 4(b) above;

   2. following each issue of new securities a further announcement must be made confirming the number and percentage of shares in which the potential controller is interested at that time; and

   3. the information in (i) and (ii) should be included in the company’s annual report and accounts until all the securities in respect of which the Rule 9 waiver has been granted have been issued or it is confirmed that no such issue will be made.

Subsequent acquisitions by potential controllers

1. Immediately following approval of the proposals at the shareholders’ meeting, the potential controllers will be free to acquire further interests in shares of the offeree company, subject to the provisions of Rule 5 and Rule 9.

2. Where shareholders approve the issue of convertible securities, or the issue of warrants or the grant of options to subscribe for new shares where no immediate voting rights are obtained, the Panel will view the approval as sanctioning maximum conversion or subscription at the earliest possible moment without the necessity for the making of an offer under Rule 9. However, if the potential controller proposes to acquire further interests in voting shares following the relevant meeting, the Panel should be consulted to establish the number of shares to which the Rule 9 waiver will be deemed to apply.

3. See also Note 4 on Rule 9.1 and Rule 37.1.