Tuesday 5 November 2013

UK: Disenfranchising short-term shareholders during a takeover bid - the Government's position

Earlier this year the House of Commons Business, Innovation and Skills Committee published a report concerning the Kay Review of UK Equity Markets and Long-term Decision Making in which recommendations were made to Government: see here (pdf). The Government has responded: see here or here (pdf).

In its response the Government explains, amongst other things, its support for ensuring that the interests of those seeking short-term returns from a merger or acquisition do not override the long-term interests of companies; for this reason it does not in principle object to measures which reduce the influence of short-term shareholders. However, the Government's position with regard to disenfranchising short-term shareholders during a takeover bid is that this would not be practical or effective. The reasons for this position are outlined in the Government's response (in annex b) and comments are invited (roundtable discussion is also planned for later this year). The Government also includes in its response a summary of what it has done in respect of the Kay Review recommendations: see here.

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