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236: Approval of arrangements, amalgamations, and compromises
or “Court approval for company changes and agreements”
You could also call this:

“Rules for changing or combining code companies that affect voting rights”

When you want to make changes to how a code company is set up or joined with another company, and these changes affect how people can vote, you need to follow some special rules. A code company is a type of company that has to follow certain rules about voting.

If you’re asking the court to approve these changes, you must also tell the Takeovers Panel about it at the same time. The Takeovers Panel is a group that makes sure companies follow the rules.

The court can only approve the changes if the shareholders of the code company agree to them in a specific way. They need to have two votes. In the first vote, at least 75% of the votes from each group of shareholders who have similar interests must say yes. In the second vote, more than half of all shareholders who can vote must say yes.

Even if the shareholders agree, the court still needs to make sure the changes won’t be bad for the shareholders. The court can ask the Takeovers Panel if they think the changes are okay.

When we talk about changes affecting voting rights, we mean changes that alter how much voting power different shareholders have. The term “interest class” refers to groups of shareholders with similar interests, and “voting right” means the right to vote at meetings about the company’s business.

Remember, even if the Takeovers Panel says the changes are okay, the court doesn’t have to approve them. The court will make its own decision based on what’s best for everyone involved.

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Next up: 236B: Takeovers code does not apply where court order under section 236

or “Court orders on voting rights override takeover rules”
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Part 15 Approval of arrangements, amalgamations, and compromises by court

236AArrangement or amalgamation involving code company

  1. If a proposed arrangement or amalgamation affects the voting rights of a code company, the applicant for an order under section 236(1) must, at the same time as filing the application, notify the Takeovers Panel of the application.

  2. The court may not make an order under section 236(1) that affects the voting rights of a code company unless—

  3. the code company's shareholders approve the arrangement or amalgamation in accordance with subsection (4); and
    1. either of the following applies:
      1. the court is satisfied that the shareholders of the code company will not be adversely affected by the use of section 236(1) rather than the takeovers code to effect the change involving the code company; or
        1. the applicant has filed a statement from the Takeovers Panel indicating that the Takeovers Panel has no objection to an order being made under section 236(1).

        2. The court need not approve a proposed arrangement or amalgamation merely because the Takeovers Panel has no objection to an order being made under section 236(1).

        3. For the purposes of subsection (2)(a), the code company's shareholders may only approve the arrangement or amalgamation in the following way:

        4. by a resolution approved by a majority of 75% of the votes of the shareholders in each interest class entitled to vote and voting on the question; and
          1. by a resolution approved by a simple majority of the votes of those shareholders entitled to vote.

            1. For the purposes of this section and section 236B,—

              affects the voting rights, in respect of an arrangement or amalgamation, means an arrangement or amalgamation that involves a change in the relative percentage of voting rights held or controlled by 1 or more shareholders

                interest class may be determined in accordance with the principles set out in Schedule 10

                  voting right has the meaning set out in section 2(1) of the Takeovers Act 1993.

                  Notes
                  • Section 236A: inserted, on , by section 30 of the Companies Amendment Act 2014 (2014 No 46).