The government plans to amend the Companies Act 2006 to restrict the use of share capital reductions in company takeovers. This change will prohibit a company from using a ‘cancellation’ scheme of arrangement to facilitate its takeover or merger.
The draft regulations will not prohibit intra-group restructures, de-mergers, or debt restructuring. It will also not affect takeovers already in progress before these regulations take effect.
An information and impact note is provided which sets out the analysis behind the proposed legislative changes.