COMPANIES ACT - 1963 (ACT 179)

    Section - 212 - Payments to Directors in Connection with Takeover Bids

    (1) Where an offer is made for the acquisition of any shares of a company on the terms that the same is available for acceptance,

    (a) by all the shareholders of the company or by all the holders of shares of the class to which the offer relates, or

    (b) by the holders of shares which, together with any shares already owned beneficially by the person making the offer or by any body corporate in which he is the controlling shareholder, confer the right to exercise or control the exercise of not less than one-third of the voting power at any general meeting of the company,
    and in connection with such an offer it is proposed that a payment shall be made or a payment has been made to any director or former director of the company or any associated company, over and above the receipt by him in respect of any shares in the company held by him of the same price as may be receivable by other holders of the shares of the same class, it shall be the duty of that director to take all reasonable steps to secure that particulars of the payment are included in or sent with any notice of the offer made for their shares which is given to any shareholders.

    (2) If,

    (a) any such director fails to take reasonable steps as aforesaid, or

    (b) any person who has been properly required by any such director to include the said particulars in or send them with any such notice fails to do so,
    he shall be liable to a fine not exceeding fifty pounds.

    (3) Unless,

    (a) the requirements of subsection (1) of this section are complied with, and

    (b) the making of the payment is, before the transfer of any shares in pursuance of the offer, approved by an ordinary resolution,

    (i) agreed to by all the holders of the shares to which the offer relates, or

    (ii) passed at a meeting, summoned for the purpose by notice complying with subsection (5) of this section, of such holders at which neither the director concerned nor the holders of any shares in which he is beneficially interested, either directly or indirectly, shall have voted on such resolution,
    such payment shall be distributed in the manner provided by the next succeeding subsection.

    (4) Where a payment is to be distributed in accordance with the provisions of the immediately foregoing subsection, the person making or proposing to make such payment and the director or former director to whom it is made or proposed to be made shall be jointly and severally liable to distribute the same among any persons who have sold their shares as a result of the offer in proportion to the number of shares sold by them, and if any director or former director shall receive any such payment he shall hold the same on trust for such persons:
    Provided that,

    (a) the expenses incurred in distributing such payment shall be borne by the persons liable to make the distribution and not retained out of the payment;

    (b) if, in proceedings instituted prior to the expiration of three months from the first transfer of any shares in pursuance of the offer, the Court shall award or approve the payment of damages to such director or former director for breach of any valid service agreement, the amount of any such damages, but not of any costs or expenses incurred in connection with such proceedings, shall be paid to or retained by the director or former director out of such payment and only the balance thereof, if any, shall be distributable as aforesaid.

    (5) The notice of any general meeting summoned for the purposes of subsection (3) of this section shall be convened, held and conducted as nearly as may be in accordance with the provisions of this Code and the company's Regulations relating to general meetings of the company, and the notices convening the meeting shall state that if the resolution approving the payment is not passed the payment will be distributable among the persons who have sold their shares in pursuance of the offer except to the extent that the Court may award or approve the payment to the director or former director concerned of damages for breach of a valid service agreement.

    (6) It shall not be lawful for such an offer as is referred to in subsection (1) of this section to be made conditional upon approval of a payment or proposed payment to any director or former director and, if an offer is expressed to be made subject to such a condition, the condition shall be void and of no effect.

    (7) For the purposes of paragraph (b) of subsection (1) of this section,

    (a) when the offer is made by a body corporate, shares shall be deemed to be owned beneficially by such body corporate if they are owned beneficially by it or by any of its associated companies or by any controlling shareholders of it; and

    (b) a person shall be deemed to be a controlling shareholder of a body corporate if such body corporate or its directors are accustomed to act in accordance with the directions or instruction of such person or his nominee or if, at a general meeting of such body corporate, such person is entitled to exercise or control the exercise of one-third or more of the voting power.