10 |
Chapter 10 first deals with offers to the public and employees and provides an exemptions where there is a genuine offer to the public at a fixed price or tender.11 The exemption applies even though the employees are given priority, provided (1) the number of priority shares is limited and no more than 10% of the shares are offered to the employees in priority,12 2) all person entitled to the priority allocation do so on similar terms and 3) the offer is not restricted wholly or mainly to directors or employees above a certain level of remuneration.13 The exemption does not apply to any discount.14 |
Secondly it provides separate but similar rules granting exemption where there is both an offer to the public and a separate offer to employees at the same time.15 The rules are aligned so that one looks at both issues together to apply the limits as to the number of employee shares.16 Again the exemption does not extend to discounts, although the enactment of this statutory purpose is more complicated and uses the device of a ‘registrant discount’.17 |
In practice, many flotations are made by placement and not by public offer and so technically fall outside these protective rules.18 These rules had to be modified to take account of privatisations involving two or more companies.19 |