Labour manifesto: Takeover procedure to be reformed
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The Labour Party has vowed to reform current takeover procedure, claiming too many acquisitions turn out to be bad news for both companies.
In its manifesto, released today, the party says the UK’s Stewardship Code should be bolstered so that institutional shareholders are required to declare how they vote and for banks to put their remuneration policies to shareholders for explicit approval.
Companies should be more transparent about their long-term plans for the business they want to acquire, Labour says. It is calling for more disclosure of who owns shares, a requirement for bidders to set out how they will finance their bids and greater transparency on advisers’ fees.
Labour also wants a higher threshold of support - two thirds of shareholders - for securing a change of ownership and the case for limiting votes to those on the register before the bid should be examined.
It states: “To build strong businesses we need skilled managers, accountable boards and committed shareholders – all with a culture of long-term commitment. We will
strengthen the 2006 Companies Act where necessary to better reflect these principles.
“Too many takeovers turn out to be neither good for the acquiring company or the firm being bought. The system needs reform.”
There had been wide speculation that Labour’s manifesto would propose a so-called “Cadbury’s law” which would put curbs on hostile takeovers of businesses deemed to be of national interest following the outrage sparked by Kraft’s £11.4bn takeover of Cadbury.
The City had attacked the move, labelling it protectionism. Experts warned the changes would result in a lower return for shareholders and pension funds.
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