By Evarist Baimu Nyaga Mawalla - Home

companies respectively. 2. As regards public companies (as well as private companieswhich have had some kind of public involvement in the ten years before the bid) thedepartment considers it better to rely on the effectiveness and flexibility of the City Codeon Take-overs and Mergers which covers bids made for public companies and certainprivate companies which have has some past public involvement.The City code has the support of and can be enforced against professional securitydealers and accordingly the department expect as a matter or course that those makingbids for public companies (and private companies covered by the code) to use theservices of a dealer in securities authorised under the Prevention of Fraud (Investments)Act 1958 (such as a stockbroker, exempt dealer, licensed dealer or a member of arecognised association) in which case the Secretary of State’s permission for thedistribution of take-over documents is not required.This is seen as an important safeguard for the shareholders of the public company (ofwhich there may be several hundreds or thousands) and as a means of ensuring that suchtake-overs are conducted properly and fully in accordance with the provisions of the Citycode. It would only be in exceptional cases that the Secretary of Secretary of State wouldconsider removing this safeguard by granting permission under section 14(2) of the Actfor the distribution of take-over documents in these circumstances.”The picture which emerges is clear. As an act of government it was decided that,in relation to take-overs there should be a central self-regulatory body which would besupported and sustained by a periphery of statutory powers and penalties wherever nonstatutorypowers and penalties were insufficient or non-existest or where E.E.Crequirements called for statutory provisions.No one could have been in the least surprised if the panel had been instituted andoperated under the direct authority of statute law, since it operates wholly in the publicdomain. Its jurisdiction extends throughout the United Kingdom. Its code and rulingsapply equally to all who wish to make take-overs bids or promote mergers, whether ornot they are members of bodies represented on the panel. Its lack of a direct statutorybase is a complete anomaly, judged by the experience of other comparable markets worldwide.The explanation is that it is an historical “happenstance,” to borrow a happy term fromacross the Atlantic. Prior to the years leading up to the “Big Bang” the City of Londonprided itself upon being a village community, albeit of an unique kind, which couldregulate itself by pressure of professional opinion. As government increasingly acceptedthe necessity for intervention to prevent fraud, it built on City institutions and mores,supplementing and reinforcing them as appeared necessary.It is a process which is likely to continue , but the position has already been reached inwhich central government has incorporated the panel into its own regulatory networkbuilt up under the Prevention of Fraud (Investments) Act 1958 and allied statutes such asthe Banking Act 1979.160