Chairman of Hearings Committee rejects appeal against Panel Executive's mandatory offer ruling in relation to Third Point Investors Limited

Background 

TPIL, a Guernsey closed-ended investment company traded on the Main Market of the London Stock Exchange, had share capital comprising of: 

1. listed ordinary shares (“Ordinary Shares”), entitling holders to one vote per share; and 
2. unlisted Redeemable B shares (“B Shares”), which carry one vote per share except on "Listing Rule Reserved Matters" (comprising instances where the UK Listing Rules require listed shareholders’ approval). 

Under TPIL's articles of incorporation, the number of issued B Shares must, at all times, represent at least 40% of the aggregate issued number of Ordinary Shares and B Shares. All of TPIL's issued B Shares are held by Third Point Offshore Independent Voting Company Limited ("VoteCo") for the purposes of ensuring TPIL retains foreign private issuer status under US securities. 

Third Point operates as the investment manager of TPIL and, together with its concert parties, holds 15% of the total voting rights, and 25% of the economic rights, in TPIL. 

Transactions 

1. Malibu Takeover – TPIL agreed to acquire Malibu Life Reinsurance for share consideration. As the acquisition would result in a fundamental change of business of TPIL and constituted a reverse takeover under the UK Listing Rules, shareholder approval was required under UKLR 7.5.1R(2). Malibu is owned by Third Point affiliates; therefore, the transaction constituted a related party transactions under the UKLRs and required Malibu to publish an announcement confirming, amongst other things, that the terms of the acquisition were fair and reasonable. 
2. TPIL re-domiciliation - TPIL intended to move its domicile from Guernsey to the Cayman Islands which required TPIL shareholder approval. The migration would occur at least two business days before the acquisition of Malibu, with TPIL’s shares remaining listed on the Main Market. 
3. Share Redemption Offer and Subscription – TPIL offered holders of Ordinary Shares wishing to realise their investment a maximum cash consideration payable of USD136 million. Further shares were also issued as part of subscription arrangements with Third Point affiliates and other third parties (together with the Malibu Takeover and the TPIL re-domiciliation, the “Proposed Transactions”). 

On completion of the above Proposed Transactions, the Third Point concert party was expected to be interested in Ordinary Shares comprising 26.2% of the total voting rights, and 43.7% of the economic rights, in TPIL. All requisite shareholder approvals were obtained at a shareholder meeting on 14 August 2025. 

Issues Raised 

An investor group from within the TPIL shareholder base came together to voice their dissatisfaction with the terms of the Proposed Transactions and in particular, to dispute the alleged unfair treatment of minority shareholders, including their inability to realise an exit of their full investment in TPIL due to the maximum cash consideration being made available under the Share Redemption and Subscription Offer. The investor group initially challenged the basis on which TPIL had secured approval for the takeover, arguing that the Proposed Transactions were “forced through” using VoteCo’s 40% voting rights (as none of the resolutions required to approve the transaction would have attained their respective hurdles without VoteCo support). 

More relevant to the Executive Ruling, the same investor group alleged that: 

1. the Proposed Transactions resulted in the Third Point concert party triggering Rule 9 of the Takeover Code (the “Code”), on the basis that the B Shares should not be considered voting securities for the purposes of Rule 9, and therefore, Third Point should be required to make a mandatory offer for TPIL; and 

2. the Executive had jurisdiction over TPIL at the time at which the Proposed Transactions were put to TPIL shareholders to either require their making a mandatory offer seeking a waiver to do so pursuant to Rule 9 of the Code. 

    

The Executive Ruling 

Mandatory Takeover 

Under Rule 9.1 of the Code, the obligation to make a mandatory offer is triggered when any person acquires an interest in shares carrying 30% or more of the voting rights of a company to which the Code applies. The definition of "voting rights" includes shares that may be subject to a restriction on the exercise of voting rights or suspension of voting rights in certain circumstances, as they are nonetheless viewed as having voting rights which are currently exercisable at a general meeting. There was, therefore, no reason to treat the B Shares as not carrying any voting rights for the purposes of Rule 9 and the Code – the fact that the B Shares are not permitted to vote on UKLR Reserved Matters was irrelevant. 

It is worth noting that VoteCo was established by TPIL in 2007 ahead of its IPO for the purpose of holding the unlisted B Shares and that the FCA had already accepted the B Shares be treated as carrying voting rights from that point in time. Therefore, VoteCo continued to be interested in shares in TPIL carrying 40% of the total voting rights and the Third Point concert party was interested in shares carrying approximately 26.2% of the total voting rights. As such, the threshold for a Rule 9 mandatory offer was not triggered. 

Applicability of the Code 

Additionally, the Executive stated that the relevant time to consider whether a particular transaction is governed by the Code (here for example, whether Rule 9 would be or has been triggered) is the point at which the transaction occurs, and not when the transaction is proposed. While TPIL was currently a company subject to the Code, as the domicile and registered office would be relocated to the Cayman Islands when the acquisition was to occur, it would at that time no longer be a company to which the Code applies. 

Chairman of the Hearings Committee ruling 

The investor group sought to appeal the Executive Ruling and the Panel Executive countered that the request should be rejected on the basis that the matter had no reasonable prospect of success, The Chair of the Hearings Committee agreed with the Panel Executive, concluding that the Executive Ruling was correct in all respects and that no appeal may be brought against it.

Contributor: Justin Chu, Trainee Solicitor