This document provides information about an upcoming conference presentation on annual reporting good practice. It summarizes the winners of the ICSA Awards 2015 for best strategic report, best board disclosure, best audit and risk disclosure, and best remuneration report. For each category, it lists the winning FTSE 100 and FTSE 250 companies and their shortlisted competitors. It then provides tips and suggestions for good practice in annual reporting for each category based on what the winning reports demonstrated. These include clearly linking strategy, risks, KPIs and remuneration, using skill matrices to describe board members, and explaining audit tendering processes.

2. Dennis Tourish
Professor of Leadership
Royal Holloway, University of
London
Co-editor of ‘Leadership’
Email:
Dennis.Tourish@rhul.ac.uk
DYSFUNCTIONAL LEADERSHIP
IN CORPORATIONS
Ken Lay
AKA ‘Kenny Boy’
Jeffrey Skilling

3. Amazon March 2016- 161223 books with ‘Leadership’ in their
title. That is 60,000 more than one year ago….
If you read one every day including weekends it would take you
441 years….
BUT – there are only
343 books with
‘Followership’ in their
title (80 more than a
year ago)
We have a fixation on
leadership, though
without followers there
are no leaders…

5. SOME ASSUMPTIONS
• Followers should
conform – mostly, do
what they are told
• Leaders know best
(but do they always?)
• Dissent is resistance to
be overcome
Who’s the
boss
BBC 2
March
2016

6. INVOLVEMENT…
AND POWER

7. A MAJOR SOURCE
OF ERROR???
‘The temptation to tell a
Chief in a great position
the things he most likes
to hear is one of the
commonest explanations
of mistaken policy. Thus
the outlook of the leader
on whose decision fateful
events depend is usually
far more sanguine than
the brutal facts admit.’
Winston Churchill (1931)
INGRATIATION...

8. ‘A lot of times in politics you have
people look you in the eye and tell
you what's not on their mind.’ --
George W. Bush, Sochi, Russia, April
6, 2008

9. ‘At GM’s Renaissance Centre
headquarters, the top brass
were sequestered on the
uppermost floor, behind
locked and guarded glass
doors. Executives housed on
that floor had elevator cards
that allowed them to descend
to their private garage
without stopping at any of
the intervening floors (no
mixing with the drones).’
Steve Rattner, Head of Auto
Rescue Task Force, Fortune,
Nov. 2009

10. EFFECTS OF FLATTERY
• A study of 451 CEOs looked at the impact on them of more
intense and frequent flattery (e.g., offering exaggerated
compliments) and opinion conformity (e.g., expression of
agreement even when people don't agree).
• Flattery and opinion conformity linked
to CEOs having more favourable
evaluations of their own strategic
judgments and leadership skills, being
less likely to make strategic changes
when firm performance suffered, and
more prone to lead firms that suffered
persistently poor performance.
Hyuan Park, Westphal and Stern, ASQ,
2011

11. EFFECTS OF NARCISSISM
• Highly narcissistic CEOs less responsive to
whether recent firm performance was good or
bad - continued to make equally risky
investments (e.g. acquisitions of new companies)
regardless of recent performance. Their less
narcissistic peers more cautious in bad times and
tended to take bigger risks during good times.
Chatterjee and Hambrick, ASQ, 2011

12. EFFECTS OF NARCISSISM
• Less narcissistic CEO's weren’t affected much by
media praise. The highly narcissistic made riskier
investments after getting praised in the media.
The narcissists were swayed more by "social
praise" and less by recent performance!
• ‘The only benefit of flattery is that by hearing
what we are not, we may be instructed what we
ought to be.’
Jonathan Swift

13. IRRATIONAL BIAS–
ILLUSORY SUPERIORITY
• 69% of drivers consciously worry about being
killed when driving
• Only 1% believe they drive worse than average
• 98% think they are safer than, or as safe, as the
average driver.
Brake (Road Safety Charity) Survey of 800 UK
adults, March 2011

15. PROBLEMS
WITH FEEDBACK
People are especially
sensitive to negative
input – the ‘automatic
vigilance effect’

21. WHAT CAN BE DONE?
• Seek out formal and informal
contact with people as often as
possible

22. WHAT CAN BE DONE?
• Scrutinise positive
feedback more rigorously
than negative feedback
• Institutionalise dissent
into the decision-making
process – e.g. promote/
cherish/ reward
contrarians
• Create a culture that
confronts ‘the brutal facts
of reality’ – i.e. where the
truth is heard

23. A CLIMATE WHERE THE
TRUTH IS HEARD
Lead with questions,
not answers
Practice saying:
• ‘I don’t know’
• ‘What do you think?’
• ‘Where have we gone wrong?’
• ‘What could we do better?’

24. A CLIMATE WHERE THE
TRUTH IS HEARD
Engage in debate, not coercion
• Have chaotic meetings
• Loud debate
• Heated discussions
• Healthy conflict

25. Corporate Secretarial Practice
ICSA Conference 2016
Luke Thomas, Chief Examiner, Corporate
Secretarial Practice

26. Objectives
1. To provide students with help on:
• their approach to the Corporate Secretarial Practice (CSP) exam
• key topic areas under examination conditions
• avoiding common mistakes
2. To provide students with an opportunity to:
• look at authentic student scripts for further guidance
Today’s your chance to also ask me some questions!
26

27. What we’re going to cover
• Role and responsibilities
• Analysis of exam papers - Corporate Secretarial Practice
• Tackling exam questions
• Example of a script that failed
• Example of a script that passed
• Good practice – student scripts
• The Examiner’s report
27

28. The Study Text
• Use the study text – latest version
• Use the checklists in the study text
• Complete the case study in the study text
28

29. Examination: Pre Read Case Study
• Read it thoroughly
• Apply it to the questions
• Don’t try to use it to question spot!
29

30. My roles and responsibilities
About me:
• My professional career and role
• My work as Chief Examiner, Corporate Secretarial
Practice
Some key links between the exam and your job:
• This is a practical exam
• You need to be an effective communicator
• You need to understand your business and the key
people in it
30

31. Some key topic areas – tips for success
Some key issues do arise and have frequently drawn comment
from the examiner:
• Remember, the whole syllabus is examinable
• Provide advice
• Draft documents where required
• You will not be asked to provide generic essay type
questions
• Be practical and helpful
• Statutory references – not as vital as getting the advice
correct
31

32. Some key topic areas – tips for success (cont’d)
• Directors – appointment, vacation etc. Shadow and
alternate directors
• Model Articles of Association
• Company Formation
• Material Shareholders and takeovers
• Listed companies – Listing Principles
• Meetings – board and general meetings (including
procedures)
32

33. Structuring an exam response – Question 4
Scenario:
You are asked to provide advice to the board about a
rights issue. You are asked to explain:
• The purpose of a rights issue and whether any shares or
shareholders may not be eligible to participate.
• How any ineligible shareholders would be treated in a
rights issue.
• The choices available to eligible shareholders who do
not wish to participate in the rights issue.
33

34. Structuring an exam response – Question 4 (cont’d)
Scenario (cont’d):
 Whether additional authorities are required to launch a
rights issue.
 Typical arrangements and considerations on the issue
price under a rights issue and the purpose of
underwriting.
 Whether it would be possible, instead of a rights issue,
to allot shares only to two large institutional
shareholders
34

35. Structure of Answer to Question 4
Introduction
• Define a rights issue and explain its purpose
Eligibility
• Explain default position and any exceptions (e.g. treasury shares). Also address
what steps should be taken for overseas shareholders. [These facts are all in the
case study]
• Explain any usual standing provisions for a listed company. For example,
allotment authority is usually sought at each AGM
• Explain the choices available to shareholders who wish to participate / not
participate in a rights issue
35

36. Structure of Answer to Question 4 (cont'd)
Authority to launch a rights issue
• Check when allotment authority was last given
• Check whether there are restrictions on amount of shares which can be issued
Issue price and underwriting
• Explain why getting the issue price right is important
• Demonstrate knowledge by explaining that issue price is usually at a discount to
prevailing market price
• Explain underwriting and why it is needed
Allotment of shares to selected shareholders only
• Recognise that pre-emption rights need to be dis-applied
• Explain applicable statutory provisions and listed company governance guidelines
36

37. An example of a Grade A fail response (Question 4)
This answer gained 11/25 marks
• Started OK with an introductory explanation of a rights issue
• However, it then lacked sufficient detail on the required
authorities
• It also lacked focus on the choices available to shareholders
who would participate / not participate
• The dis-application of pre-emption rights were not properly
explained, neither were applicable listed company governance
guidelines (e.g. ABI limits)
37

38. Structuring an exam response – Question 6
Scenario:
Part (a)
A dormant subsidiary company has been struck off by the Registrar of
Companies as defunct. There is no Company Secretary on the company
which was struck off. You are required to advise:
• why this has happened;
• what steps the Registrar would have taken before striking off the
company; and
• what should be done to ensure this does not happen to other companies
in the future.
38

39. Structuring an exam response – Question 6 (cont’d)
Scenario (cont’d):
Part (b)
You are asked to advise on the setting up a place of business in the UK for
an oversea company. Your advice need to cover a permanent UK
representative, the required documents and advice on the name of the
business in the UK.
[NB: Note that part (a) and part (b) cover completely different parts in the
syllabus. This is to be expected in this examination.]
39

40. Structure of answer to Question 6
Part (a)
• Advise that all companies, including dormant companies, must be
properly maintained
• Explain the consequences of failing to properly maintain a company
• Give a structured explanation of the process the Registrar would have
taken prior to striking off a Company. Include references such as
advertising in The Gazette to demonstrate your knowledge on the topic
• Give practical advice on how to prevent this happening in the future.
For example, appoint a Company Secretary to each company to
ensure the company is properly maintained. Also, ensure the
Secretariat department maintains a calendar with all compliance
events properly diarised
40

41. Structure of answer to Question 6 (cont’d)
Part (b)
• Explain the term ‘oversea company’ and that the Companies Act 2006
applies to such companies – this gives a good framework for the
response
• Explain the formation process for an oversea company – be specific
and do not explain the generic incorporation process for a UK
company. For example, constitutional documents may need to be
translated into English
• Explain the process of retaining a person authorised to accept the
serving of documents
41

42. Structure of answer to Question 6 (cont’d)
Part (b) (cont’d)
• Consider and explain ongoing compliance / filing requirements
• Explain statutory name provisions, which broadly match those for UK
companies
42

43. An example of a Pass response (Question 6)
This answer gained 15/25 marks
Part (a):
• Directly addressed main problem that all companies, even dormant
companies, must be maintained
• Explains process Registrar of Companies took prior to striking off the
company as being defunct. Includes, for example, a reference to The
Gazette
• Includes practical advice for avoiding problems in the future, such as
making sure all filings are up to date and investing in company
secretarial software packages
43

44. An example of a Pass response (Question 6) (cont’d)
This answer gained 15/25 marks
Part (b):
• Explains in general terms that constitutional documents need to be filed
with Companies House. [The answer could have been improved by
mentioning relevant timescales]. The response specifically mentions the
need to translate document to English
• Advice provided on name. [However, further advice should have been
provided to check the index of existing names at Companies House].
Advice also provided on ongoing filing requirements.
• [More advice was needed on the service of documents]
44

45. What does a great answer look like?
• It provides the response in the format required and it gives advice
• It fully explains the steps in a process in a well structured manner
• Knowledge on the topic is clearly demonstrated – this is often
stating ‘obvious’ points to show understanding
• Excellent level of detail (without being excessively long) along with
statutory references
• Able to fully explain the relevance of the principles used to the
scenario in question
• Practical advice is given to support the statutory / governance
position
45

46. General tips on approaching the CSP exam
• The Examiner’s report
• Learn the whole syllabus – don’t try to question spot!
• Think laterally and explain the right authority and process. Also
who needs to be notified and when? – example
• Link your answer to the actions of a Company Secretary –
updating statutory records, convening meetings, providing niche
advice etc..
• Participate in the webinar, lead by the Chief Examiner for the
CSP exam
• Do you need reference materials?
46

47. Key re-occurring problems
• Poor presentation
• Inappropriate length answers
• Not being obvious in your answer
• Not reading all of the study text. Using out of date study text or reference
materials
• Lack of recognition for plc vs ltd processes
• Guessing
47

48. Tips for success
Coverage of the whole syllabus – you need 4 strong questions to get a high grade
Exam confidence comes from:
• Sufficient preparation
• Effective study skills
48

49. Annual Reporting Good Practice
Peter Swabey, FCIS,
Policy & Research Director, ICSA
ICSA Conference – 8th March 2016

50. ICSA Awards 2015
1st December 2015

51. Best Strategic Report
FTSE 100 – SSE plc FTSE 250 – Drax Group plc
Shortlisted companies:
Aggreko plc
Berendsen plc
Dairy Crest Group plc
Shortlisted companies:
Anglo American plc
Aviva plc
BT Group plc

52. Best Strategic Report
• Clear and understandable business model
• Demonstrate clear linkage – strategy – risks – KPIs – remuneration
• Why have KPIs been chosen?
• Why have principal risks been chosen and how do they relate to strategy?
• How do sustainability activities link to your business model?
• Case studies and photos – can be good but can feel ‘advertorial’
• How does investor engagement work?
• Honesty – explain failures, especially if well known

53. Best Board Disclosure
FTSE 100 – Land Securities plc FTSE 250 – Provident Financial plc
Shortlisted companies:
Great Portland Estates plc
Premier Farnell plc
Telecity Group plc – Highly
Commended
Shortlisted companies:
Hikma Pharmaceuticals PLC
Marks and Spencer Group plc
United Utilities Group PLC

54. Best Board Disclosure
• What do the board bring to the table? Why are the company recommending a
vote for someone? Use skill matrices etc rather than bland CVs
• How does what the board have been doing relate to your strategy?
• Talk about what the committees have done and why – the majority now show how
the board and committees have spent their time, the good reports explain why
• If you are doing something unusual – explain it
• Investors want to see something on board evaluation and, especially outcomes
• Talk about succession planning and diversity – what are you doing?
• This is also a great place to talk about culture

55. Best Audit and Risk Disclosure
FTSE 100 – Johnson Matthey plc FTSE 250 – Intermediate Capital
Group plc
Shortlisted companies:
Cairn Energy PLC
Tullow Oil plc
Vesuvius plc
Shortlisted companies:
GKN plc
Marks & Spencer Group plc
National Grid

56. Best Audit and Risk Disclosure
• The needle has shifted this year – expectations from readers were very high
• Talk not just about what you do, but why
• Comment on audit rotation or tendering is expected – glossing over this looks weak
• Ensure principal risks are aligned with strategy – if not, why take them?
• Don’t have too many principal risks !
• There will be a lot of focus on viability statements in 2016 – why is that the right
period?
• A split between one-off and recurring risks is helpful
• If there is an ‘obvious’ risk to your business – don’t ignore it

57. Best Remuneration Report
FTSE 100 – National Grid plc FTSE 250 – FirstGroup plc
Shortlisted companies:
Great Portland Estates plc
Shaftesbury PLC
WS Atkins plc
Shortlisted companies:
Hammerson plc
Taylor Wimpey plc
Tesco PLC

58. Best Remuneration Report
• Ensure that linkages to strategy and KPIs are clear
• If claiming commercial confidentiality for not reporting targets – explain why …….
and do it convincingly – few companies did
• Explain any use of discretion clearly – an analysis of external influences on
performance is useful
• What is being done to ensure that remuneration does not encourage poor
behaviours?
• Don’t avoid known issues – creates an impression that there may be others

59. Best Sustainability Disclosure
FTSE 100 – Johnson Matthey plc FTSE 250 – Pennon Group plc
HIGHLY COMMENDED
Lonmin Plc
Shortlisted companies:
Galliford Try plc
Interserve Plc
HIGHLY COMMENDED
The British Land Company PLC
Shortlisted companies:
Antofagasta plc
Kingfisher plc

60. Best Sustainability Disclosure
• Link your sustainability efforts to your business model and strategy – why does
sustainability matter to you?
• How many of your KPIs are sustainability related?
• Does your sustainability performance have external benchmarking?
• Is there clear board and/or executive engagement and accountability?
• Does sustainability appear throughout the report – or just in the sustainability
report?
• Integrated reporting can help here – but needs clear thought

61. Best Annual Report
FTSE 100
Marks and Spencer plc
FTSE 250
Berendsen plc
Shortlisted companies:
bwin.party digital
entertainment plc
Great Portland Estates plc
Halfords Group plc
Shortlisted companies:
BHP Billiton Plc
Smith & Nephew plc
United Utilities Group PLC
Small Cap and AIM
Premier Foods plc
Shortlisted companies:
Renold plc
Shanks Group plc
The Vitec Group plc

62. Best Annual Report
• All the points I’ve mentioned so far
• A strong Chairman’s letter really sets the tone of a report – but if he refers to an
issue it should appear elsewhere in the report
• Aim to speak with ‘one voice’ throughout the report
• Readability is important
• Graphics and pictures are good, but should add to the point being made, rather
than just being ‘pretty’ - they can become ‘annoying’
• This is a fantastic communications opportunity for the company
• Make the best use of that !

63. Thought leadership from ICSA

64. Considering and preparing for
an IPO
March 2016
Tracey Brady – Managing Director
Marco Murray – Assistant Manager

65. Agenda
1. The Dual Track Process
2. Pre-IPO steps / planning
3. Day 1
4. Challenges for the year ahead
5. Key considerations

66. The Journey
• Appointment of company secretary
• Provision of registered office and
corporate secretarial support
• Share registration and corporate
action
• Project management of IPO closing
settlement mechanics
• Employee share scheme development
• Share dealing support
• Provision of a corporate nominee
• Accounting & finance including:
o GAAP conversion
o HFI, preparation
o FPPP preparation
o Working capital model
o Board memorandum
• Corporate secretarial and corporate
governance structures and policies
set-up
• Creation of corporate calendar and
reporting timetable
• Director Training and induction
• Secondment of experienced IPO staff
• Corporate secretarial and governance
assistance including on-site support
• Ongoing financial control and
outsourced finance function
• Share registration and share plans
maintenance
• AGM services and transaction support
• Project managements of accounts and
audit process
• Financial modelling and share options
• Subsidiary governance framework
• Internal audit and risk management
services
• Tax & Regulatory Compliance
Pre – IPO
preparation Listing Post – IPO

67. CoSec
IPO
responsibilties
Health checks
Training for directors and
company secretaries
Governance Gap Analysis
and Advice
Ongoing Guidance with AIM
rules, Listing Rules, DTRs
Review of admission documents
Support with listing application
process, filings and returns
Directors’ dealing process, Insider
lists and Model Code compliance
Co Sec Responsibilities Pre and Post IPO
Board & Committee structure,
Corporate Calendar & Meeting
support

68. Things to think about
New Registers
Board
Composition
Board
Processes
Committee
structure
Directors and
PDMRs
Remuneration Share Dealing
Training &
Professional
development
Corporate
calendar
Website
LSE/FCA/UKLA
Corporate
Governance
Registrars
Investor
Relations
Annual Report
and AGM

69. Pre IPO steps – Getting the structure
• Restructuring of Group/share capital
• Board/Persons Discharging Managerial Responsibilities (PDMRs)
o New NEDs
o Identifying the PDMRs (senior executive with regular access to inside information
and power to make managerial decisions affecting future development/business
prospects)
o Training – directors’ duties, listed company requirements particularly for executive
directors and senior management team
• Committees
o Review/establish for compliance with the UK Corporate Governance Code
o Membership, sufficient independence
o Consider disclosure committee

70. Pre IPO steps – Complying with new regulation
Listing Rules and Disclosure and Transparency Rules
o Listing Principles
o Continuing Obligations
o Inside Information policy and Insider Lists – DTR 2
o Model Code and Share Dealing
o Process for meeting disclosure obligations
o FCA contact

71. Pre IPO planning – Other key things to consider
• Corporate calendar
o Key events now include; annual report, prelim/AFR announcement, half-year, dividend payments,
quarterly trading updates, TVRs, option grants, AGM
• Website
o Regulatory information; RNS updates, share price feed
o Investor area; registrar contact details, results, shareholder FAQs
• New systems
o Stock Exchange RIS (RNS, PR Newswire)
o National Storage Mechanism
o Managing insiders
o Board papers
• Registrars and share plan provider
o Share register analysis
o E-comms

72. Registrar timeline
• Attend planning meetings
• Review prospectus
• Obtain ISIN
• Create share register
• Prepare and lodge CREST
application forms
• Identify selling shareholders
(secondary shares)
• Prepare share certificate
template
When issued dealing
commences:
• Receive board minute
confirming number of
shares to be allotted
(primary shares)
• Preload share allotment to
advisor CREST account
• Process any selling
shareholders (secondary
shares)
• Dealing notice published
8.00am
• CREST enablement letter
submitted
• Share register ‘live’
• DVP settlement occurs
• Issue share certificates, if
required
• Provide information for the
return of allotment (SH01)
• Set up web portals
Your relationship manager
will take over as your day to
day contact
• Maintain the register
• Set up web portals
• Arrange post IPO review
and strategy meeting re:
corporate calendar
• Provide initial investor
relations reports
• Set up electronic
communications
Pre IPO Execution (T-3) Listing (T) Post IPO

73. The Next Day!
Breathe a sigh of relief!
Now the real work begins…….

74. The In-tray

75. Key considerations
• Reporting and AGM
o Ready for first announcements/request for dealing? Does everyone know the
timescales (is the process embedded)?
o Half year report / annual report and accounts - shortened timetable and a lot more
work!
o AGM planning (retail investors?)
o First dividend! (Particular care on first interim dividend)

76. Key considerations
• Embedding the plc culture
o ‘Public’ information – ensuring those talking to outsiders are clear
o Inside information (flow / restriction) / insider dealing
o Share dealing/ permission to deal
o New governance processes
o New regulations for the company, which continue to increase!

77. How we can help?
Products Solution
Due Diligence Health checks A complete review of all corporate records for UK or international
entities
Pre IPO Services Full company secretarial support through to listing
Board & Committee Support Pre-meeting support, minute taking and follow-up of actions, advise on
UK corporate governance and best practice
Director Training Tailored for your Board - giving an overview of key duties, liabilities,
roles and responsibilities in respect of the Listing Rules, the Companies
Act 2006 and the UK Corporate Governance Code and recent
developments.
Advisory Company Secretarial services We have a hotline number for newly listed organisations: 0207 204
1601

78. Thank you!
Do you have any questions?
We are Capita Asset Services, a division of Capita plc, a FTSE 100 company and the UK’s leading provider of business process outsourcing and integrated
professional support solutions.
We firmly believe that one size doesn’t fit all, so our solutions are specifically designed around our clients’ needs. Whether it is providing corporate, private
client, treasury, debt or fund administration or shareholder and employee solutions, Capita Asset Services can help you manage and grow your business.
We have over 2,500 professional staff dedicated to making your life easier by delivering service excellence and creating efficiencies for your organisation. Our
operations are based in the UK, Ireland, Jersey, mainland Europe and India, with representative offices in the US and Asia – we have over 4,000 multi
national and UK based clients and relationships.
Further information about our full range of expertise can be found at www.capitaassetservices.com.
Capita Asset Services is a trading name of Sector Treasury Services Limited which is authorised and regulated by the Financial Conduct Authority only for
conducting advisory and arranging activities in the UK as part of its Treasury Management Service.
Registered office: 71 Victoria Street, Westminster, London, SW1H 0XA. Registered in England No. 2652033.

79. Contact us
Tracey Brady
Managing Director
Capita Company Secretarial Services
Capita Asset Services
T: +44 (0)7747 066 905
E: tracey.brady@capita.co.uk
Marco Murray
Assistant Manager
Capita Company Secretarial Services
Capita Asset Services
T: +44 (0)7808 010 317
E: marco.murray@capita.co.uk

80. Mergers and Acquisitions
ICSA ANNUAL CONFERENCE 2016
Sheelagh Duffield, Group General Counsel & Company Secretary, Miller Group
Jeremy Evans, Assistant Director General, The Takeover Panel
Stephen Shapiro, Group Company Secretary and Deputy General Counsel, SAB Miller
Chaired by Will Pearce, Partner, Davis Polk

81. Jeremy Evans, Assistant Director General, The
Takeover Panel
Mergers & Acquisitions
ICSA Annual Conference 2016

82. THE CITY CODE ON TAKEOVERS
AND MERGERS
Jeremy Evans
Assistant Director General
8 March 2016

83. 1. PANEL OVERVIEW – BASICS
• The Takeover Panel regulates takeovers and administers the Takeover Code
• Approaching 50 ‘not out’ - regulated over 8,500 bids
• Statutory footing in 2006 but still an independent and self-funding regulator
• Members drawn from investors, industry and market practitioners (investment
banks, stockbrokers and accountants)
• Broadly, Code applies to public companies incorporated in UK and:
– securities traded on regulated market/MTF in UK; or
– managed and controlled in UK

84. 1. PANEL OVERVIEW – CITY CODE KEY FEATURES
• Objectives - fair shareholder treatment, orderly framework and market integrity
• Flexibility - principles-based and spirit as well as letter must be observed
• Pragmatism - primary focus is on remedies and redress
• Speed - Executive committed 24/7 and appeals procedures are efficient and
quick
• Successful British export
• No tactical litigation

85. 2. CURRENT PANEL ACTIVITY
• During 2015, 62 firm offers were announced (59 in 2014)
• Remained steady following pick-up in 2014 from preceding years
• Significant post-Cadbury changes to Code are still working well
– Fixed 28 day “put up or shut up” period
– “Naming” regime
– Prohibition on “break fees” and other deal protection
• In 2015, nearly 40% of all offer periods commenced with a firm offer
announcement
• Unprecedented number of on-going investigations

86. 3. HOT TOPICS
• Announcements under Rule 2 are of critical importance – PS No.20
• Golden rule – information to be disseminated via a RIS and parties will be “held
to what they say”
• Statements by parties of their future intentions following completion of the offer
should be made with care
• Restriction on offer related arrangements in Rule 21.2 – PS No.29

87. 4. DEALING WITH THE PANEL – WHAT WE EXPECT
• Asia Resource Minerals Plc (Panel Statement 2015/15) – statement of public
criticism of Credit Suisse, Freshfields and Holman Fenwick Willan
• Good understanding of Code and Practice Statements
• Consult Executive if in any doubt
• Disclose all relevant facts
• Be open and transparent
• Don’t be tempted to “spin”
• Special responsibility on financial advisers to ensure Code compliance

88. Stephen Shapiro, Group Company Secretary
and Deputy General Counsel, SAB Miller
Mergers & Acquisitions
ICSA Annual Conference 2016

89. Reflections on the
Company Secretary’s
role in a takeover
Stephen Shapiro
Group Company Secretary
SABMiller plc

90. © SABMiller 2016
One of the top 5 largest M&A
deals of all time
Largest ever takeover of a UK
listed company
The deal
Newco
Combined market cap: ~US$ 230bn
(at 1 March 2016)
Historical basis combined:
Revenues: US$ 64bn
EBITDA: US$ 24bn
2nd largest global brewer
FTSE 10 company
Largest global brewer

91. © SABMiller 2016
Stakes in the business
Shareholding
Public shareholders
59.54%
Altria
26.56%
Bevco
(Santo Domingo)
13.90%
Board
Chairman Exec. Directors Non-Exec. Directors
Altria Bevco (Santo Domingo)

92. © SABMiller 2016
September October 13 Oct – 11 Nov
Date 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14
PUSU 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Extension
£38 £40 £43.50 £44
• Series of private
proposals made by
AB InBev and
rejected by
SABMiller
• Intense preparation
for public defence
• Complex set of
board / shareholder
issues
• Rumours of a
proposal in the
press
• SABMiller required
to make an
announcement
• PUSU period
starts
1) Private offers
• SABMiller delivers
investor presentation
and accelerated cost
saving programme
• AB InBev makes initial
public proposal of
£42.15 per share along
with investor presentation
• SABMiller rejects rapidly
• AB InBev makes
clarificatory statement
about shareholder support
• AB InBev issues
statement saying
SABMiller rejection ‘lacks
credibility’
• SABMiller brings forward
strong H1 trading
statement
2) Concentrated public fight
£42.15
• AB InBev makes
increased offer of
£43.50
• Agreement in principle
on £44.00 per share
with cash and share
alternative
• $3bn reverse break fee
and regulatory “best
efforts” commitment
from AB InBev
• PUSU extension
announced
3) Price agreed and announced
• Extensions to PUSU
on 13-Oct, 28-Oct and
4-Nov
• 2.7 RNS setting out
terms on 11-Nov
4) Negotiation of
non-price terms
£40 / £42(1)
How the PUSU period played out

93. © SABMiller 2016
Reflections on the Company Secretary’s role in a
takeover
You are
the bridge
Communication
is vital
Work as
a team
Be prepared

94. © SABMiller 2016
Reflections on the Company Secretary’s role in a
takeover
Get
good advice
Remember, your
board documents
will be under the
microscope
Clear your diary
and put your life
on hold
You have a
responsibility to
express your view

95. Will Pearce, Partner, Davis Polk
Mergers & Acquisitions
ICSA Annual Conference 2016

96. Davis Polk & Wardwell London LLP
Mergers and Acquisitions: the roles of company
secretary and external counsel
Presented by
Will Pearce
Partner
March 8, 2016

97. Indicative steps in a public takeover
Bidder prepares
to approach
target
Initial
discussions
between parties
and diligence
Negotiation of
terms and
conditions
Bidder puts
financing in
place
Rule 2.4
announcement
of a possible
offer
Rule 2.7
announcement
of a firm offer
Publication of
offer document
// publication of
scheme circular
Deadline for
acceptances //
shareholder
vote if scheme
Offer
unconditional
and minority
squeeze-out
begins //
scheme
becomes
effective

98. Your role preparing for a takeover approach
 Companies don’t prepare for takeovers, but they do prepare to defend!
 Defence team contact details and engagement letters
 Defence manuals and response protocols
 Annual drill now taking on a broader remit – responding to activists
 What can you do?
 Keep up to date – monitor legal developments and your share register
 Make sure the board are kept up to date
 Know who to contact and where to find information (quickly)

99. Your role during the takeover process
 Role differs depending on whether you are the bidder or target – but common
ground
 Cabinet responsibility
 Managing the board – from directors’ responsibilities and board minutes to
directors’ holidays ….
 Share capital and stock options
 Verification
 Release of announcements

100. The role of external counsel
 Application and interpretation of the Code and interaction with the Panel
 Structuring the deal
 Due diligence – limited
 Preparing transaction documentation
 Advising on directors’ duties and responsibilities
 Financing – certain funds
 Anti-trust/regulatory
 Work closely with you and the board, as well as with your financial advisers

101. Indicative steps in a private M&A transaction
Seller
commences
sale process
Buyer conducts
initial due
diligence and
makes
indicative offer
Seller provides
diligence
material and
draft
transaction
documents
Buyer reviews
draft
transaction
documents and
arranges
financing
Buyer submits
formal offer to
seller
Negotiation of
transaction
documents
Buyer and
seller sign
binding
transaction
documents
Buyer and
seller work to
satisfy closing
conditions
Closing of
acquisition and
payment of
consideration

102. Your role during the sale process
 Extent of role will depend on whether a public company is involved – compliance
with the Listing Rules or the AIM Rules
 On the sell-side
 Collating due diligence materials, responding to queries
 Assisting with the disclosure process
 On the buy-side
 Assisting with due diligence
 Arranging necessary board/shareholder approvals
 Assisting with the issue of consideration shares

103. The role of your external counsel
 If a public company is involved, application of the Listing Rules or the AIM Rules
 Structuring the deal
 Due diligence – extensive
 Running the competitive sales process with the financial adviser
 Preparing transaction documentation
 Advising on rights of shareholders/investors
 Financing
 Anti-trust/regulatory
 Work closely with you/the board, shareholders/investors and financial advisers

104. Sheelagh Duffield, Group General Counsel
and Company Secretary Miller Group
Mergers & Acquisitions
ICSA Annual Conference 2016

105. SHEELAGH DUFFIELD, GROUP GENERAL COUNSEL AND
COMPANY SECRETARY, MILLER GROUP
Reflections on the Company Secretary’s
role in private M&A transactions

106. Communication, Communication, Communication
• Large number of stakeholders
• Board
• Shareholders
• Employees / Employee shareholders through share
schemes
• Due diligence

107. Board
• Quality of Board papers
– Authors live and breath the deal – readers don’t!
– Readers (the directors) are responsible for the decisions.
• Time to review
– Chairman
– Additional calls/meetings
• Meetings
– Main
– Ad-hoc or Committees
• Communication outside meetings

108. Shareholders
• Communication determined by
– Complexity of deal
– Number and mix of shareholders
– Tax
• Q&A documents
• Help lines

109. Employee shareholders
• General employee communications
• Share scheme explanations
• Q&A documents
• Help lines
• Presentations

110. Due diligence
• What’s its purpose?
• Manage the process
– To guide or not to guide?
– Invest time at the beginning
– Control costs
– Keep talking as principals
• Disclosure letter process

111. Mergers and Acquisitions
ICSA ANNUAL CONFERENCE 2016
QUESTIONS