Why the Volkswagen situation could not happen here
By Jennifer Hughes
Published: October 30 2008 02:00 | Last updated: October 30 2008 02:00
At least it couldn't happen here. UK investors have been able to breathe a sigh of relief as they watch the mother of all short squeezes in Germany following the furore over Porsche's surprise declaration of its recent stake building in Volkswagen.
Talk has been about the Financial Services Authority's newish position that will force disclosure of all holdings, in derivatives or stocks, equivalent to 3 per cent of a company's shares. With good timing, the FSA released its draft rules for the new regime just last week.
But that change hasn't happened yet. The reason the VW situation couldn't happen here is currently down to the Takeover Panel's rules, which would trigger disclosure and a new bid following any increase, derivative or stock, in a stake that was above the 30 per cent threshold, even if a previous bid had failed.
The FSA has been following the Takeover Panel's lead on disclosure for a while. It was the Panel that first introduced a derivatives disclosure at 1 per cent in companies in a takeover situation.
The thinking behind both is that all investors in the target company should be able to benefit equally from further stake building, not just selective investors approached by the would-be bidder. This seems fair.
This column has long supported greater transparency and has welcomed the FSA's moves. However, the new rules won't come into effect until September next year, even though the final version will be published in February. This is ostensibly to give investors and companies time to get up to speed and adjust their systems. In normal conditions this would be commendable, but these are not normal markets.
Why not bring the new regime in sooner?
With its sudden changes in short selling rules, the FSA has displayed little sympathy for investor struggles with their systems where it deems market conditions merit rule changes. Unlike its short selling thunderbolts, investors have had a long time to get used to this one.
European regulators are looking to the FSA on this issue and it can, in this case, provide a working example others can follow. That is good for investors everywhere
ft.com |
