CITY AND SUBURBAN
How a dockful of takeover bankers could get in on the Act
CHRISTOPHER FILDES
Iam haunted by a City vision: the dock at the Mansion House court, crammed to bursting with merchant bankers. Pillars of famous families, heads of accepting houses, these worthies wriggle with shame as counsel for the prosecution arraigns them all, for breaching the Companies Act in a hundred takeovers. Alexander Gross- kopf mutters to a fellow-prisoner that he wishes someone had told him that the Act had been changed. When he came out of the Guards into Grosskopfs, there was a Section 54 of the Companies Act which forbade a company to buy its own shares with its own money, or buy another com- pany with that company's own money. Not too hard to avoid (though didn't Jim Slater trip up?). In the new Act, 18 months ago, this became Section 151, and it looks just the same, but it isn't. Grosskopfs, like its competitors, when handling a takeover bid would be willing to use its own money to buy its client company's shares. Nothing contractual about it, of course: a gesture of confidence. But, since even Grosskopfs' purse is not bottomless, if at the end of the day there was a loss on the shares, that would be more than taken care of in Grosskopfs' fee. Section 151 (so prosecut- ing counsel is saying) catches retrospective payments. Does that make the client com- pany and the merchant bank into accom- plices? But, good Lord, we all do it, Alexander protests: however will people make takeovers if we go inside? The game will never be the same again. . . . Then the vision fades, but so does the game.
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