Whitewash procedure meaning

In practice, a whitewash procedure describes steps taken to secure shareholder approval and safeguards so that a transaction can proceed without breaching financial assistance rules or triggering a mandatory takeover offer. In the UK (England & Wales, Scotland and Northern Ireland), “whitewash” historically referred to the Companies Act 1985 mechanism allowing private companies to authorise otherwise prohibited financial assistance for the acquisition of their own shares. That regime was abolished for private companies by the Companies Act 2006 from 1 October 2008. Financial assistance prohibitions remain for public companies, and there is no whitewash available for them. Today in the UK the term mainly refers, informally, to a Takeover Code Rule 9 “whitewash” or Rule 9 waiver. Where a share buy-back (or similar) would otherwise require a mandatory offer, the Takeover Panel may waive that obligation if independent shareholders approve a waiver resolution on the basis of a Panel-cleared circular and independent advice, before implementation. In Ireland, “whitewash” commonly denotes the statutory Summary Approval Procedure under the Companies Act 2014, used (among other restricted activities) to approve financial assistance for the acquisition of shares, typically requiring a directors’ solvency declaration and a special resolution. Usage is broadly consistent as above across the jurisdictions.