Scheme of Arrangement

A scheme is the usual route for a recommended takeover of a UK-listed company, and it differs from a contractual offer in ways that matter to outcome. It requires approval by a majority in number of the shareholders voting who together hold at least 75% of the value, and once sanctioned by the court it binds everyone, including holders who voted against or did not vote.

That produces cleaner outcomes than an offer, which can leave a minority in place, but it hands considerable power to small shareholders. The majority-in-number test means a large number of small holders can defeat a scheme that holders of most of the value support.

Because the court is involved and the timetable is regulated, the process is slower and more visible than a private sale, and each step produces disclosure that is often the most informative material published about the deal.