BT 2016 Annual Report Download - page 250

256 BT Group plc
Annual Report 2016
Subject to the relevant legislation, the shareholders can, by passing
an ordinary resolution, ratify any particular contract carried out in
breach of those provisions.
Directors’ appointment and retirement
Under BT’s Articles there must be at least two directors, who
manage the business of the company. The shareholders can vary
this minimum and/or decide a maximum by ordinary resolution.
The Board and the shareholders (by ordinary resolution) may
appoint a person who is willing to be elected as a director, either to
fill a vacancy or as an additional director.
At every annual general meeting, all directors must automatically
retire. A retiring director is eligible for re-election.
In addition to any power of removal under the 2006 Act, the
shareholders can pass an ordinary resolution to remove a director,
even though his or her time in office has not ended. They can
elect a person to replace that director subject to the Articles, by
passing an ordinary resolution. A person so appointed is subject to
retirement by rotation when the director replaced would have been
due to retire.
Directors’ borrowing powers
To the extent that the legislation and the Articles allow, the Board
can exercise all the powers of the company to borrow money, to
mortgage or charge its business, property and assets (present
and future) and to issue debentures and other securities, and
give security either outright or as collateral security for any debt,
liability or obligation of the company or another person. The Board
must limit the borrowings of the company and exercise all the
company’s voting and other rights or powers of control exercisable
by the company in relation to its subsidiary undertakings so as to
ensure that the aggregate amount of all borrowings by the group
outstanding, net of amounts borrowed intragroup among other
things, at any time does not exceed £35bn. These borrowing
powers may only be varied by amending the Articles.
(k) Sinking fund, liability to further calls and change of control
BT’s shares are not subject to any sinking fund provision under
the Articles or as a matter of the laws of England and Wales. No
shareholder is currently liable to make additional contributions of
capital in respect of BT’s ordinary shares in the future. There are no
provisions in the Articles or of corporate legislation in England and
Wales that would delay, defer or prevent a change of control.
(l) Disclosure of interests in shares
Under the Financial Services and Markets Act 2000 and the UK
Disclosure and Transparency Rules there is a statutory obligation
on a person who acquires or ceases to have a notifiable interest in
the relevant share capital of a public company like BT to notify the
company of that fact. The disclosure threshold is 3%. These Rules
also deal with the disclosure by persons of interests in shares or
debentures of companies in which they are directors and certain
associated companies. Under section 793 of the 2006 Act
(referred to in (a) above), BT may ascertain the persons who are or
have within the last three years been interested in its shares and
the nature of those interests. The UK City Code on Takeovers and
Mergers also imposes strict disclosure requirements with regard to
dealings in the securities of an offeror or offeree company on all
parties to a takeover and also on their respective associates during
the course of an offer period.
Material contracts
The contracts summarised below (not being entered into in the
ordinary course of business) have been entered into in the two
years preceding the date of this document by BT or another
member of the group and are, or may be, material to the group
or have been entered into by BT or another member of the group
and contain a provision under which a member of the group has
an obligation or entitlement which is, or may be, material to BT or
such other member of the group.
Definitions
The definitions apply to the following section titled: Acquisition of
EE – summary of the principal terms.
Acquisition: the acquisition by BT of EE
Articles: the articles of association of BT in force from time to time
Board: the Directors of the Company from time to time
BT Pension Scheme: BT’s main defined benefit pension scheme
Buy-Back Resolution: the resolution to approve the buy-back of
Ordinary Shares from Deutsche Telekom and/or Orange pursuant to
the CP Contracts
CP Contracts: the DT CP Contract and Orange CP Contract
Company: BT Group plc
Completion: completion of the Acquisition pursuant to the terms
of the Share Purchase Agreement which occurred on 29 January
2016
Consideration Shares: the Ordinary Shares to be issued by the
Company to the Sellers pursuant to the Share Purchase Agreement
Directors or Board of Directors: the directors of the Company whose
names appear in the section in the shareholder circular entitled
Directors, Company Secretary, Registered Office and Advisers
Financial Investor: a Qualified Institutional Buyer as defined in Rule
144A under the US Securities Act 1933 or a Qualified Investor
as described in Section I(1) of Annex II to Directive 2004/39/EC,
other than any activist fund, or any company licensed as a
telecommunications operator (or its affiliates)
Ordinary Shares: the ordinary shares of nominal value 5 pence each
in the capital of the Company, including, if the context requires, the
Consideration Shares
Sellers: Deutsche Telekom and Orange
Shareholder: a holder of Ordinary Shares and “Shareholders” shall
be construed accordingly
Sponsor: JP Morgan Cazenove
Transaction Documents: the Share Purchase Agreement, the
Relationship Agreement, the Standstill and Lock-up Agreement
and the CP Contracts
Acquisition of EE – summary of the principal
terms
Share Purchase Agreement
On 5 February 2015, the Share Purchase Agreement was entered
into between the Company, the Sellers, who held 100% of the
issued share capital of EE on a combined basis, Deutsche Telekom
AG as guarantor of Deutsche Telekom and Orange SA as guarantor
of Orange. Pursuant to the Share Purchase Agreement, the
Sellers agreed to sell, and the Company agreed to acquire, the
entire issued share capital of EE. The Acquisition completed on
29January 2016.
1. Seller Warranties, Indemnities and Covenants
1.1 Warranties
The Share Purchase Agreement contains customary warranties
given by the Sellers, including in relation to authorisations, valid
obligations, filings and consents for the entry of the Sellers into the
Transaction Documents, and including in relation to the EE Group,
its share capital, accounts and financial condition, material licences