TAX.L Regulatory News (TAX)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

13 February 2019

RECOMMENDED CASH ACQUISITION

of

Tax Systems plc ("Tax Systems")

by

Stripes Bidco Limited ("Bidco")

a wholly owned subsidiary of funds managed by Bowmark Capital LLP and its affiliates

to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006

 

Summary

· Further to the announcements released by Bowmark and Tax Systems on 7 February 2019 relating to the advanced discussions between Bowmark and Tax Systems in respect of a possible cash offer for Tax Systems, the Board of Bidco and the Independent Directors of Tax Systems are pleased to announce that they have reached agreement on the terms of a recommended all cash offer by Bidco to acquire the entire issued and to be issued share capital of Tax Systems (the "Acquisition"). 

· Under the terms of the Acquisition, each Tax Systems Shareholder will be entitled to receive:

for each Tax Systems Share held 110 pence in cash

· The Acquisition values the entire issued and to be issued share capital of Tax Systems at approximately £100.6 million on a fully diluted basis. The Acquisition Price represents:

· a premium of approximately 9.5 per cent. to the Closing Price of 100.5 pence on 6 February 2019, the Business Day prior to the commencement of the Offer Period;

· a premium of approximately 20.3 per cent. to the volume weighted average price of 91.4 pence for the 12 months to 6 February 2019, the Business Day prior to the commencement of the Offer Period; and

· a premium of approximately 64.2 per cent. to the 67 pence at which Tax Systems Shares were issued to fund the reverse takeover of Tax Computer Systems Limited in July 2016.

· The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act (the "Scheme") (or if Bidco elects, with the consent of the Panel, by way of a Takeover Offer).

 

Recommendation

· The Independent Directors, who have been so advised by Oakley Advisory and finnCap as to the financial terms of the Acquisition, unanimously consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Independent Directors, Oakley Advisory and finnCap have taken into account the commercial assessments of the Independent Directors. Oakley Advisory and finnCap are providing independent financial advice to the Independent Directors for the purposes of Rule 3 of the Code.

· Accordingly, the Independent Directors intend unanimously to recommend that Tax Systems Shareholders vote in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting.

Irrevocable Undertakings and support for the Acquisition

· Bidco has received an irrevocable undertaking from Gavin Lyons (the only Tax Systems Director who is interested in Tax Systems Shares) to vote (or to procure the voting) in favour of the Special Resolution to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 149,254 Tax Systems Shares, being his entire beneficial holding of Tax Systems Shares, representing, in aggregate, approximately 0.18 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date. This irrevocable undertaking remains binding even in the event of a higher competing offer. In light of his interest in the Rollover Arrangements described in paragraph 10 of this Announcement, Gavin Lyons is not entitled to vote at the General Meeting in respect of the resolution to approve the Rollover Arrangements and the Sweet Equity Arrangements, is not entitled to vote at the Court Meeting and has not participated in the appraisal of the Acquisition by the Independent Directors or the decision of the Independent Directors to recommend unanimously that Tax Systems Shareholders approve the Acquisition.

· Bidco has also received irrevocable undertakings from certain other Tax Systems Shareholders to vote (or to procure the voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of a total of 40,394,698 Tax Systems Shares, representing, in aggregate, approximately 50.05 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date. Certain of these irrevocable undertakings (in respect of a total of 22,761,822 Tax Systems Shares, representing approximately 28.20 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date) remain binding even in the event of a higher competing offer.

· Further details of these irrevocable undertakings are set out in Appendix III to this Announcement.

Rollover Arrangements

· Pursuant to the Rollover Arrangements, the Rollover Managers have agreed to invest £1.1 million in aggregate into shares and other securities in the Wider Bidco Group in the manner more particularly described in paragraph 10 of this Announcement.

· The Board of Bidco believe that the ongoing participation of the Rollover Managers is an important element of the Acquisition, and are pleased that they will continue as employees of Tax Systems and investors in the Wider Bidco Group following completion of the Acquisition. 

 

Scheme Document

· The Scheme Document will include further information about the Acquisition, together with notices of the Court Meeting and the General Meeting and the expected timetable of the Scheme, and will specify the actions recommended to be taken by Tax Systems Shareholders. The Scheme Document will be sent to Tax Systems Shareholders as soon as reasonably practicable and, in any event (save with the consent of the Panel), within 28 days of this Announcement and will be made available by Tax Systems and Bidco at www.taxsystems.com/announcement (subject to certain restrictions in relation to persons in Restricted Jurisdictions).

· The Acquisition will be conditional, amongst other things, on the following matters:  

· the approval by a majority in number of Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted;

· the approval by Tax Systems Shareholders representing at least 75 per cent. of the votes cast on the Special Resolution to amend the Company's articles of association in connection with the implementation of the Scheme, at the General Meeting;

· the approval on a poll by Scheme Shareholders, representing a simple majority of the votes cast, of the Rollover Resolution in connection with the implementation of the Rollover Arrangements and the Sweet Equity Arrangements, at the General Meeting;

· the sanction of the Scheme by the Court; and

· the Scheme becoming Effective by no later than the Long Stop Date.

Comments on the Acquisition

Commenting on the Acquisition, Clive Carver, Independent Non-Executive Chairman of Tax Systems said:

"Tax Systems has performed well and according to plan since the reverse takeover in 2016, delivering organic growth during this period, a stronger focus on customers and a strategy to create new state of the art products for Tax Systems' core markets. I would like to take this opportunity to thank all the employees of Tax Systems for all their hard work and support.

The offer from Bowmark represents a 64.2 per cent. return for investors who invested at the point of the reverse takeover, only two and a half years ago. The Independent Directors believe that Bowmark will be an excellent partner to Tax Systems and its management, and believe the Acquisition is in the best interests of all our stakeholders, and unanimously recommend that shareholders vote in favour of the resolutions relating to the Acquisition."

General

This summary should be read in conjunction with, and is subject to, the full text of this Announcement (including its Appendices).

The Acquisition will be subject to the Conditions and further terms set out in Appendix I to this Announcement and to the full terms and conditions which will be set out in the Scheme Document. Appendix II to this Announcement contains the sources of and bases of calculation for certain information contained in this Announcement. Appendix III to this Announcement contains a summary of the irrevocable undertakings received in relation to the Acquisition. Appendix IV to this Announcement contains definitions of certain expressions used in this summary and in this Announcement.

Enquiries:
Bidco / Bowmark	Tel: +44 (0)20 7189 9000
Charles Ind / David Torbet / Stephen Delaney
GCA Altium (Financial Adviser to Bidco and Bowmark)	Tel: +44 (0)20 7484 4040
Stephen Georgiadis / Tim Richardson / Declan O'Connor
Tax Systems plc	Tel: +44 (0)1784 777 700
Clive Carver / Kevin Goggin
Oakley Advisory (Lead Financial Adviser and Joint Rule 3 Adviser to Tax Systems)	Tel: +44 (0)20 7766 6900
Chris Godsmark / Marc Jones / Max Gilbert / Sarthak Sawlani
finnCap (Joint Rule 3 Adviser, Nominated Adviser and Broker to Tax Systems)	Tel: +44 (0)20 7220 0500
Jonny Franklin-Adams / Henrik Persson / James Thompson

Stephenson Harwood LLP is providing legal advice to Bowmark and Bidco. K&L Gates LLP is providing legal advice to Tax Systems.

 

Important notices

GCA Altium, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Bidco and Bowmark and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Bidco and Bowmark for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

Oakley Advisory, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser to Tax Systems and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

finnCap, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser, nominated adviser and broker to Tax Systems and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

This Announcement is for information purposes only and is not intended to and does not constitute, or form part of, any offer, invitation, inducement or the solicitation of an offer to purchase or otherwise acquire, subscribe for, sell or otherwise dispose of or exercise rights in respect of any securities, or the solicitation of any vote or approval of an offer to buy securities in any jurisdiction (pursuant to the Acquisition or otherwise) nor shall there be any sale, issuance or transfer of any securities pursuant to the Acquisition in any jurisdiction in contravention of any applicable laws.

The Acquisition will be made solely by means of the Scheme Document or any document by which the Takeover Offer is made, which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme. Any decision, vote or other response in respect of the Acquisition should be made only on the basis of information contained in the Scheme Document. Tax Systems will prepare the Scheme Document to be distributed to Tax Systems Shareholders at no cost to them. Tax Systems Shareholders are advised to read the formal documentation in relation to the Acquisition carefully once it becomes available because it will contain important information relating to the Acquisition.

This Announcement does not constitute a prospectus or prospectus-equivalent document.

This Announcement has been prepared for the purpose of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Overseas jurisdictions

The release, publication or distribution of this Announcement in certain jurisdictions other than the United Kingdom may be restricted by law and the ability of Tax Systems Shareholders who are not resident in the United Kingdom to participate in the Acquisition may be restricted by the laws and/or regulations of those jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Scheme Shares with respect to the Scheme at the Court Meeting or with respect to the Resolutions at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Therefore, any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom or Tax Systems Shareholders who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

The Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction and no person may vote in favour of the Acquisition by any use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

Further details in relation to Tax Systems Shareholders in overseas jurisdictions will be contained in the Scheme Document.

Notice to US investors

Tax Systems Shareholders in the United States should note that the Acquisition relates to the securities of a company organised under the laws of England and Wales and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. This Announcement, the Scheme Document and certain other documents relating to the Acquisition have been or will be prepared in accordance with English law, the Code and UK disclosure requirements, format and style, all of which differ from those in the United States. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements of and practices applicable in the United Kingdom to schemes of arrangement, which differ from the disclosure requirements of the United States tender offer and proxy solicitation rules.

None of the securities referred to in this Announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United State or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States.

Tax Systems' financial statements, and all financial information that is included in this Announcement or that may be included in the Scheme Document, or any other documents relating to the Acquisition, have been or will be prepared in accordance with International Financial Reporting Standards and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

Forward Looking Statements

This Announcement contains certain statements about Bidco and Tax Systems that are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact, are or may be deemed to be, forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are therefore subject to known and unknown risks and uncertainties which could cause actual results, performance or events to differ materially from the future results, performance or events expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", "targets", "aims", "projects", "goal", "objective", "outlook", "risks", "seeks" or words or terms of similar substance or the negative thereof, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might", "probably" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. Any forward-looking statements made in this Announcement on behalf of Bidco or Tax Systems are made as of the date of this Announcement based on the opinions and estimates of directors of Bidco and Tax Systems, respectively. Each of Bidco and Tax Systems and their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them, expressly disclaims any intention or obligation to update or revise any forward-looking or other statements contained in this Announcement, whether as a result of new information, future events or otherwise, except as required by applicable law. Neither Bidco, Tax Systems nor their respective members, directors, officers or employees, advisers or any person acting on their behalf, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

No forward-looking or other statements have been reviewed by the auditors of Bidco or Tax Systems. All subsequent oral or written forward-looking statements attributable to Bidco, Tax Systems or to any of their respective members, directors, officers, advisers or employees or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

No profit forecasts or estimates

Nothing in this Announcement is intended or shall be deemed to be a forecast, projection or estimate of the future financial performance of Bidco or Tax Systems for any period and no statement in this Announcement should be interpreted to mean that cash flow from operations, earnings, or earnings per share or income for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, earnings, earnings per share or income of Tax Systems.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3:30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3:30 p.m. (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will normally be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and availability of hard copies

A copy of this Announcement and the display documents required to be published pursuant to Rule 26.1 of the Code will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Tax Systems' website at www.taxsystems.com/announcement by no later than 12 noon (London time) on the Business Day following this Announcement. Neither the content of any website referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

Any person who is required to be sent a copy of this Announcement under the Code, and who has not received a hard copy of it, may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by submitting a request in writing to Computershare, Corporate Actions Projects, Bristol BS99 6AH or by calling Computershare on 0370 707 1238 or +44 370 707 1238 if calling from outside the United Kingdom. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8:30 a.m. and 5:30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Save as otherwise referred to above, a hard copy of this Announcement will not be sent unless requested. Any such person may also request that all future documents, announcements and information in relation to the Acquisition should be sent to them in hard copy form.  

Relevant securities in issue

In accordance with Rule 2.9 of the Code, Tax Systems confirms that, as at the date of this Announcement, its current issued share capital comprises 80,703,381 ordinary shares of one pence each. Tax Systems does not hold any Tax Systems Shares in treasury. The International Securities Identification Number for Tax Systems Shares is GB00BDHLGB97.

Electronic communications

Please be aware that all addresses, electronic addresses (if any) and certain other information provided by the Tax Systems Shareholders, persons with information rights and other relevant persons for the receipt of communications from Tax Systems may be provided to offerors (including Bidco) during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11(c) of the Code.

General

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

THE ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

13 February 2019

RECOMMENDED CASH ACQUISITION

of

Tax Systems plc

by

Stripes Bidco Limited ("Bidco")

a wholly owned subsidiary of funds managed by Bowmark Capital LLP and its affiliates

to be effected by means of a scheme of arrangement under Part 26 of the Companies Act

 

 

1. Introduction

The Board of Bidco and the Independent Directors of Tax Systems are pleased to announce that they have reached agreement on the terms of a recommended all cash offer by Bidco to acquire the entire issued and to be issued share capital of Tax Systems (the "Acquisition"). The Acquisition is intended to be effected by means of a scheme of arrangement under Part 26 of the Companies Act.

2. The Acquisition

Under the terms of the Acquisition, which shall be subject to the Conditions and further terms set out in Appendix I to this Announcement and to be set out in the Scheme Document, Tax Systems Shareholders shall be entitled to receive:

for each Tax Systems Share held 110 pence in cash

The Acquisition values the entire issued and to be issued share capital of Tax Systems at approximately £100.6 million on a fully diluted basis. The Acquisition Price represents:

· a premium of approximately 9.5 per cent. to the Closing Price of 100.5 pence on 6 February 2019, being the Business Day prior to the commencement of the Offer Period;

· a premium of approximately 20.3 per cent. to the volume weighted average price of 91.4 pence for the 12 months to 6 February 2019, being the Business Day prior to the commencement of the Offer Period; and

· a premium of approximately 64.2 per cent. to the 67 pence at which Tax Systems Shares were issued to fund the reverse takeover of Tax Computer Systems Limited in July 2016.

3. Conditions to the Acquisition

The Acquisition will be subject to the Conditions and further terms set out in Appendix I to this Announcement and which will be set out in the Scheme Document, including:

· the approval by a majority in number of Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted;

· the approval by Tax Systems Shareholders of the Special Resolution in connection with the implementation of the Scheme, by the requisite majority at the General Meeting;

· the approval on a poll by Scheme Shareholders of the Rollover Resolution by the requisite majority at the General Meeting;

· the sanction of the Scheme by the Court;

· the Scheme becoming Effective by no later than the Long Stop Date; and

· the satisfaction of the other Conditions listed in Appendix I to this Announcement.

4. Background to and reasons for the Acquisition

Bidco intends to support the Tax Systems management team in further developing Tax Systems by way of continued investment in both the current and new product sets, and in further enhancing its operational and financial controls. Bidco will also seek to support Tax Systems management in identifying, assessing and financing the acquisition of complementary companies providing software for the tax and regulatory reporting, and automated data collection markets.

Bidco believes that, under private ownership and supported by Bowmark's expertise and capital, Tax Systems would be better able to capitalise on additional growth and investment opportunities available in its core markets.

5. Recommendation by Independent Directors

The Independent Directors, who have been so advised by Oakley Advisory and finnCap as to the financial terms of the Acquisition, unanimously consider the terms of the Acquisition to be fair and reasonable. In providing advice to the Independent Directors, Oakley Advisory and finnCap have taken into account the commercial assessments of the Independent Directors. Oakley Advisory and finnCap are providing independent financial advice to the Independent Directors of Tax Systems for the purposes of Rule 3 of the Code.

The Independent Directors consider the terms of the Acquisition to be in the best interest of Tax Systems Shareholders as a whole. Accordingly, the Independent Directors intend unanimously to recommend that Tax Systems Shareholders vote in favour of the Scheme at the Court Meeting and approve the Resolutions to be proposed at the General Meeting.

In light of his interest in the Rollover Arrangements described in paragraph 10 of this Announcement, Gavin Lyons is not entitled to vote at the General Meeting in respect of the Rollover Resolution, is not entitled to vote at the Court Meeting and has not participated in the appraisal of the Acquisition by the Independent Directors or the decision of the Independent Directors to recommend unanimously that Tax Systems Shareholders approve the Acquisition.

6. Background to and reasons for the Independent Directors' recommendation

Since the reverse takeover of Tax Computer Systems Limited in 2016 (the "Reverse Takeover"), the management team, led by CEO Gavin Lyons, has transitioned the business from a private company with no growth and products that required updating and further investment, to a successful AIM quoted company, with a stronger focus on customers and a strategy to create new state of the art products for Tax Systems' core markets. This has only been achieved as a result of the dedication of Tax Systems management and employees, who should be thanked for their continued hard work.

The Independent Directors remain confident in the standalone prospects of Tax Systems, and believe that Tax Systems is well placed to continue to thrive, and grow shareholder value, as a listed business. However, the Independent Directors have a duty to consider approaches from potential acquirers of the business, including that made by Bidco, which has been announced today. In this regard, the Independent Directors have carefully evaluated the Acquisition on behalf of Tax Systems Shareholders as a whole, including having detailed discussions regarding the terms of the Acquisition. These discussions have resulted in the decision by the Independent Directors to recommend the Acquisition at a price of 110 pence in cash for each Tax Systems Share.

In the view of the Independent Directors, the Acquisition allows Tax Systems Shareholders to realise a cash exit at an attractive price, which represents a 64.2 per cent. premium to the price at which Tax Systems Shares were issued to fund the Reverse Takeover. The Independent Directors also considered the limited trading liquidity in Tax Systems Shares to be an important factor in providing their recommendation. The Independent Directors have recognised that the Acquisition presents an opportunity for all Tax Systems Shareholders to realise their investment in Tax Systems at a premium to the prevailing share price which the Independent Directors consider may not be achievable in the near-term future due to Tax Systems' limited trading liquidity. The Independent Directors also believe that to exploit fully the available market opportunity, including the Government's Making Tax Digital initiative, which is scheduled to be rolled out in April 2019, will require additional investment and an increased focus on growth on a longer-term basis than is typical in a public company environment. As a result, the Independent Directors believe that Tax Systems is better placed to achieve this as a private company, and with Bowmark as a partner.

The Independent Directors further welcome Bidco's stated intentions concerning Tax Systems management and employees, locations of business and strategic plans (further details on which are set out in paragraph 11 of this Announcement). In particular, the Independent Directors are pleased that Bidco does not intend to initiate any material headcount reductions within Tax Systems as a result of the Acquisition. The Independent Directors also welcome Bidco's confirmation that, following completion of the Acquisition, the existing contractual and statutory employment rights of all Tax Systems management and employees will be fully safeguarded in accordance with applicable law.

In considering their recommendation, the Independent Directors note that MXC Capital, Lombard Odier, Premier and Oliver Chadwick have provided irrevocable undertakings to vote in favour of the Acquisition, indicating their support for the Acquisition (further details of which are set out in paragraph 7 of this Announcement).

Having taken into account these matters, the Independent Directors believe that the Acquisition is in the best interests of Tax Systems Shareholders as a whole, and therefore unanimously recommend that Scheme Shareholders vote in favour of the Scheme at the Court Meeting and the Rollover Resolution at the General Meeting and that Tax Systems Shareholders vote in favour of the other resolutions to be proposed at the General Meeting.

Gavin Lyons has not participated in the appraisal of the Acquisition by the Independent Directors, or the decision by the Independent Directors to recommend the Acquisition to Tax Systems Shareholders, as a result of the conflict of interests arising from his participation in the Rollover Arrangements, which are described more fully in paragraph 10 of this Announcement. The same conflict of interests precludes Gavin Lyons from voting at the General Meeting in respect of the Rollover Resolution and from voting at the Court Meeting.

7. Irrevocable Undertakings

Bidco has received an irrevocable undertaking from Gavin Lyons (the only Tax Systems Director who is interested in Tax Systems Shares) to vote (or to procure the voting) in favour of the Special Resolution to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of 149,254 Tax Systems Shares, being his entire beneficial holding of Tax Systems Shares, representing, in aggregate, approximately 0.18 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date. This irrevocable undertaking remains binding in the event of a higher competing offer.

Bidco has also received irrevocable undertakings from certain other Tax Systems Shareholders to vote (or to procure the voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, in the event that the Acquisition is implemented by way of a Takeover Offer, to accept or procure acceptance of the Takeover Offer) in respect of a total of 40,394,698 Tax Systems Shares, representing, in aggregate, approximately 50.05 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date. Certain of these irrevocable undertakings, (in respect of a total of 22,761,822 Tax Systems Shares, representing approximately 28.20 per cent. of the share capital of Tax Systems in issue on the Last Practicable Date) remain binding even in the event of a higher competing offer.

Further details of these irrevocable undertakings, including the circumstances in which they may lapse, are set out in Appendix III to this Announcement.

8. Information on Bowmark and Bidco

Bowmark Capital LLP

Bowmark is an independent UK private equity investment firm with approximately £1.5 billion of funds under management and advice. Bowmark focuses on investing in growth-orientated companies with enterprise values of up to £250 million.

The Bowmark team has extensive experience of investing in growth companies, having supported businesses across a range of industries including technology, business services, financial services, media, consumer and leisure, education and training, and healthcare.

Bowmark is an independent partnership owned by its management and is authorised and regulated by the Financial Conduct Authority.

Bidco

Bidco is a company limited by shares, incorporated on 5 February 2019 under the laws of England and Wales for the purpose of implementing the Acquisition. Bidco has not traded since the date of its incorporation and has not entered into any obligations other than in connection with the Acquisition and its financing. Bidco is a wholly-owned indirect subsidiary of one of the Bowmark Funds. The directors of Bidco are Stephen Delaney and David Torbet.

9. Information on Tax Systems

Tax Systems is a leading provider of corporation tax software and services in the UK and Ireland. Tax Systems' business has a long track record of being a key supplier of corporation tax software and services to many of the largest companies and the accounting profession in the UK and Ireland.

Tax Systems' solutions enable customers to automate their end-to-end compliance processes from the collection and management of financial data, sensitisation of tax data, creation of computations, statutory report generation and control of associated processes and risk.

10. Rollover Arrangements and Sweet Equity Arrangements

Bowmark has agreed with each of the Rollover Managers the terms of their participation in the equity of the Wider Bidco Group following the successful completion of the Acquisition, subject to the approval of the Scheme Shareholders, as set out in this paragraph 10.

As a result of the Rollover Arrangements, which are also conditional upon the Scheme having become Effective in accordance with its terms, the Rollover Managers will invest an aggregate of £1.1 million in the ordinary and preference share capital of Topco (the ultimate holding company of Bidco). The Bidco Directors believe that the ongoing participation of the Rollover Managers is an important element of the Acquisition, and are pleased that they will continue as employees of and investors in the Wider Bidco Group following completion of the Acquisition.

The Rollover Managers have entered into a number of agreements with Bidco to effect the Rollover Arrangements, as follows:

Sale and Purchase Agreement

A Sale and Purchase Agreement dated 13 February 2019 entered into by the Rollover Managers (other than Daran Gibney) provides for the sale by the relevant Rollover Manager of his Subsidiary Shares in consideration for cash and loan notes to be issued by Bidco. The Rollover Managers (other than Daran Gibney) hold 620 Subsidiary Shares in aggregate, issued to them as part of the LTIP and which, assuming all options and warrants under the Tax Systems Share Option Plan and the Tax Systems Option and Warrant Arrangements are exercised in full prior to the Effective Date, will have an aggregate value of £2.1 million. Pursuant to the Sale and Purchase Agreement, loan notes in Bidco with an aggregate principal amount of £0.4 million will be issued to the Rollover Managers (other than Gavin Lyons and Daran Gibney, who will be investing directly in Topco) (the "Bidco Rollover Notes").

Put and Call Option Deed

A Put and Call Option Deed dated 13 February 2019 provides for the transfer by the Rollover Managers (other than Gavin Lyons and Daran Gibney, who will be investing directly in Topco), by means of a series of put and call options, of the Bidco Rollover Notes in consideration for loan notes issued by Midco 2, subsequently in consideration for loan notes in Midco 1 and subsequently in consideration for shares issued by Topco.

Equity Terms Agreement

An Equity Terms Agreement dated 13 February 2019 sets out the terms on which, amongst other things, the Rollover Managers will hold their investment in Topco in the form of ordinary and preference shares following, in the case of Andrew Dancer and Andrew Mills, the completion of the series of puts and calls provided for by the Put and Call Option Deed and, in the case of Gavin Lyons and Daran Gibney, their direct investment into Topco on completion of the Rollover Arrangements.

Following the Effective Date, the Rollover Managers will hold, in aggregate, approximately 1.4 per cent. of the preference share capital and approximately 13.5 per cent. of the ordinary share capital of Topco.

In addition, it is Bidco's intention to utilise up to an additional 12.5 per cent. of the ordinary shares in Topco in order to incentivise existing and future management and employees of Tax Systems Group. Following the Effective Date, certain employees of Tax Systems Group, potentially including current participants in the Tax Systems Share Option Plan, will be offered the opportunity to invest directly in some of these Topco ordinary shares (the "Sweet Equity Arrangements").

The Scheme Shareholders will be asked at the General Meeting to approve the Rollover Arrangements and Sweet Equity Arrangements described in this paragraph 10 by voting on the Rollover Resolution. Pursuant to Rule 16.2 of the Code, none of the Rollover Managers who hold Tax Systems Shares nor their connected persons, nor any person holding Tax Systems Shares on behalf of the Rollover Managers and / or any of their connected persons will be entitled to vote on such resolution and voting on this resolution will be by way of a poll.

The Independent Directors intend unanimously to recommend that the Scheme Shareholders vote in favour of the Rollover Resolution to approve the Rollover Arrangements and the Sweet Equity Arrangements. For the purposes of Rule 16.2 of the Code, finnCap and Oakley Advisory have confirmed to the Independent Directors that, in their opinion, the terms of the Rollover Arrangements and the Sweet Equity Arrangements are fair and reasonable so far as the Scheme Shareholders are concerned. In providing this opinion, finnCap and Oakley Advisory have taken into account the commercial assessments of the Independent Directors.

The Acquisition will be conditional on, amongst other things, the Scheme Shareholders approving the Rollover Resolution at the General Meeting.

Further details on the terms of the Rollover Arrangements and the Sweet Equity Arrangements will be set out in the Scheme Document.

Other than the Rollover Arrangements and the Sweet Equity Arrangements, currently there are no arrangements or understandings between Bowmark or Bidco and / or any person acting in concert with Bowmark and / or Bidco and the management or directors of Tax Systems having any connection with or dependence upon the Acquisition.

11. Directors, management, employees, pensions, research and development, locations of business and strategic plans

As set out in paragraph 4 of this Announcement, Bidco intends to support Tax Systems Group's management to develop the company by way of continued investment in both its current and new product sets and in making further improvements to its operational and financial controls.

Bidco will also seek to support Tax Systems Group's management in identifying, assessing and financing the acquisition of complementary companies providing software for the tax and regulatory reporting and automated data collection markets.

Bidco believes that, under private ownership and supported by Bowmark's expertise and access to capital, Tax Systems Group would be better able to capitalise on additional growth and investment opportunities available in its core markets. Bidco will actively monitor these additional opportunities and pursue them with Tax Systems Group where appropriate.

Bidco recognises the contribution made by the Tax Systems Group management team in developing the company since the reverse takeover of Tax Computer Systems Limited in July 2016 and attaches great importance to their skills and experience. Bidco intends to support the Tax Systems Group management team in the execution of their medium term strategy.

Bidco does not intend to initiate any material headcount reductions within the Tax Systems Group as a result of the Acquisition and expects that existing employees of the Tax Systems Group will continue to contribute to Tax Systems Group's ongoing success. Bidco confirms that, following the Scheme becoming Effective, the existing contractual and statutory employment rights, including in relation to pensions, of Tax Systems Group's management and employees will be fully safeguarded in accordance with applicable law. Bidco does not intend to make any material change to the conditions of employment or in the balance of skills and functions of the management and employees of the Tax Systems Group. Bidco does not intend to make any changes with regards to the Tax Systems Group's existing pension schemes, the accrual of benefits to existing members or the admission of new members to such pension schemes. Tax Systems Group does not have any defined benefit pension schemes.

As disclosed in paragraph 10 of this Announcement, other than in respect of the Rollover Arrangements and the Sweet Equity Arrangements, Bidco has not entered into, and has not had discussions on proposals to enter into, any form of incentivisation or any other arrangements with the management and employees of Tax Systems.

Kevin Goggin, Chief Financial Officer and an executive director of Tax Systems, is not a participant in the Rollover Arrangements or the Sweet Equity Arrangements. Bidco understands that by mutual agreement with Tax Systems and conditional on the Scheme becoming Effective (or, in the event that the Acquisition is implemented by a Takeover Offer upon the Takeover Offer becoming or being declared wholly unconditional), Kevin Goggin will resign his position with effect from 30 June 2019, or such other date as may be agreed between Tax Systems and Kevin Goggin. Following the Scheme becoming Effective, Bidco intends to actively participate in the process of appointing a new chief financial officer to Tax Systems.

It is intended that each of the non-executive directors of Tax Systems will resign upon and with effect from the Effective Date (or, in the event that the Acquisition is implemented by a Takeover Offer, upon or shortly following the Takeover Offer becoming or being declared wholly unconditional).

Following the Scheme becoming Effective, Bidco does not intend to make any restructurings or changes in location of Tax Systems' headquarters and headquarter functions, operations and places of business. In addition, no changes are expected with respect to the redeployment of Tax Systems' fixed asset base or the research and development functions of Tax Systems.

Tax Systems Shares are currently admitted to trading on AIM. As set out in paragraph 17 of this Announcement, it is expected that, prior to the Effective Date, Tax Systems will make an application to the London Stock Exchange to effect the cancellation of the trading on AIM of the Tax Systems Shares to take effect on or shortly after the Effective Date.

Bidco is considering the possibility of a corporate reorganisation of the Tax Systems Group following the Effective Date, in order to make its corporate structure more efficient. If implemented, this would result in Bidco becoming the immediate holding company of the current Tax Systems Group in place of the Company, with the Company undertaking a solvent liquidation. If implemented, any such re-organisation would not have any impact on the business of the Tax Systems Group or result in any headcount reduction nor alter any of Bidco's above stated intentions in any way.

No statements in this paragraph 11 are "post-offer undertakings" for the purposes of Rule 19.5 of the Code.

The Independent Directors welcome Bidco's stated intentions concerning the Tax Systems Group management and employees, locations of business and strategic plans. In particular, the Independent Directors are pleased that Bidco does not intend to initiate any material headcount reductions within Tax Systems Group as a result of the Acquisition. The Independent Directors also welcome Bidco's confirmation that, following completion of the Acquisition, the existing contractual and statutory employment rights of all Tax Systems Group management and employees will be fully safeguarded in accordance with applicable law.

12. Financing arrangements

The cash consideration payable by Bidco pursuant to the Acquisition and the amount required to refinance the existing facilities of Tax Systems Group will be funded through equity financing of £67.5 million in aggregate drawn down from the Bowmark Funds, of which £29.1 million is being provided by the Co-Invest Funds, and through debt facilities of £50.0 million arranged with HSBC UK Bank plc and Five Arrows Managers LLP pursuant to the Facilities Agreement. In connection with their equity financing of Bidco, each of the Bowmark Funds has entered into an Equity Commitment Letter with Bidco.

Under the terms of the Facilities Agreement, Bidco has agreed it will not waive or amend or declare or treat as satisfied (other than if satisfied in accordance with its terms) any of the Conditions unless: (i) the Agent (acting on instructions of all the Lenders (acting without undue delay)) has given its consent; or (ii) (and to the extent) required by law, regulation, the Code, the Panel, the London Stock Exchange, the AIM Rules, the Companies Act or the Court; or (iii) such action could not reasonably be expected to affect adversely the interests of the Lenders (taken as a whole) in any material respect.

GCA Altium, in its capacity as financial adviser to Bidco and Bowmark, is satisfied that sufficient resources are available to Bidco to enable it to satisfy, in full, the cash consideration payable to Tax Systems Shareholders under the terms of the Acquisition.

13. Structure of the Acquisition and the Scheme Document

Scheme

It is intended that the Acquisition will be effected by a Court-sanctioned scheme of arrangement between Tax Systems and the Scheme Shareholders under Part 26 of the Companies Act. Bidco reserves the right to elect to implement the Acquisition by way of a Takeover Offer (with the consent of the Panel).

The purpose of the Scheme is to enable Bidco to become the owner of the whole of the issued and to be issued share capital of Tax Systems.

Under the Scheme, the Scheme Shares will be transferred to Bidco in consideration for which the Scheme Shareholders will receive the cash consideration on the basis set out in paragraph 2 of this Announcement. The Scheme will be subject to the Conditions and further terms referred to in Appendix I to this Announcement and to be set out in the Scheme Document. The Acquisition will lapse if the Scheme does not become Effective by the Long Stop Date.

Approval by the Court Meeting and the General Meeting

In order to become Effective, the Scheme requires:

(a) the approval of a majority in number of the Scheme Shareholders who vote, representing not less than 75 per cent. in value of the Scheme Shares voted, either in person or by proxy, at the Court Meeting. At the Court Meeting, voting will be by poll and not on a show of hands and, subject to the below, all Scheme Shareholders, appearing on Tax Systems' register of members at the Voting Record Time, will be entitled to vote at the Court Meeting and to cast one vote for each Scheme Share held;

(b) the approval of not less than 75 per cent. of the votes cast, either in person or by proxy, of the Special Resolution to be proposed at the General Meeting (to be held directly after the Court Meeting) necessary in order to implement the Scheme, including to approve amendments to Tax Systems' articles of association to ensure that any Tax Systems Shares issued after the approval of the Scheme at the Court Meeting and the Scheme Record Time will be (i) subject to the Scheme and (ii) automatically acquired by Bidco (or its nominee(s)) on the same terms as under the Scheme. This will avoid any person (other than Bidco, its nominee(s) or the Bowmark Funds) being left with Tax Systems Shares after the Effective Date. At the General Meeting, all Tax Systems Shareholders, appearing on Tax Systems' register of members at the Voting Record Time, will be entitled to vote on the Special Resolution and to cast one vote for each Tax Systems Share held;

(c) the approval on a poll by a simple majority of the votes cast, either in person or by proxy, of the Rollover Resolution to be proposed at the General Meeting (to be held directly after the Court Meeting) necessary in order to implement and approve the Rollover Arrangements and the Sweet Equity Arrangements. At the General Meeting, all Scheme Shareholders, appearing on Tax Systems' register of members at the Voting Record Time, will be entitled to vote on the Rollover Resolution and to cast one vote for each Scheme Share held; and

(d) all of the other Conditions to be satisfied or (where applicable) waived.

Application to the Court to sanction the Scheme

Once the necessary approvals have been obtained at the Tax Systems Meetings, and the other Conditions have been satisfied or (where applicable) waived (save for the Conditions set out at paragraph 1(d) of Part A of Appendix I to this Announcement), in order for the Scheme to be capable of becoming Effective, it must be sanctioned by the Court at the Scheme Court Hearing.

The Scheme will only become Effective once a copy of the Scheme Court Order is delivered to the Registrar of Companies. 

Lapsing of the Acquisition

The Acquisition will lapse if, amongst other things:

(a) the approval of the requisite majorities of Scheme Shareholders at the Court Meeting is not obtained on or before the Long Stop Date; or

(b) the approval of the requisite majority of Tax Systems Shareholders to pass the Special Resolution to be proposed at the General Meeting is not obtained on or before the Long Stop Date; or

(c) the approval on a poll of the requisite majority of Scheme Shareholders to pass the Rollover Resolution to be proposed at the General Meeting is not obtained on or before the Long Stop Date; or

(d) the sanction of the Scheme by the Court (without modification or with modification on terms acceptable to Bidco and Tax Systems) and the delivery of a copy of the Scheme Court Order to the Registrar of Companies is not procured before the Long Stop Date.

Scheme becoming Effective

Upon the Scheme becoming Effective, it will be binding on all Tax Systems Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the General Meeting, or whether they voted in favour of or against the Scheme. 

The Acquisition Price will be dispatched by Bidco to Tax Systems Shareholders no later than 14 days after the Effective Date. Share certificates in respect of Tax Systems Shares will cease to be valid and entitlements to Tax Systems Shares held within the CREST system will be cancelled.

Scheme Document

The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the General Meeting and the expected timetable for the Scheme, and will specify the action to be taken by Tax Systems Shareholders. 

It is expected that the Scheme Document, together with the Forms of Proxy, will be dispatched to Tax Systems Shareholders and, for information only, to participants in the Tax Systems Share Option Plan and the Tax Systems Option and Warrant Arrangements as soon as practicable and, in any event, within 28 days of the date of this Announcement, unless Bidco and Tax Systems otherwise agree, and the Panel consents, to a later date.

General

The Scheme will be governed by the laws of England and Wales. The Scheme will be also subject to the applicable requirements of the Code, the Panel, the London Stock Exchange and the Financial Conduct Authority.

14. Interests of Bidco and Bowmark in Tax Systems Shares

Bidco will make a public Opening Position Disclosure setting out details required to be disclosed by it under Rule 8.1(a) of the Code.

As at the Last Practicable Date, the Bowmark Funds, which are the indirect shareholders of 100 per cent. of the issued share capital of Bidco, held no Tax Systems Shares.

Save in respect of the irrevocable undertakings referred to in paragraph 7 of this Announcement, as at the Last Practicable Date neither Bidco, nor Bowmark, nor any of their respective directors, nor, so far as Bidco is aware, any person acting in concert (within the meaning of the Code) with Bidco or Bowmark had (i) any interest in or right to subscribe for Tax Systems Shares; nor (ii) any short positions in respect of relevant Tax Systems Shares (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell, any delivery obligation or right to require another person to purchase or take delivery; nor (iii) borrowed or lent any Tax Systems Shares (including, for these purposes, any financial collateral arrangements of the kind referred to in Note 4 on Rule 4.6 of the Code); nor (iv) is a party to any dealing arrangement of the kind referred to in Note 11 on the definition of acting in concert in the Code.

It has not been practicable for Bidco to make enquiries of all of its concert parties in advance of the release of this Announcement. Therefore, if Bidco becomes aware, following the making of such enquiries, that any of its concert parties have any such interests in relevant securities of Tax Systems, all relevant details in respect of Bidco's concert parties will be included in Bidco's Opening Position Disclosure in accordance with Rule 8.1(a) and Note 2(a)(i) on Rule 8 of the Code, which must, unless there are no such interests of which Bidco is aware, be made on or before 12 noon (London time) on 21 February 2019.

'Interests in securities' for these purposes arise, in summary, when a person has long economic exposure, whether absolute or conditional, to changes in the price of securities (and a person who only has a short position in securities is not treated as interested in those securities). In particular, a person will be treated as having an 'interest' by virtue of the ownership, voting rights or control of securities, or by virtue of any agreement to purchase, option in respect of, or derivative referenced to, securities.

15. Tax Systems Share Option Plan and Tax Systems Option and Warrant Arrangements

Holders of options under the Tax Systems Share Option Plan will be contacted regarding the effect of the Acquisition on their rights under the Tax Systems Share Option Plan and appropriate proposals in accordance with Rule 15 of the Code will be made to such persons. Further details of those proposals will be set out in the Scheme Document and in separate communications to be sent to participants in the Tax Systems Share Option Plan.

Holders of options and warrants under the Tax Systems Option and Warrant Arrangements will be contacted regarding the effect of the Acquisition on their rights under the Tax Systems Option and Warrant Arrangements and appropriate proposals in accordance with Rule 15 of the Code will be made to such persons. Further details of those proposals will be set out in the Scheme Document and/or in separate communications to be sent to holders of options and warrants under the Tax Systems Option and Warrant Arrangements.

LTIP

The LTIP Holders have entered into a Sale and Purchase Agreement which provides for the sale by each LTIP Holder of his Subsidiary Shares. In respect of each Rollover Manager selling his Subsidiary Shares in accordance with the Sale and Purchase Agreement, the consideration payable for his Subsidiary Shares is described in paragraph 10 of this Announcement.

In respect of each Non-Rollover Manager, the consideration for his Subsidiary Shares shall be paid in cash. The Non-Rollover Managers hold 180 Subsidiary Shares in aggregate which, assuming all options and warrants under the Tax Systems Share Option Plan and the Tax Systems Option and Warrant Arrangements are exercised in full prior to the Effective Date, will have an aggregate value of £0.6 million.

Further details of the Sale and Purchase Agreement will be set out in the Scheme Document.

16. Acquisition related arrangements

Confidentiality agreement

On 3 November 2018, Bowmark (on behalf of the Bowmark Funds) and Tax Systems entered into a confidentiality agreement in relation to the Acquisition, pursuant to which Bowmark undertook, subject to certain exceptions, to keep information relating to Tax Systems and the Acquisition confidential, to use such information solely for the agreed purposes in connection with the Acquisition and not to disclose such information to third parties. Unless terminated earlier, the confidentiality obligations will remain in force for 24 months from the date of the agreement unless and until Bidco completes the Acquisition in which event the terms of the agreement will cease to have effect.

The confidentiality agreement also contains standstill provisions which restrict Bowmark, during the period of six months following the date of the agreement (save with the prior written consent of Tax Systems) from (i) acquiring, procuring or inducing any other person to acquire interests in the Tax Systems Shares; (ii) making, procuring or inducing any other person to make an offer for all or any of the Tax Systems Shares; (iii) making, procuring or inducing any person to announce an offer for all or any of the Tax Systems Shares; and (iv) entering into any agreement, arrangement or undertaking which imposes obligations or restrictions on any party to such agreement, arrangement or understanding with respect to the exercise of voting rights attached to the Tax Systems Shares. These restrictions ceased to apply on the making of this Announcement.

The confidentiality agreement also contains restrictions on Bowmark soliciting or employing any person who is working for Tax Systems or a member of the Wider Tax Systems Group (whether an employee, consultant or independent contractor) and who occupies a senior or managerial position or who is directly involved in the Acquisition. Such restrictions shall survive until such date that is 12 months from the date of the confidentiality agreement. Bowmark has also undertaken that it will not, and that it will use reasonable endeavours to procure that no member of the Wider Bidco Group will, (other than in the ordinary course of business) encourage any of the customers, suppliers, landlords, tenants, licensors, licensees, financiers or bankers of Tax Systems or any member of the Wider Tax Systems Group or any person with whom Tax Systems or any member of the Wider Tax Systems Group has a contractual, trading, commercial or business relationship to cease, restrict or vary adversely their relationship or dealings with Tax Systems or the relevant member of the Wider Tax Systems Group.

17. Cancellation of admission to trading on AIM and re-registration

Prior to the Effective Date, Tax Systems will make an application to the London Stock Exchange for the cancellation of the admission to trading on AIM of the Tax Systems Shares to take effect on or shortly after the Effective Date. It is intended that dealings in Tax Systems Shares will be suspended at 5.00 p.m. (London time) on the Business Day prior to the Effective Date.

Shortly after the Effective Date and the cancellation of the admission to trading on AIM of the Tax Systems Shares, it is intended that Tax Systems will be re-registered as a private limited company pursuant to the relevant provisions of the Companies Act.

18. Documents available on website

Copies of the following documents will, in accordance with Rule 26.2 of the Code, be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Tax Systems' website at www.taxsystems.com/announcement by no later than 12 noon on the Business Day following the date of this Announcement until the end of the Offer Period:

· a copy of this Announcement;

· the irrevocable undertakings referred to in paragraph 7 of this Announcement;

· the written consents of each of GCA Altium, Oakley Advisory and finnCap referred to in paragraph 21 below;

· the Sale and Purchase Agreement referred to in paragraph 10 of this Announcement;

· the Put and Call Option Deed referred to in paragraph 10 of this Announcement;

· the Equity Terms Agreement referred to in paragraph 10 of this Announcement;

· the Facilities Agreement and the Equity Commitment Letters referred to in paragraph 12 of this Announcement;

· a conditions precedent satisfaction letter addressed from Global Loan Agency Services Limited (as agent) to Bidco; and

· the confidentiality agreement described in paragraph 16 of this Announcement.

19. Dividends

The Tax Systems Shares to be acquired under the Acquisition shall be acquired fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this Announcement.

If any dividend or other distribution or return of value is authorised, declared, made or paid in respect of Tax Systems Shares on or after the date of this Announcement and prior to the Effective Date, Bidco reserves the right to reduce the Acquisition Price by an amount up to the per share amount of such dividend or other distribution, except where the Tax Systems Shares are or will be acquired pursuant to the Scheme on a basis which entitles Bidco to receive the dividend, distribution or return of value and to retain it.

If any such dividend, distribution or return of value is paid or made after the date of this Announcement and Bidco exercises its rights described above, any reference in this Announcement to the consideration payable under the Scheme shall be deemed to be a reference to the consideration as so reduced. Any exercise by Bidco of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme.

20. General

This Announcement does not constitute an offer or an invitation to purchase or subscribe for any securities.

The Acquisition and the Scheme will be subject to the Conditions and certain further terms set out in Appendix I to this Announcement and to the full terms and conditions to be set out in the Scheme Document. Appendix II to this Announcement contains the sources and bases of certain information contained in this Announcement. Appendix III to this Announcement contains a summary of the irrevocable undertakings received in relation to the Acquisition. Appendix IV to this Announcement contains the definitions of certain terms used in this Announcement.

Bidco reserves the right, subject to the prior consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer for the entire issued and to be issued share capital of Tax Systems, as an alternative to the Scheme. In such an event, such offer will be implemented on the same terms (subject to appropriate amendments described in Part B of Appendix I to this Announcement), so far as applicable, as those which would apply to the Scheme.

If the Acquisition is effected by way of a Takeover Offer and such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Bidco intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act to acquire compulsorily the remaining Tax Systems Shares in respect of which the Takeover Offer has not been accepted.

Investors should be aware that Bidco may purchase Tax Systems Shares otherwise than under any Takeover Offer or scheme of arrangement relating to the Acquisition, such as in open market or privately negotiated purchases.

The availability of any such Takeover Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Such persons should inform themselves about and observe any applicable requirements.

21. Consents

GCA Altium has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion therein of the references to its name in the form and context in which it appears.

Oakley Advisory has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion therein of the references to its name in the form and context in which it appears.

finnCap has given and has not withdrawn its written consent to the issue of this Announcement with the inclusion therein of the references to its name in the form and context in which it appears.

Enquiries:
Bidco / Bowmark	Tel: +44 (0)20  7189 9000
Charles Ind / David Torbet / Stephen Delaney
GCA Altium (Financial Adviser to Bidco and Bowmark)	Tel: +44 (0)20 7484 4040
Stephen Georgiadis / Tim Richardson / Declan O'Connor
Tax Systems plc	Tel: +44 (0)1784 777 700
Clive Carver / Kevin Goggin
Oakley Advisory (Lead Financial Adviser and Joint Rule 3 Adviser to Tax Systems)	Tel: +44 (0)20 7766 6900
Chris Godsmark / Marc Jones / Max Gilbert / Sarthak Sawlani
finnCap (Joint Rule 3 Adviser, Nominated Adviser and Broker to Tax Systems)	Tel: +44 (0)20 7220 0500
Jonny Franklin-Adams / Henrik Persson / James Thompson

Stephenson Harwood LLP is providing legal advice to Bowmark and Bidco. K&L Gates LLP is providing legal advice to Tax Systems.

Further Information

GCA Altium, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively as financial adviser to Bidco and Bowmark and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Bidco and Bowmark for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

Oakley Advisory, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser to Tax Systems and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

finnCap, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as financial adviser, nominated adviser and broker to Tax Systems and for no one else in connection with the Acquisition or any matters referred to in this Announcement and will not be responsible to anyone other than Tax Systems for providing the protections afforded to its clients nor for providing advice in relation to the Acquisition, the contents of this Announcement or any other matters referred to in this Announcement.

This Announcement is for information purposes only and is not intended to and does not constitute, or form part of, any offer, invitation, inducement or the solicitation of an offer to purchase or otherwise acquire, subscribe for, sell or otherwise dispose of or exercise rights in respect of any securities, or the solicitation of any vote or approval of an offer to buy securities in any jurisdiction (pursuant to the Acquisition or otherwise) nor shall there be any sale, issuance or transfer of any securities pursuant to the Acquisition in any jurisdiction in contravention of any applicable laws.

The Acquisition will be made solely by means of the Scheme Document, or any document by which the Takeover Offer is made, which will contain the full terms and conditions of the Acquisition, including details of how to vote in respect of the Scheme. Any decision, vote or other response in respect of the Acquisition should be made only on the basis of information contained in the Scheme Document. Tax Systems will prepare the Scheme Document to be distributed to Tax Systems Shareholders at no cost to them. Tax Systems Shareholders are advised to read the formal documentation in relation to the Acquisition carefully once it becomes available because it will contain important information relating to the Acquisition.

This Announcement does not constitute a prospectus or prospectus-equivalent document.

This Announcement has been prepared for the purpose of complying with English law, the Code and the AIM Rules and the information disclosed may not be the same as that which would have been disclosed if this Announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Overseas jurisdictions

The release, publication or distribution of this Announcement in certain jurisdictions other than the United Kingdom may be restricted by law and the ability of Tax Systems Shareholders who are not resident in the United Kingdom to participate in the Acquisition may be restricted by the laws and/or regulations of those jurisdictions. In particular, the ability of persons who are not resident in the United Kingdom to vote their Scheme Shares with respect to the Scheme at the Court Meeting or with respect to the Resolutions at the General Meeting, or to execute and deliver Forms of Proxy appointing another to vote at the Court Meeting and/or General Meeting on their behalf, may be affected by the laws of the relevant jurisdictions in which they are located. Therefore, any persons who are subject to the laws and regulations of any jurisdiction other than the United Kingdom or Tax Systems Shareholders who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements in their jurisdiction. Any failure to comply with the applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.

The Acquisition will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws of that jurisdiction and no person may vote in favour of the Acquisition by any use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Announcement and any formal documentation relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in or into or from any Restricted Jurisdiction and persons receiving such documents (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send them in or into or from any Restricted Jurisdiction.

Further details in relation to Tax Systems Shareholders in overseas jurisdictions will be contained in the Scheme Document.

Notice to US investors

Tax Systems Shareholders in the United States should note that the Acquisition relates to the securities of a company organised under the laws of England and Wales and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. This Announcement, the Scheme Document and certain other documents relating to the Acquisition have been or will be prepared in accordance with English law, the Code and UK disclosure requirements, format and style, all of which differ from those in the United States. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act. Accordingly, the Acquisition is subject to the disclosure requirements of and practices applicable in the United Kingdom to schemes of arrangement, which differ from the disclosure requirements of the United States tender offer and proxy solicitation rules.

None of the securities referred to in this Announcement have been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offence in the United States.

Tax Systems' financial statements, and all financial information that is included in this Announcement or that may be included in the Scheme Document, or any other documents relating to the Acquisition, have been or will be prepared in accordance with International Financial Reporting Standards and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

Forward Looking Statements

This Announcement contains certain statements in relation to Bidco and Tax Systems that are, or may be deemed to be, "forward-looking statements" which are prospective in nature. All statements other than statements of historical fact, are or may be deemed to be, forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are therefore subject to known and unknown risks and uncertainties which could cause actual results, performance or events to differ materially from the future results, performance or events expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "believes", "targets", "aims", "projects", "goal", "objective", "outlook", "risks", "seeks" or words or terms of similar substance or the negative thereof, as well as variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might", "probably" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations.

Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results to differ materially from those projected or implied in any forward-looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Announcement. Any forward-looking statements made in this Announcement on behalf of Bidco or Tax Systems are made as of the date of this Announcement based on the opinions and estimates of directors of Bidco and Tax Systems, respectively. Each of the Bidco and Tax Systems and their respective members, directors, officers, employees, advisers and any person acting on behalf of one or more of them, expressly disclaims any intention or obligation to update or revise any forward-looking or other statements contained in this Announcement, whether as a result of new information, future events or otherwise, except as required by applicable law. Neither Bidco and Tax Systems nor their respective members, directors, officers or employees, advisers or any person acting on their behalf, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this Announcement will actually occur.

No forward-looking or other statements have been reviewed by the auditors of Bidco or Tax Systems. All subsequent oral or written forward-looking statements attributable to Bidco, Tax Systems or their respective members, directors, officers, advisers or employees or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above.

Rounding

Certain figures included in this Announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

No profit forecasts or estimates

Nothing in this Announcement is intended or shall be deemed to be a forecast, projection or estimate of the future financial performance of Bidco or Tax Systems for any period and no statement in this Announcement should be interpreted to mean that cash flow from operations, earnings, or earnings per share or income for the current or future financial years would necessarily match or exceed the historical published cash flow from operations, earnings, earnings per share or income of Tax Systems.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) of the Code applies must be made by no later than 3:30 p.m. (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3:30 p.m. (London time) on the 10th Business Day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) of the Code applies must be made by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will normally be deemed to be a single person for the purpose of Rule 8.3 of the Code.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and availability of hard copies

A copy of this Announcement and the display documents required to be published pursuant to Rule 26.1 of the Code will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Tax Systems' website at www.taxsystems.com/announcement by no later than 12 noon (London time) on the Business Day following this Announcement. Neither the content of any website referred to in this Announcement nor the content of any website accessible from hyperlinks is incorporated into, or forms part of, this Announcement.

Any person who is required to be sent a copy of this Announcement under the Code, and who has not received a hard copy of it, may request a hard copy of this Announcement (and any information incorporated by reference in this Announcement) by submitting a request in writing to Computershare, Corporate Action Projects, Bristol BS99 6AH or by calling Computershare on 0370 707 1238 or +44 370 707 1238 if calling from outside the United Kingdom. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 9:00 a.m. and 5:30 p.m., Monday to Friday excluding public holidays in England and Wales. Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

Save as otherwise referred to above, a hard copy of this Announcement will not be sent unless requested. Any such person may also request that all future documents, announcements and information in relation to the Acquisition should be sent to them in hard copy form.  

Relevant securities in issue

In accordance with Rule 2.9 of the Code, Tax Systems confirms that, as at the date of this Announcement its current issued share capital comprises 80,703,381 ordinary shares of one pence each admitted to trading on the London Stock Exchange's market for listed securities. Tax Systems does not hold any Tax Systems Shares in treasury. The International Securities Identification Number for Tax Systems Shares is GB00BDHLGB97.

Electronic communications

Please be aware that all addresses, electronic addresses (if any) and certain other information provided by the Tax Systems Shareholders, persons with information rights and other relevant persons for the receipt of communications from Tax Systems may be provided to offerors (including Bidco) during the Offer Period as required under Section 4 of Appendix 4 of the Code to comply with Rule 2.11I of the Code.

General

If you are in any doubt about the contents of this Announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

 

Appendix IConditions and Further Terms of the Acquisition and the Scheme

Part A: Conditions of the Acquisition

The Acquisition is conditional upon the Scheme becoming unconditional and becoming Effective, subject to the Code, by no later than the Long Stop Date or such later date (if any) as Bidco and Tax Systems may agree and (if required) the Panel and the Court may allow.

1. The Scheme shall be conditional on the following Conditions:

Scheme Approval

(a) the approval of the Scheme at the Court Meeting (or at any adjournment of any such meeting) by a majority in number representing 75 per cent. or more in value of the Scheme Shareholders (or the relevant class or classes thereof, if applicable) present and voting, either in person or by proxy; 

(b) the Special Resolution required to approve and implement the Scheme as set out in the notice of the General Meeting (including, without limitation, to amend Tax Systems' articles of association) being duly passed by the requisite majority required to pass such resolution at the General Meeting or at any adjournment of that meeting;

(c) the Rollover Resolution required pursuant to Rule 16.2 of the Code to approve the Rollover Arrangements and the Sweet Equity Arrangements as set out in the notice of the General Meeting being duly passed on a poll by the requisite majority required to pass such resolution at the General Meeting or at any adjournment of that meeting; and

(d) the sanction of the Scheme by the Court (without modification or with modification on terms acceptable to Bidco and Tax Systems) and the delivery, by no later than the Long Stop Date, of a copy of the Scheme Court Order to the Registrar of Companies.

2. In addition, subject as stated in Part B below and to the requirements of the Panel and in accordance with the Code, the Acquisition will be conditional upon the following Conditions and, accordingly, the Court Order will not be delivered to the Registrar of Companies unless such Conditions have been satisfied or, where relevant, waived:

Other third party clearances

(a) no government or governmental, quasi-governmental, supranational, statutory, administrative or regulatory body or association, institution or agency (including any trade agency) or any court tribunal in any jurisdiction (each a "Relevant Authority") having taken or instituted or given written notice of any action, proceeding, suit, investigation, enquiry or reference (and, in each case, not having withdrawn the same) or enacted, made or proposed and there not continuing to be outstanding any statute, regulation, order or decision that would or would reasonably be expected to:

(i) make the Acquisition or other acquisition of Tax Systems Shares, or control or management of Tax Systems by Bidco or any member of Wider Bidco Group void, unenforceable or illegal in any jurisdiction or directly or indirectly prohibit or otherwise materially restrict, materially delay or materially interfere with the implementation of, or impose material additional conditions or obligations with respect to, or otherwise materially challenge or require material amendment to the terms of, the Scheme or the Acquisition or other acquisition of any Tax Systems Shares, or control or management of Tax Systems by Bidco or any member of the Wider Bidco Group;

(ii) require, prevent or materially delay the divestiture (or alter the terms of any proposed divestiture) by the Wider Bidco Group (as a result of or in connection with the Acquisition) or the Wider Tax Systems Group of all or any material part of their respective businesses, assets or properties or impose any material limitation on their ability to conduct all or any part of their respective businesses and to own, control or manage any of their respective assets or properties;

(iii) impose any limitation on, or result in any material delay in, the ability of any member of the Wider Bidco Group to acquire or hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the Wider Tax Systems Group or on the ability of any member of the Wider Tax Systems Group to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares or other securities (or the equivalent) in, or to exercise management control over, any other member of the Wider Tax Systems Group to an extent which is material in the context of the Wider Tax Systems Group taken as a whole or the Wider Bidco Group taken as a whole or material in the context of the Acquisition (as the case may be);

(iv) except pursuant to Chapter 3 of Part 28 of the Companies Act, require any member of the Wider Bidco Group (as a result of or in connection with the Acquisition) or of the Wider Tax Systems Group to acquire or offer to acquire any shares or other securities (or the equivalent) or interest in any member of the Wider Tax Systems Group or any member of the Wider Bidco Group owned by a third party (other than in the implementation of the Acquisition);

(v) other than in the implementation of the Acquisition, require the divestiture by any member of the Wider Bidco Group of any shares, securities or other interests in any member of the Wider Tax Systems Group;

(vi) impose any material limitation on, or result in any material delay in, the ability of any member of the Wider Bidco Group or the Wider Tax Systems Group to integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider Bidco Group and/or the Wider Tax Systems Group;

(vii) result in any member of the Wider Tax Systems Group ceasing to be able to carry on business under any name under which it presently does so, to an extent which is material in the context of the Wider Tax Systems Group taken as a whole or the Wider Bidco Group taken as a whole or material in the context of the Acquisition (as the case may be);

(viii) otherwise materially and adversely affect the business, assets, financial or trading position or profits of any member of the Wider Tax Systems Group,

and all applicable waiting and other time periods (including extensions thereof) during which any such Relevant Authority could decide to take, institute or threaten any such action, proceeding, suit, investigation, enquiry or reference having expired, lapsed or been terminated; provided that, for the avoidance of doubt, this paragraph 2.(a) shall not apply to any action taken by a Relevant Authority in relation to a contract or arrangement with a member of the Wider Tax Systems Group entered into in the ordinary course of its business;

(b) other than in relation to the approvals referred to in paragraph 2(a) of this Appendix I, all material filings, applications and/or notifications which are necessary under applicable legislation or regulation of any relevant jurisdiction having been made and all relevant waiting periods and other time periods (including any extensions thereof) under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated and all applicable statutory or regulatory obligations in any jurisdiction having been complied with in each case in respect of the Scheme and the Acquisition or, except pursuant to Chapter 3 of Part 28 of the Companies Act, other acquisition of any shares or other securities in, or control or management of, Tax Systems or any member of the Wider Tax Systems Group by any member of the Wider Bidco Group or (except as Disclosed) the carrying on by any member of the Wider Tax Systems Group of its business;

(c) other than in relation to the approvals referred to in paragraph 2(a) of this Appendix I, all Authorisations which are necessary in any jurisdiction for or in respect of the Acquisition and other acquisition of any Tax Systems Shares, or control of Tax Systems, by Bidco or any member of the Wider Bidco Group being obtained on terms and in a form reasonably satisfactory to Bidco from appropriate Relevant Authorities, or (except as Disclosed) from any persons or bodies with whom any member of the Wider Tax Systems Group has entered into contractual arrangements or material business relationships, and such Authorisations, together with all other Authorisations necessary for any member of the Wider Tax Systems Group to carry on its business (except as Disclosed) (where the absence of any such Authorisations would be material and adverse in the context of the Acquisition) remaining in full force and effect and no written notice of any intention to revoke, suspend, restrict or modify or not to renew any of the same having been given.

Confirmation of absence of adverse circumstances

(d) except as Disclosed, there being no provision of any agreement, arrangement, licence, lease, franchise, permit or other instrument to which any member of the Wider Tax Systems Group is a party or by or to which any such member or any of its assets is or may be bound, entitled or subject which, as a result of the implementation of the Acquisition or other acquisition by Bidco or any member of the Wider Bidco Group of any Tax Systems Shares, or change in the control or management of Tax Systems, would or would reasonably be expected to result in (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole):

(i) any monies borrowed by or any other indebtedness (actual or contingent) of, or any grant available to, any such member of the Wider Tax Systems Group becoming repayable, or capable of being declared repayable, immediately or earlier than the stated repayment date or the ability of such member to borrow monies or incur any indebtedness being withdrawn or inhibited;

(ii) other than in the ordinary course of business, the creation or enforcement of any mortgage, charge or other security interest over the whole or any material part of the business, property or assets of any such member of the Wider Tax Systems Group or any such mortgage, charge or other security interest (whenever arising or having arisen) becoming enforceable;

(iii) any material rights, assets or interests of any such member of the Wider Tax Systems Group being or falling to be disposed of or ceasing to be available to any member of the Wider Tax Systems Group or any right, under which any such asset or interest could be required to be disposed of or could cease to be available to any member of the Wider Tax Systems Group, being exercised or reasonably likely to be exercised;

(iv) the interest or business of any such member of the Wider Tax Systems Group in or with any other person, firm or company (or any agreements or arrangements relating to such interest or business) being terminated or adversely modified or affected;

(v) any such member of the Wider Tax Systems Group ceasing to be able to carry on business under any name under which it presently does so;

(vi) the value of any such member of the Wider Tax Systems Group or its financial or trading position or prospects being prejudiced or adversely affected;

(vii) any such agreement, arrangement, licence, lease, franchise, permit or other instrument being terminated or the rights, liabilities, obligations or interests of any member of the Wider Tax Systems Group being adversely modified or adversely affected or any obligation or liability arising or any adverse action being taken or arising thereunder;

(viii) any liability of any member of the Wider Tax Systems Group to make any severance, termination, bonus or other payment to any of its directors, or other officers;

(ix) the creation or acceleration of any liability (actual or contingent) by any such member of the Wider Tax Systems Group, other than trade creditors or other liabilities incurred in the ordinary course of business; or

(x) any requirement on any member of the Wider Tax Systems Group to acquire, subscribe, pay up or repay any shares or other securities (or the equivalent);

and no event having occurred which, under any provision of any agreement, arrangement, licence or other instrument to which any member of the Wider Tax Systems Group is a party or by or to which any such member or any of its assets is or may be bound or subject, would or would reasonably be expected to result in any events or circumstances as are referred to in this paragraph 2.(d) (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

No material transactions, claims or changes in the conduct of the business of the Tax Systems Group

(e) except as Disclosed, no member of the Wider Tax Systems Group having since 30 June 2018:

(i) issued or agreed to issue or authorised or proposed the issue of additional shares of any class, or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible or exchangeable securities or transferred or sold (or agreed to transfer or sell) any shares out of treasury (except, in each case, (a) as between Tax Systems and its wholly owned subsidiaries or between its wholly owned subsidiaries, or (b) upon, pursuant to or in respect of the exercise of any options or vesting of any awards granted under the Tax Systems Share Option Plan and the Tax Systems Option and Warrant Arrangements);

(ii) recommended, declared, paid or made or resolved to recommend, declare, pay or make any bonus, dividend or other distribution, whether payable in cash or otherwise other than dividends or other distributions, whether payable in cash or otherwise, lawfully paid or made by any wholly-owned subsidiary of Tax Systems to Tax Systems or any of its wholly-owned subsidiaries;

(iii) (except for transactions between Tax Systems and its wholly-owned subsidiaries, or between its wholly-owned subsidiaries or transactions in the ordinary course of business) implemented or authorised, or announced its intention to implement or authorise, any merger, demerger, reconstruction, amalgamation, scheme or commitment, acquired or disposed of or transferred, mortgaged or charged, or created any other security interest over, any asset or any right, title or interest in any asset (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(iv) entered into, or authorised the entry into, any joint venture, asset or profit sharing arrangement, partnership or merger of businesses or corporate entities (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(v) other than pursuant to the Acquisition and except for transactions between Tax Systems and its wholly owned subsidiaries or between wholly owned subsidiaries of Tax Systems, implemented or authorised any reconstruction, amalgamation, scheme or other transaction or arrangement with a substantially equivalent effect (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(vi) purchased, redeemed or repaid any of its own shares or other securities or reduced or made or authorised any other change in its share capital (except, in each case, where relevant, (a) as between Tax Systems and wholly owned subsidiaries of Tax Systems or between the wholly owned subsidiaries of Tax Systems, or (b) upon, pursuant to or in respect of the exercise of any options or vesting of any awards granted under the Tax Systems Share Option Plan and the Tax Systems Option and Warrant Arrangements);

(vii) made or authorised any change in its loan capital or issued or authorised the issue of any debentures or incurred or increased any indebtedness (except in the ordinary course of business) or contingent liability (except, in each case, where relevant, as between Tax Systems and wholly owned subsidiaries of Tax Systems or between the wholly owned subsidiaries of Tax Systems) (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(viii) entered into, varied or terminated, or authorised the entry into, variation or termination of, any contract, commitment or arrangement (whether in respect of capital expenditure, real estate or otherwise) which is outside the ordinary course of business or which is of a long term, onerous or unusual nature or magnitude or which involves, or would reasonably be expected to involve, an obligation of a nature or magnitude which is materially restrictive on the business of any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(ix) been unable or deemed unable, or admitted in writing that it is unable, to pay its debts as they fall due or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(x) commenced negotiations with any of its creditors or taken any step with a view to rescheduling or restructuring any of its indebtedness or entered into a composition, compromise, assignment or arrangement with any of its creditors whether by way of a voluntary arrangement, scheme of arrangement, deed of compromise or otherwise (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(xi) (other than in respect of a member of the Wider Tax Systems Group which is dormant and solvent at the relevant time) taken any corporate action or had any legal proceedings started, served or threatened against it or any documents filed or faxed in court for its winding-up (voluntary or otherwise), dissolution or reorganisation (or for any analogous proceedings or steps in any jurisdiction) or for the appointment of a liquidator, provisional liquidator, receiver, administrator, administrative receiver, trustee or similar officer (or for the appointment of any analogous person in any jurisdiction) of all or any of its assets and revenues or had written notice given of the intention to appoint any of the foregoing to it (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(xii) except in the ordinary course of business, waived, compromised, settled, abandoned or admitted any dispute, claim or counter-claim whether made or potential and whether by or against any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(xiii) made any material alteration to its constitutional documents (other than the amendments to Tax Systems' articles of association as required in connection with the Acquisition);

(xiv) entered into, or varied the terms of, or terminated or given notice of termination of, in each case except in the ordinary course of business, any service agreement, commitment or arrangement with any director or senior executive of any member of the Wider Tax Systems Group;

(xv) proposed, agreed to provide, or agreed to modify to any material extent the terms of, any share option scheme, incentive scheme or other benefit relating to the employment or termination of employment of any person employed by any member of the Wider Tax Systems Group; or

(xvi) entered into any contract, commitment or arrangement or passed any resolution or made any offer (which remains open for acceptance) to effect, or proposed or announced any intention to effect, any of the transactions, matters or events referred to in this paragraph 2.(e) (otherwise than where permitted or referred to in this paragraph 2.(e));

(f) except as Disclosed, since 30 June 2018:

(i) no adverse change having occurred, and no circumstances having arisen which would reasonably be expected to result in any adverse change, in the business, assets, financial or trading position or profits of any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings in any jurisdiction having been threatened, announced, instituted or remaining outstanding by, against or in respect of any member of the Wider Tax Systems Group or to which any member of the Wider Tax Systems Group is a party (whether as claimant or defendant or otherwise) and no investigation by any Relevant Authority or other investigative body against or in respect of any member of the Wider Tax Systems Group having been threatened in writing, announced, instituted or remaining outstanding by, against or in respect of any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(iii) no enquiry, review or investigation by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Tax Systems Group having been threatened in writing, announced or instituted or remaining outstanding by, against or in respect of any member of the Wider Tax Systems Group, in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole;

(iv) no steps having been taken and no omissions having been made which would result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Tax Systems Group which is necessary for the proper carrying on of its business, and the withdrawal, cancellation, termination or modification of which would have a material adverse effect on the Wider Tax Systems Group taken as a whole; and

(v) no contingent or other liability having arisen outside the ordinary course of business which would or would reasonably be expected to adversely affect any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(g) except as Disclosed, Bidco not having discovered that:

(i) any financial, business or other information concerning the Wider Tax Systems Group publicly announced on or prior to the date of this Announcement at any time by any member of the Wider Tax Systems Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(ii) there is any information which renders inaccurate any information publicly announced prior to the date of this Announcement by or on behalf of any member of the Wider Tax Systems Group (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

(iii) any member of the Wider Tax Systems Group is subject to any liability, contingent or otherwise, other than in the ordinary course of business (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole); or

(iv) there is or is likely to be any obligation or liability (whether actual or contingent) to make good, repair, re-instate or clean up any property now or previously owned, occupied, operated or made use of or controlled by any past or present member of the Wider Tax Systems Group under any environmental legislation, regulation, notice, circular or order of any Relevant Authority in any jurisdiction (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole);

Anti-corruption, sanctions and criminal property

(h) save as Disclosed, Bidco not having discovered (in each case to an extent which is material in the context of the Wider Tax Systems Group taken as a whole) that:

(i) any past or present member, director or officer of the Wider Tax Systems Group is or has at any time engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010, the US Foreign Corrupt Practices Act of 1977 or any other applicable anti-corruption legislation;

(ii) any asset of any member of the Wider Tax Systems Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition);

(iii) any past or present member, director or officer of the Wider Tax Systems Group, or any other person for whom any such person may be liable or responsible, has engaged in any business with, made any investments in, made any funds or assets available to or received any funds or assets from: (a) any government, entity or individual in respect of which US or European Union persons, or persons operating in those territories, are prohibited from engaging in activities or doing business, or from receiving or making available funds or economic resources, by US or European Union laws or regulations, including the economic sanctions administered by the US Office of Foreign Assets Control, or HM Treasury in the UK; or (b) any government, entity or individual targeted by any of the economic sanctions of the United Nations, the US, the European Union or any of its member states; or

(iv) any member of the Wider Tax Systems Group has been engaged in any transaction with any person targeted by any of the economic sanctions of the United Nations, the US, the European Union or any of its member states which would cause Bidco to be in breach of any law or regulation upon its acquisition of Tax Systems, including the economic sanctions of the US Office of Foreign Assets Control, or HM Treasury & Customs in the UK; and

No tax abuse or avoidance notice

(i) except as Disclosed, Bidco not having discovered that any member of the Wider Tax Systems Group has received any notice, assessment or claim from any tax authority to the effect that:

(i) any such member has advised on or knowingly been involved in any transaction or series of transactions the main purpose, or one of the main purposes, of which was the avoidance of tax, either for itself or any customer of the Wider Tax Systems Group;

(ii) any such member has advised on or been party to any arrangements that were notifiable under the disclosure of tax avoidance scheme rules provided for in part 7 of the Finance Act 2004, Schedule 11A VAT 1994 or Schedule 17 of the Finance (No.2) Act 2017 (and, in each case, related regulations), either for itself of any customer of the Wider Tax Systems Group and which were not so notified;

(iii) any such member has advised on or taken any action as a result of which it could be treated as having enabled abusive tax arrangements within the meaning of Schedule 16 Finance (No.2) Act 2017; or

(iv) any circumstances have arisen which would result in any such member being guilty of an offence under section 45 or section 46 of the Criminal Finances Act 2017.

Part B: Certain further terms of the Acquisition

1. Bidco reserves the right (subject to the requirements of the Code and the Panel) to waive, in whole or in part, the Conditions in paragraph 2 of Part A of this Appendix.

2. If Bidco is required by the Panel to make an offer for Tax Systems Shares under the provisions of Rule 9 of the Code, Bidco may make such alterations to any of the above Conditions and terms of the Acquisition as are necessary to comply with the provisions of that Rule.

3. The Acquisition shall lapse unless all the above Conditions in paragraphs 1.(a), 1.(b), 1.(c) and 2 of Part A of this Appendix have been fulfilled or, where permitted, waived by 11:59 p.m. on the date immediately preceding the date of the Scheme Court Hearing. Such date may not be further extended, other than with the agreement of Bidco, Tax Systems and the Panel. 

4. Bidco shall be under no obligation to waive (if capable of waiver), to determine to be or remain satisfied or to treat as fulfilled any of the Conditions in paragraph 2 of Part A of this Appendix by a date earlier than the latest date for the fulfilment of that Condition notwithstanding that the other Conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.

5. Under Rule 13.5 of the Code, Bidco may not invoke a Condition so as to cause the Acquisition not to proceed, to lapse or to be withdrawn unless the circumstances which give rise to the right to invoke the Condition are of material significance to Bidco in the context of the Acquisition. The Conditions contained in paragraph 1 of Part A of this Appendix are not subject to this provision of the Code.

6. The Tax Systems Shares to be acquired under the Acquisition shall be acquired fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the date of this Announcement. Accordingly, without prejudice to paragraph 2 of this Announcement, insofar as any dividend or other distribution or return of value is authorised, declared, made or paid in respect of Tax Systems Shares on or after the date of this Announcement and prior to the Effective Date, Bidco reserves the right to reduce the Acquisition Price by the amount of any such dividend or other distribution except where the Tax Systems Shares are or will be acquired pursuant to the Scheme on a basis which entitles Bidco to receive the dividend, distribution or return of value and to retain it.

7. The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the Restricted Jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.

8. Bidco reserves the right, subject to the prior consent of the Panel, to implement the Acquisition by way of a Takeover Offer. In such event, the Takeover Offer will be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments to reflect the change in acquisition method. In the event that the Acquisition is implemented by way of a Takeover Offer, the Tax Systems Shares acquired under the Acquisition will be acquired fully paid and free from all liens, equities, charges, encumbrances, options, rights of pre-emption and any other third party rights and interests of any nature and together with all rights now or hereafter attaching or accruing to them, including voting rights and the right to receive and retain in full all dividends and other distributions (if any).

9. The Acquisition is governed by English law and is subject to the jurisdiction of the English courts and to the Conditions and further terms set out in this Appendix and those terms which will be set out in the Scheme Document. The Acquisition shall be subject to the applicable requirements of the Code, the Panel, the AIM Rules, the London Stock Exchange and the Financial Conduct Authority.

10. Each of the Conditions shall be regarded as a separate Condition and shall not be limited by reference to any other Condition.

11. The Acquisition shall lapse, and shall no longer bind Scheme Shareholders or Bidco if:

(a) in so far as the Acquisition or any matter arising from or relating to the Acquisition constitutes a concentration with a Community dimension within the scope of the Regulation, the European Commission either initiates proceedings under Article 6(1)(c) of the Regulation or makes a referral to a competent authority in the United Kingdom under Article 9(1) of the Regulation and there is then a CMA Phase 2 Reference; or

(b) in so far as the Acquisition or any matter arising from the Acquisition does not constitute a concentration with a Community dimension within the scope of the Regulation, the Acquisition or any matter arising from or relating to the Acquisition becomes subject to a CMA Phase 2 Reference,

in each case, before the date of the Court Meeting.

 

 

 

Appendix IISources of information and bases of calculation

In this Announcement, unless otherwise stated, or the context otherwise requires, the bases and sources used are set out below.

1. Unless otherwise stated, financial information relating to the Tax Systems Group has been extracted or derived (without any adjustment) from the Tax Systems Group's audited consolidated financial statements for the financial year ended 31 December 2017 or the unaudited results for the six month period ended 30 June 2018, as applicable. 

2. As at the Last Practicable Date, there were 80,703,381 Tax Systems Shares in issue.

3. The International Securities Identification Number for the Tax Systems Shares is GB00BDHLGB97.

4. The value of the issued and to be issued share capital of Tax Systems at the Acquisition Price has been calculated by multiplying the Acquisition Price of 110 pence per share by 91,450,599 issued and to be issued Tax Systems Shares, which consists of 80,703,381 Tax Systems Shares in issue as at the Last Practicable Date, plus 5,970,149 Tax Systems Shares to be issued as consideration following any exercise of the BGF Option, plus 3,362,641 Tax Systems Shares to be issued as consideration following the exercise of the Warrant plus 1,414,428 Tax Systems Shares to be issued as consideration following the exercise of the EMI Options.

5. The number of Scheme Shares entitled to be voted at the Court Meeting is 80,554,127 and has been calculated by subtracting the Excluded Shares from the 80,703,381 Tax Systems Shares in issue as at the Last Practicable Date.

6. Unless otherwise stated, all Closing Prices for Tax Systems Shares are closing middle market quotations derived from the AIM Appendix to the Daily Official List published by the London Stock Exchange, save that the volume weighted average price of a Tax Systems Share has been derived from Datastream.

 

 

Appendix III

Irrevocable Undertakings

Tax Systems Director's Irrevocable Undertakings

Gavin Lyons has given an irrevocable undertaking to vote (or procure the voting) in favour of the Special Resolution to be proposed at the General Meeting (or in the event that the Acquisition is implemented by way of a Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer) in relation to the following Tax Systems Shares, in which he or his family members are beneficially interested:

Name	Number of Tax Systems Shares in respect of which undertaking is given	Percentage of Tax Systems' issued share capital at the Last Practicable Date
Gavin Lyons	149,254	0.18%

 

This irrevocable undertaking will cease to be binding if:

(a) Bidco announces, with the consent of the Panel, that it does not intend to make or proceed with the Acquisition;

(b) the Scheme Document or the Offer Document (as the case may be) has not been posted within 28 days of the date of this Announcement (or within such longer period as Bidco and Tax Systems, with the consent of the Panel, determine); or

(c) the Acquisition lapses or is withdrawn in accordance with its terms.

Other Tax Systems Shareholders' Irrevocable Undertakings

Certain other Tax Systems Shareholders have given irrevocable undertakings to vote (or procure the voting) in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or in the event that the Acquisition is implemented by way of a Takeover Offer, to accept, or procure the acceptance of, the Takeover Offer) in relation to the following Tax Systems Shares:

Name	Number of Tax Systems Shares in respect of which undertaking is given	Percentage of Tax Systems' issued share capital at the Last Practicable Date	Percentage of Scheme Shares at the Last Practicable Date
MXC Capital Limited	20,655,461	25.59%	25.64%
Lombard Odier	11,954,816	14.81%	14.84%
Premier	5,678,060	7.04%	7.05%
Oliver Chadwick*	2,106,361	2.61%	2.61%
Total	40,394,698	50.05%	50.15%

 

*Oliver Chadwick's irrevocable undertaking includes a procurement obligation in respect of those Tax Systems Shares held by Charlotte Chadwick.

 

These irrevocable undertakings will cease to be binding if:

(a) Bidco announces, with the consent of the Takeover Panel, that it does not intend to make or proceed with the Acquisition;

(b) the Scheme Document or the Offer Document (as the case may be) has not been posted within 28 days of the date of this Announcement (or within such longer period as Bidco and Tax Systems, with the consent of the Panel, determine); or

(c) the Acquisition lapses or is withdrawn in accordance with its terms.

In addition, the irrevocable undertakings provided by Lombard Odier and Premier will also cease to be binding in the event that a person other than Bidco or a subsidiary of Bidco or any person acting in concert with Bidco announces a firm intention to make an offer (in accordance with Rule 2.7 of the Code) to acquire the Tax Systems Shares where the value of the consideration per Tax Systems Share is at least 121 pence per Tax Systems Share as at the date on which such firm intention to make an offer is announced.

 

Appendix IV

Definitions

"Acquisition"		the proposed recommended acquisition by Bidco for the entire issued and to be issued share capital of Tax Systems by means of the Scheme, on the terms and subject to the conditions set out in this Announcement and to be set out in the Scheme Document (or the Takeover Offer, under certain circumstances as described in this Announcement)
"Acquisition Price"		110 pence per Tax Systems Share
"Agent"		Global Loan Agency Services Limited (acting as agent under the Facilities Agreement)
"AIM"		the market of that name operated by the London Stock Exchange
"AIM Rules"		the AIM Rules for Companies published by the London Stock Exchange, as amended from time to time
"Announcement"		means this announcement made pursuant to Rule 2.7 of the Code
"Authorisations"		regulatory authorisations, orders, recognitions, grants, consents, clearances, confirmations, certificates, licences, permissions or approvals
"BGF Option"		the option over up to 5,970,149 Tax Systems Shares held by BGF Investment LP on the terms of the BGF Option Deed
"BGF Option Deed"		the agreement between the Company and BGF Investment LP dated 26 July 2016 relating to the BGF Option
"Bidco"		Stripes Bidco Limited, a company incorporated in England and Wales with registered number 11808228, whose registered office address is at One Eagle Place, London, SW1Y 6AF
"Bidco Group"		Bidco and its subsidiary undertakings and, where the context permits, each of them
"Board"		in relation to Bidco or Tax Systems, the board of directors of the relevant company
"Bowmark"		Bowmark Capital LLP, the discretionary manager of the Bowmark Funds
"Bowmark Funds"		the investment funds managed by Bowmark, specifically Bowmark Capital Partners V, L.P., Bowmark Investment Partnership V, L.P. and, where applicable, the Co-Invest Funds
"Business Day"		a day (other than Saturdays, Sundays and public or bank holidays in the UK) on which banks are generally open for business in the City of London
"Closing Price"		the middle market price of a Tax Systems Share at the close of business on the day to which such price relates, as derived from the AIM Appendix to the Daily Official List for that day
"CMA Phase 2 Reference"		a reference of the Acquisition to the chair of the Competition and Markets Authority for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013
"Co-Invest Funds"		Bowmark Investment Partnership-G, L.P., Bowmark Investment Partnership-H, L.P. and Bowmark Investment Partnership-I, L.P., being limited partnerships established by Bowmark for the purposes of investing in the Acquisition, which have appointed Bowmark as discretionary manager and the limited partners of which are clients of The Private Equity Group of J.P. Morgan Investment Management Inc. or persons in respect of whom J.P. Morgan Chase Bank N.A. acts as trustee
"Code"		the City Code on Takeovers and Mergers issued from time to time by the Panel
"Companies Act"		the Companies Act 2006, as amended from time to time
"Competition and Markets Authority"		a UK statutory body established under the Enterprise and Regulatory Reform Act 2013
"Conditions"		the conditions of the Acquisition (including the Scheme) set out in Part A of Appendix I to this Announcement and to be set out in the Scheme Document
"Court"		the High Court of Justice, Business and Property courts of England and Wales, Companies Court
"Court Meeting"		the meeting(s) of the Scheme Shareholders to be convened by order of the Court pursuant to section 896 of the Companies Act for the purpose of considering, and if thought fit, approving the Scheme (with or without amendment) and any adjournment thereof
"Court Order"		the order of the Court sanctioning the Scheme
"CREST"		the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI 2001/3755) in respect of which Euroclear is the Operator (as defined in such Regulations) for the paperless settlement of trades in securities and the holding of uncertificated securities
"Daily Official List"		the daily official list of the London Stock Exchange
"Dealing Disclosure"		has the meaning given to it by Rule 8 of the Code
"Disclosed"		information which has been either: (a) fairly disclosed by, or on behalf of, Tax Systems to Bidco (or its advisers) in the data room established by Tax Systems for the purposes of the Acquisition, on or before 5.30 p.m. on 6 February 2019; (b) disclosed in the annual report and accounts for Tax Systems for the financial period ended 31 December 2017 or the unaudited interim results for Tax Systems for the six months ended 30 June 2018; (c) disclosed in any announcement to a regulatory information service by, or on behalf of, Tax Systems, prior to the publication of this Announcement; (d) disclosed in this Announcement; or (e) fairly disclosed to Bidco (or its respective officers, employees, agents or advisers) in writing on or before the Business Day prior to the date of this Announcement (including all matters fairly disclosed in the written replies, correspondence, documentation and information provided in an electronic data room or sent to any member of the Bidco Group or Bowmark or their affiliates or any of their professional advisers during the due diligence process and whether or not in response to any specific request for information made by any member of the Bidco Group or Bowmark or their affiliates or any of their professional advisers)
"EC Regulation"		Regulation Council Regulation (EC) No 139/2004
"Effective"		the Scheme having become effective in accordance with its terms, upon delivery of the Scheme Court Order to the Registrar of Companies
"Effective Date"		the date upon which the Scheme becomes Effective
"EMI Options"		options over Tax Systems Shares intended to qualify as tax-advantaged Enterprise Management Incentive options pursuant to Schedule 5 of the Income Tax (Earnings and Pensions) Act 2003
"Equity Commitment Letters"		the equity commitment letters dated 13 February 2019 between each of the Bowmark Funds and Bidco, and each an "Equity Commitment Letter"
"Equity Terms Agreement"		the equity terms agreement dated 13 February 2019 between the Bowmark Funds, Bidco, Topco, Midco 1, Midco 2 and the Rollover Managers
"Euroclear"		Euroclear UK and Ireland Limited
"Excluded Shares"		(a) any Tax Systems Shares held by Bidco or, otherwise, directly or indirectly by the Bowmark Funds; (b) any Tax Systems Shares held in treasury from time to time; and (c) any Tax Systems Shares registered in the name of or beneficially owned by the Rollover Managers, their nominees or any person acting in concert with the Rollover Managers for the purposes of the Code at any relevant date or time
"Excluded Shareholders"		the holders of Excluded Shares
"Facilities Agreement"		the senior and supersenior multicurrency term and revolving facilities agreement dated 13 February 2019 and entered into between, amongst others, Bidco (as borrower), HSBC UK Bank and Five Arrows Managers LLP (as arrangers), Global Loan Agency Services Limited (as agent) and GLAS Trust Corporation Limited (as security agent)
"Financial Conduct Authority"		the UK Financial Conduct Authority or its successor from time to time
"finnCap"		finnCap Ltd, Joint Rule 3 Adviser, Nominated Adviser and Broker to Tax Systems
"Forms of Proxy"		the forms of proxy for use at the Court Meeting and at the General Meeting which will accompany the Scheme Document
"GCA Altium"		GCA Altium Limited, financial adviser to Bowmark and Bidco in relation to the Acquisition
"General Meeting"		the general meeting of Tax Systems Shareholders (including any adjournment thereof) to be convened in connection with the Scheme, notice of which will be set out in the Scheme Document
"Independent Directors"		the Tax Systems Directors excluding Gavin Lyons
"Last Practicable Date"		12 February 2019, being the last practicable date prior to the publication of this Announcement
"Lenders"		has the meaning given to it in the Facilities Agreement
"Lombard Odier"		Lombard Odier Asset Management (Europe) Limited
"London Stock Exchange"		London Stock Exchange Group plc, a public limited company incorporated in England and Wales with registered number 05369106
"Long Stop Date"		13 August 2019, or such later date (if any) as may be agreed by Bidco and Tax Systems (with the consent of the Panel) and the approval of the Court (if such approval is required)
"LTIP"		the arrangements pursuant to which the LTIP Holders have acquired Subsidiary Shares
"LTIP Holders"		the holders of Subsidiary Shares, being the Rollover Managers (other than Daran Gibney) and the Non-Rollover Managers
"Midco 1"		Stripes Midco Limited, a company incorporated in England and Wales (company number 11807938 whose registered office is at One Eagle Place, London, SW1Y 6AF, a wholly owned subsidiary of Topco
"Midco 2"		Stripes Holdco Limited, a company incorporated in England and Wales (company number 11808094 whose registered office is at One Eagle Place, London, SW1Y 6AF, a wholly owned subsidiary of Midco 1
"Non-Rollover Managers"		Paul Gibson, Kevin Goggin and Grant Le Brun
"Oakley Advisory"		Oakley Advisory Limited, Joint Rule 3 Adviser to Tax Systems
"Offer Period"		in relation to Tax Systems, has the meaning given to it in the Code, which period commenced on 7 February 2019
"Opening Position Disclosure"		has the meaning given to it in Rule 8 of the Code
"Panel"		the Panel on Takeovers and Mergers
"Premier"		Premier Fund Managers Limited
"Put and Call Option Deed"		the put and call option deed dated 13 February 2019 between Topco, Midco 1, Midco 2, Bidco and the Rollover Managers (other than Gavin Lyons and Daran Gibney)
"Registrar of Companies"		the Registrar of Companies in England and Wales
	"Regulation"		Council Regulation (EC) No 139/2004
"Relevant Authority"		has the meaning given to it in paragraph 2.(a) of Appendix I to this Announcement
"Resolutions"		together the Special Resolution and Rollover Resolution
"Restricted Jurisdiction"		any jurisdiction where local laws or regulations may result in a significant risk of civil, regulatory or criminal exposure if the information concerning the Acquisition is sent or made available to Tax Systems Shareholders in that jurisdiction
"Rollover Arrangements"		the arrangements between Bidco and the Rollover Managers as documented in the Sale and Purchase Agreement, the Put and Call Option Deed and the Equity Terms Agreement
"Rollover Managers"		Gavin Lyons, Andrew Dancer, Andrew Mills and Daran Gibney
"Rollover Resolution"		the ordinary resolution to approve the Rollover Arrangements and the Sweet Equity Arrangements to be considered at the General Meeting
"Sale and Purchase Agreement"		the conditional sale and purchase agreement dated 13 February 2019 between Bidco and the LTIP Holders
"Scheme"		the proposed scheme of arrangement under Part 26 of the Companies Act between Tax Systems and the Scheme Shareholders to implement the Acquisition with or subject to any modification, addition or condition approved or imposed by the Court and agreed by Tax Systems and Bidco
"Scheme Court Hearing"		the hearing of the Court to sanction the Scheme under section 899 of the Companies Act
"Scheme Court Order"		the order of the Court sanctioning the Scheme under section 899 of the Companies Act
"Scheme Document"		the document to be despatched to (among others) Tax Systems Shareholders including, among other things, details of the Scheme required by section 897 of the Companies Act, the full terms and conditions of the Scheme and the notices of the Tax Systems Meetings
"Scheme Record Time"		the time and date to be specified as such in the Scheme Document or such later time and/or date as Bidco and Tax Systems may agree
"Scheme Shareholder"		holders of Scheme Shares
"Scheme Shares"		all Tax Systems Shares: (a) in issue at the date of the Scheme Document; (b) issued after the date of the Scheme Document and before the Voting Record Time (if any); and (c) issued at or after the Voting Record Time and before the Scheme Record Time in respect of which the original or any subsequent holders thereof are, or shall have agreed in writing to be, bound by the Scheme (if any), in each case excluding the Excluded Shares
"Significant Interest"		in relation to an undertaking, a direct or indirect interest of 20 per cent. or more of (i) the total voting rights conferred by the equity share capital (as defined in section 548 of the Companies Act) of such undertaking or (ii) the relevant partnership interest
"Special Resolution"		the special resolution to approve the implementation of the Scheme to be considered at the General Meeting
"Subsidiary Shares"		the A ordinary shares in the capital of Tax Systems Holdings, a wholly owned subsidiary of Tax Systems
"Sweet Equity Arrangements"		has the meaning given to it in paragraph 10 of this Announcement
"Takeover Offer"		should the Acquisition be implemented by way of a takeover offer as defined in Chapter 3 of Part 28 of the Companies Act, the offer to be made by or on behalf of Bidco to acquire the entire issued and to be issued share capital of Tax Systems and, where the context requires, any subsequent revision, variation, extension or renewal of such offer and includes any election available thereunder
"Tax Systems" or the "Company"		Tax Systems plc, a company incorporated in England and Wales with registered number 04998151, whose registered office is at Magna House, Ground Floor, 18-32 London Road, Staines-Upon-Thames, TW18 4BP
"Tax Systems Directors"		the directors of Tax Systems at the date of this Announcement
"Tax Systems Group"		Tax Systems and its subsidiaries and subsidiary undertakings
"Tax Systems Holdings"		Tax Systems Holdings Limited, a company incorporated in England and Wales with registered number 10805509, whose registered office is at Magna House, Ground Floor, 18-32 London Road, Staines-Upon-Thames, TW18 4BP
"Tax Systems Meetings"		the Court Meeting and the General Meeting
"Tax Systems Option and Warrant Arrangements"		the BGF Option and the Warrant
"Tax Systems Share"		an ordinary share of 1 pence in the capital of Tax Systems
"Tax Systems Share Option Plan"		the Tax Systems Share Option Plan 2017
"Tax Systems Shareholders"		the holders of Tax Systems Shares from time to time
"Third Party"		each of a central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever performing a similar function in any jurisdiction
"Topco"		Stripes Topco Limited, a company incorporated in Jersey (registered number 128255) whose registered office is at 22 Grenville Street, St Helier, Jersey JE4 8PX, the ultimate holding company of Bidco
"UK" or "United Kingdom"		the United Kingdom of Great Britain and Northern Ireland
"United States" or "US"		the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and all other areas subject to its jurisdiction
"US Exchange Act"		the US Securities Exchange Act of 1934, as amended from time to time
"Voting Record Time"		the date and time specified in the Scheme Document by reference to which entitlement to vote at the Court Meeting or the General Meeting (as applicable) will be determined, expected to be 6:00 p.m. on the day which is two Business Days before the date of the Court Meeting or General Meeting (as applicable) or, if the Court Meeting or General Meeting (as applicable) is adjourned, 6:00 p.m. on the day which is two Business Days before the date of such adjourned meeting
"Warrant"		the warrant instrument between the Company and MXC Guernsey Limited dated 23 December 2015 as amended and restated on 30 June 2016 and 2 August 2017
"Wider Bidco Group"		Bidco and its subsidiaries, subsidiary undertakings, associated undertakings, holding companies, and their respective subsidiaries, subsidiary undertakings, associated undertakings, holding companies and any other body corporate, partnership, joint venture or person in which Bidco and all such undertakings (aggregating their interests) have a Significant Interest or which have a Significant Interest in Bidco or any other member of the Wider Bidco Group, in each case other than any member of the Wider Tax Systems Group
"Wider Tax Systems Group"		Tax Systems and its subsidiaries, subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which Tax Systems and all such undertakings (aggregating their interests) have a Significant Interest

 

For the purposes of this Announcement, "subsidiary", "subsidiary undertaking", "undertaking" and "associated undertaking" have the respective meanings given thereto by the Companies Act.

All references to "pounds", "pounds Sterling", "Sterling", "£", "pence", "penny" and "p" are to the lawful currency of the United Kingdom.

All the times and/or dates referred to in this Announcement are to those times and/or dates as determined by Greenwich Mean Time, unless otherwise stated.

References to the singular include the plural and vice versa.

 

END