What does a whitewash resolution accomplish in takeover regulations?

A whitewash resolution is a mechanism used in takeover regulations, primarily within the context of the UK takeover code, to allow certain transactions to occur without triggering the requirement for a mandatory bid. When shareholders approve a whitewash resolution, it essentially exempts the party making the acquisition from needing to make a mandatory bid for the entire company. This usually comes into play when a company has significant shareholdings in another company and wishes to increase its stake without being compelled to make an offer for all shares, which could be financially burdensome or strategically undesirable.

The process of obtaining shareholder approval ensures that the interests of existing shareholders are considered before allowing this exemption. Thus, if a whitewash resolution is passed, it mitigates the usual requirement for a mandatory bid, thus streamlining the acquisition process and allowing for more flexibility in corporate maneuvers.

This understanding of whitewash resolutions highlights their pivotal role in facilitating certain strategic acquisitions while ensuring that shareholder rights are still acknowledged through the approval process.