Takeover Panel consultation on companies to which the Takeover Code applies

7 minutes de lecture
02 mai 2024

On 24 April 2024, the Code Committee of the Takeover Panel published its Consultation Paper (PCP 2024/1) on 'Companies to which the Takeover Code applies'. The Code Committee is proposing a new jurisdictional framework which would narrow the scope of the companies to which the City Code on Takeovers and Mergers (the "Takeover Code") applies - refocusing the application of the Takeover Code on companies which are registered and listed (or were recently listed) in the UK.

The Takeover Code currently applies to UK-registered companies that are also UK-listed. It also applies to a range of UK-registered companies that are not UK-listed if they satisfy a 'residency' test, meaning that their place of central management and control is in the UK. The Code Committee is proposing to abolish this 'residency' test, and for the scope of companies to which the amended Takeover Code applies to be significantly narrower than under the current Takeover Code.



Under the proposals, the Takeover Code would only apply to a company which has its registered office in the UK, the Channel Islands or the Isle of Man (a "UK registered") and either:

  • any of the company's securities are admitted to trading on a UK regulated market (e.g. the London Stock Exchange's main market for listed securities), a UK multilateral trading facility (e.g. AIM or the Aquis Stock Exchange) or a stock exchange in the Channel Islands or the Isle of Man (e.g. The International Stock Exchange ('TISE')) (a "UK listed company"); or
  • the company was a UK listed company at any time during the three years prior to the 'relevant date' (defined as the date on which an announcement is made of a proposed or possible offer for the company or the date on which some other event occurs in relation to the company which has significance under the Takeover Code).

The Takeover Code will continue not to apply to a company which has its registered office outside of the UK, the Channel Islands or the Isle of Man.

1. Proposals

The Code Committee is proposing to introduce transitional arrangements which will apply for three years from the implementation date of the proposed amendments (the "implementation date") - referred to as the "transition period" - in relation to companies to which the Takeover Code applies immediately prior to the implementation date but which will fall outside the scope of the new regime ("transition companies"). This will provide such a 'transition company' with an opportunity to put in place alternative arrangements such as making appropriate amendments to its articles of association or enabling shareholders to exit their investment if they do not wish to be shareholders in the company without the protections afforded by the Takeover Code.

During the transition period, the 'residency' test will continue to apply and the Takeover Code will apply to a transition company on the relevant date only if it satisfies the 'residency' test at that time.

2. Summary of how the Proposals will impact companies

In summary, the proposals contained in the Consultation Paper would mean:

  • A UK listed company subject to the current Takeover Code will continue to be subject to the Takeover Code under the new proposals and no transitional arrangements will apply to it.
  • A UK listed company subject to the Takeover Code prior to the implementation date but which ceases to be UK listed in the transition period will continue to be subject to the Takeover Code for three years after delisting.
  • If a private company was UK listed in the 10 years before the implementation date, the company will be a Takeover Code company until the earlier of: (i) the end of the transition period and (ii) the end of the 10 year run-off period under paragraphs (A) to (D) of section 3(a)(ii) of the 'Introduction' to the Takeover Code, provided that the company satisfies the 'residency' test on the relevant date.
  • Where a transition company is a non-UK-listed public company or a private company which was UK listed on a date less than three years prior to the implementation date, the company will cease to be a Takeover Code company at the end of the transition period.
  • Where a transition company is:
  1. a non-UK-listed public company which was listed between three and 10 years prior to the implementation date; or
  2. a private company which was UK listed between three and 10 years prior to the implementation date; or
  3. a public company which has never been listed;

the company will cease to be a Takeover Code company at the end of the transition period or, where a private company's run off period will expire before the end of the transition period, at the end of that run-off period.

3. Companies that would not be subject to the Takeover Code on implementation of the proposals

Following implementation of the proposals and subject to transitional arrangements (detailed above), the following UK-registered companies will fall outside the scope of the Takeover Code (notwithstanding that they may have their place of central management and control in the UK, Channel Islands or the Isle of Man - i.e. which currently meet the Takeover Panel's 'residency' test):

  • a public or private company which was UK-listed more than three years prior to the relevant date;
  • a public or private company whose securities are, or were previously, traded solely on an overseas market;
  • a public or private company whose securities are, or were previously, traded using a 'matched bargain' facility (e.g. JP Jenkins or Asset Match);
  • any other 'unlisted' public company; and
  • a private company which filed a prospectus at any time during the 10 years prior to the relevant date;

unless the company has been UK-listed at any time during the three years prior to the relevant date.

4. Close of consultation period and implementation of proposals

The Takeover Panel's consultation will close on 31 July 2024 and the Code Committee plans to publish a Response Statement in Autumn 2024 setting out the final amendments - with their implementation then approximately one month later.


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