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Agreements Restricting Reductions of Interests in Shares and Voting Agreements (Note 5 on the definition of “acting in concert”)
Proposals – amend Note 5 on the definition of “acting in concert” to:-
- Narrow the scope of Note 5 so that it applies only to an agreement between a person interested in shares and a company (and/or its directors) that restricts the person from reducing the number of shares in which it is interested — rather than to other types of “standstill” agreement. The parties will not be considered to be acting in concert provided the agreement permits the person both to accept, or to agree to accept, any offer.
- Codify the treatment of certain voting agreements: where a shareholder agrees to vote its shares as the board recommends on any resolution regarding the appointment and/or removal of directors, the shareholder and the directors will normally be considered to be acting in concert, on the basis that the shareholder is assisting the directors in preserving control of the board.
Definition of “Reverse Takeover” and Equality of Information (Rule 21.3)
Proposals:-
- Amend the definition of “reverse takeover” to clarify that it includes any acquisition by a Takeover Code company in consideration for which the company might need to increase its voting equity share capital by more than 100% – removing the current reference to an “Offeror” and deleting the existing Note on reverse takeover. This would make clear that a reverse takeover is not limited to transactions involving two Takeover Code companies, but extends to acquisitions of non-Takeover Code companies, businesses, or assets.
- Amend Note 4 on Rule 21.3 to introduce a requirement for an Offeree board to pass to an Offeror or bona fide potential Offeror any information it provides to a counterparty to a reverse takeover where that counterparty is not a company to which the Takeover Code applies (a “ ”). The equality of information principle would apply on the same basis as currently applies to sales of all or substantially all of the Offeree company’s assets.
Definition of “UK Multilateral Trading Facility” – New “UK Primary MTF” Definition
Proposals to:-
- Delete the definition of “UK multilateral trading facility or UK MTF” and replace it with a new definition of “UK primary MTF”, defined by reference to regulation 8 of The Public Offers and Admissions to Trading Regulations 2024 (the “POATR”). AIM and the Aquis Growth Market currently satisfy the “primary MTF” conditions.
- Amend Rule 24.3(a) to replace the reference to “AIM or the AQSE Growth Market” with reference to “a UK primary MTF”.
- Amend Rule 28.5(b) to replace references to “the AIM Rules for Companies or the AQSE Growth Market Rules for Issuers” with references to “the rules of the relevant UK primary MTF (as applicable)”.
- Delete the # note at the end of section 3(a) of the Introduction (which is considered unnecessary once the “primary MTF” definition is adopted).
Extending a ‘Put Up or Shut Up’ Deadline (Rule 2.6(c))
Proposals – to delete the stated factors which the Takeover Panel takes into account when deciding whether to consent to the extension of a ‘Put Up or Shut Up’ (PUSU) deadline, and to delete the requirement for the Offeree company to comment on those factors in the extension announcement. This reflects the established practice that the Takeover Panel routinely grants extensions at the request of the Offeree board.
Review of the Notes on Rule 9.1 (Mandatory Offer Requirement)
This is the most substantial section of Consultation Paper PCP 2026/1. The Takeover Panel has reviewed all 18 Notes on Rule 9.1
Proposals (key changes):-
| Note | Proposed change |
| Note 1 (Coming together to act in concert) | Simplify and shorten without altering its effect. |
| Note 2 (Collective shareholder action) | Remove duplication of the board control-seeking factors (to be located solely in Practice Statement 26); move the investment trust paragraph and the concert party break-up factors into Practice Statement 26. |
| Note 3 (Directors of a company) | Delete entirely, as the substance is addressed by proposed amendments to Note 5 on the definition of “acting in concert”. |
| Note 4 (Acquisition of interests in shares by members of a group acting in concert) | Delete and replace with new Note 3 (Transfers of interests in shares between members of a concert party) and new Note 4 (Acquisitions from third parties where a concert party holds more than 50% of the voting rights). A new Note 2(d) on Rule 9.5 would address calculation of the highest price paid. |
| Note 5 (Employee benefit trusts) | Simplify the relevant factors the Takeover Panel considers. |
| Note 6 (Vendor of part only of an interest in shares) | Delete and replace with a shorter, clearer new Note 6 (Sale of part of an interest in shares). |
| Note 7 (Placings and other arrangements) | Simplify. |
| Note 10 (Convertible securities, warrants and options) | Simplify and shorten; codify the Executive’s practice of granting a Rule 9 waiver on exercise in certain circumstances. |
| Note 17 (Changes in the nature of a person’s interest) | Delete the transitional anti-avoidance provision from 20 May 2006, which is considered no longer necessary some 20 years later. |
| Notes 8, 9, 11, 14, 15, 16 | Minor amendments only (not altering their effect). |
| Notes 12, 13, 18 | No amendments proposed. |
The introductory paragraph to the Notes on Rule 9.1 and the headings ‘Persons acting in concert’ and ‘Other general interpretations’ would also be deleted.
Special Deals and Management Incentivisation (Rule 16)
Proposals – to amend Note 2 on Rule 16.1, Rule 16.2(a) and Note 3 on Rule 16.2 to require that, where an independent adviser gives a ‘fair and reasonable’ opinion on special deals with favourable conditions or management incentivisation arrangements, the opinion must expressly state that the terms are fair and reasonable “so far as shareholders are concerned”. This codifies the Executive’s existing practice.
End of Restrictions on Frustrating Action (Rule 21.1)
Proposals – to amend Note 7 and Note 9 on Rule 21.1 to clarify that, where a potential Offeror has not been publicly identified during an offer period, the restrictions on frustrating action will apply only until 5.00 pm on the 7th day following the date on which the latest approach is unequivocally rejected by the Offeree board. This replicates the position that applies prior to the commencement of an offer period.
Publication of Investment Research on a Website (Rule 28.7)
Proposals to:-
- Delete the requirement in Rule 28.7(a)(ii) for the Offeree company or a securities exchange Offeror to remove forecasts by “connected” investment analysts from its website at the beginning of an offer period. Instead, all current forecasts must be included, with any connection clearly disclosed.
- Amend Rule 28.7(c) to require that, where a consensus forecast includes a forecast by a firm connected to the Offeree company or securities exchange Offeror, the relationship must be stated.
Restrictions on Significant Asset Transactions Following Offers (Note 1 on Rule 35.1)
Proposals – to amend Note 1(a) on Rule 35.1 to clarify that, where a former Offeror had made an “unqualified” no increase statement or acceleration statement, the Takeover Panel will not normally consent to the former Offeror purchasing significant assets from the Offeree company (under Rule 35.1(f)) in the 3 months after its offer was withdrawn or lapsed (or, if later, the end of the offer period). This aligns the position with that following a Rule 2.8 statement.
Minor Issues
Proposals to:-
- Rule 30.5(c): Delete the requirement to inform advisers of an ‘out of hours’ publication, as the advisers will already have received the document electronically under Rule 30.5(b).
- Rule 32.1(c): Add a cross-reference to Note 2 on Rule 31.3 to clarify the existing position that an offer may be revised after Day 46 in certain circumstances.
Impact Assessment
The Takeover Panel considers that the proposals are primarily intended to simplify, shorten, and clarify existing provisions or to codify established Executive practice, and are therefore not expected to impose material additional compliance costs or burdens on parties to offers.
For more information about any of the issues covered in this update, please contact Jeff Elway, Partner in Corporate.
