The Takeover Panel has published two consultation papers proposing amendments to the definition of “acting in concert” and “voting rights”.

Acting in concert

The Panel is proposing to introduce three new presumptions, in addition to the existing presumptions, of persons deemed to be acting in concert for the purposes of the Code. The additional presumptions, intended to codify existing practice, are: Š

  • a person, the person’s close relatives (which will be defined), and the related trusts of any of them, all with each other; Š
  • the close relatives of a founder of a company to which the Code applies, their close relatives, and the related trusts of any of them, all with each other;
  • and Š shareholders in a private company who sell their shares in that company in consideration for the issue of new shares in a company to which the Code applies, or who, following the re-registration of that company as a public company in connection with an initial public offering or otherwise, become shareholders in a company to which the Code applies.

Voting rights

The definition of voting rights refers to rights “which are currently exercisable at a general meeting”. The Panel proposes amending this definition to codify its existing practice and make clear that shares which are the subject of a restriction or suspension of voting rights should nonetheless be considered as having voting rights “currently exercisable at a general meeting”. The Panel is clear that the issue is whether voting rights attach to the shares, not whether a particular shareholder can exercise those rights. Treasury shares will be specifically excluded from the scope of the revised definition. In addition to making the definition clearer, the amendment is intended to eliminate the scope of using suspended voting shares to avoid the application of certain provisions in the Code such as Rule 9 (mandatory offer).

Impact – clarification of the Panel’s existing practice ensures those considering the Code are better able to interpret it. This is particularly relevant where, as in the case of the definition of acting in concert, there can be a number of provisions in the Code which are potentially relevant.