Section 11(b) of the Introduction to the City Code on Takeovers and Mergers states that if the Takeover Panel finds a breach of the code, it may publish a statement indicating that the offender is unlikely to comply therewith. The consequence of this statement is that members of the Financial Conduct Authority (FCA) and certain professional bodies would not, in accordance with their respective rules, be able to act for such a person in a code transaction (ie, that person would be 'cold-shouldered'). This penalty is the most serious disciplinary power available to the panel and has rarely been used.(1)

On 11 October 2019 the panel published Panel Statement 2019/16, which sets out the Takeover Hearings Committee's ruling on disciplinary proceedings brought against Mr David King (chair of Rangers International Football Club plc) for contraventions of the code. These code contraventions stemmed from Mr King's obligation to procure a Rule 9 mandatory offer following the acquisition of Rangers shares by a concert party on and around 31 December 2014.(2) In response to these contraventions, the panel ruled that Mr King is someone who is unlikely to comply with the code and should therefore be cold-shouldered for four years.

Panel Statement 2019/16 provides helpful guidance on the factors that the panel will take into consideration when determining whether a person should be cold-shouldered.


On 31 December 2014 Mr George Letham, Mr George Taylor and Mr Douglas Park (the Letham Group) acquired interests in shares in Rangers from Laxey Partners Limited. Following this acquisition, and taking into account shares already held by Mr Taylor, the shares held by the three men on 31 December 2014 amounted to approximately 19.7% of the issued shares in Rangers.

On the same day, Mr King instructed Cantor Fitzgerald to acquire shares in Rangers from certain Rangers shareholders. In accordance with these instructions, on 2 January 2015 New Oasis Asset Limited (owned ultimately by Glencoe Investments Trust, a trust established by Mr King for the benefit of himself and members of his family) completed its purchase of shares in Rangers. Shares in Rangers held by Mr King on that date amounted to approximately 14.6% of the issued shares in Rangers.

Emails sent by Mr Letham to Mr King around 31 December 31 2014 revealed that the Letham Group and Mr King coordinated the above acquisitions. As these acquisitions produced an aggregate holding of approximately 34.3% of the issued shares in Rangers, this triggered an obligation on Mr King to make a Rule 9 mandatory offer for the remaining Rangers shares.

Following a panel investigation, as Mr King did not make a Rule 9 offer at the relevant time, the panel directed Mr King in a number of rulings in 2016 to do so; however, he did not comply with these rulings. For the first time since the Companies Act 2006 put the panel on a statutory footing, it had to commence court proceedings to seek a court order to compel Mr King to comply with its rulings. The panel also had to initiate contempt of court proceedings against Mr King, as he did not carry out the court order by the relevant deadline.

Eventually, on 29 March 2018 an affiliate of Mr King announced its intention to make a Rule 9 mandatory offer for the remaining Rangers shares. On 25 January 2019 this affiliate published the relevant offer document. However, on 15 February 2019 the offer lapsed as the acceptances received fell short of the 50% acceptance condition.

Takeover Code contraventions

In Panel Statement 2019/16, the panel ruled that Mr King had contravened the following code provisions:

  • Rule 9 – Mr King did not comply with his obligation to make a Rule 9 offer until 25 January 2019 (over four years after he became subject to a Rule 9 obligation).
  • Rule 24.8 – where a code offer is for cash, the offer document must include a confirmation by an appropriate third party (eg, financial adviser) that sufficient resources are available to the bidder to satisfy full acceptance of the offer. The panel ruled that Mr King was in breach of this rule, as there was no cash confirmation in the Rule 9 offer announcement or offer document.
  • Section 9(a) of the Introduction to the code – a person dealing with the panel must take all reasonable care not to provide the panel with incorrect, incomplete or misleading information. The panel ruled that Mr King had provided it with incorrect and misleading answers during its investigations of the circumstances in which he and the Letham Group (as a concert party) had procured the purchase of shares in Rangers. Specifically, Mr King denied that he had communicated with Mr Letham in terms of coordinating their purchases of Rangers shares at the end of 2014, but this was later shown to be untrue by email exchanges between them.
  • Section 6(b) of the Introduction to the code – where a person or its advisers are in any doubt as to whether a proposed course of conduct is in accordance with the code, that person or its advisers must consult the panel in advance. The panel ruled that Mr King should have consulted the panel on the implications of his acquisition of Ranger shares at the beginning of 2015, particularly since Mr Letham reminded Mr King in an email that he and the Letham Group would have to make a mandatory offer unless their aggregate holdings remained under 30% of Rangers' share capital. Similarly, the panel ruled that Mr King should have consulted the panel on the requirements and implications of Rule 24.8 of the code.


The panel noted that it had to answer two questions relating to the cold-shouldering penalty:

  • is Mr King an offender who is unlikely to comply with the code and whose conduct merits cold-shouldering by professional bodies regulated by the FCA; and
  • if so, for what period should that penalty apply?

On the first question, the panel noted that it had to determine whether Mr King's misconduct demonstrated a propensity to disregard the code and if so to weigh that propensity against any undertaking from him to comply in future. Specifically, the panel noted that he had such a propensity as he knew of the consequences of his actions under the code and yet did not consult the panel on the implications of his actions. Further, he had persistently ignored the panel's rulings and the panel had to obtain a court ruling (supported by contempt proceedings) to enforce his compliance. Lastly, the panel noted that his code contraventions, particularly his prolonged refusal to procure a Rule 9 offer, and his conduct in dealing with the panel during its concert party investigations were offences of the utmost seriousness for which a statement of public censure would not be a sufficient penalty. While Mr King had offered to undertake to comply with the code in future, the panel did not think that this undertaking would outweigh his propensity to disregard the code.

On the second question, the panel considered a number of mitigating factors:

  • Mr King had no previous code contraventions;
  • his investment in Rangers was not motivated by financial gain or commercial advantage. Instead, he had invested huge sums of money in Rangers solely because he loved the football club; and
  • it was not clearly established that his failure to procure a Rule 9 offer would have prevented shareholders who would otherwise have taken the opportunity to sell their Rangers shares. There was no clear evidence of significant detriment to Rangers shareholders.

Bearing the above mitigating factors in mind and balancing them against the seriousness of a Rule 9 contravention and Mr King's refusal to comply with the panel's rulings until he was compelled by a court order to do so, the panel ruled that Mr King should be cold-shouldered for four years.

FCA statement

After Panel Statement 2019/16 was published, the FCA issued a statement to remind all regulated firms that, in accordance with Market Abuse Regulation (MAR) 4.3 (Support of the Takeover Panel's Functions), they should not act or continue to act for Mr King in connection with a code transaction. In addition, the FCA stated that it expects regulated firms to inform all approved persons at their firms that they should not deal with such individuals on such transactions. The FCA added that a breach of MAR 4.3 may leave a firm and any individuals exposed to enforcement action by the FCA.

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(1) A list of such instances is set out on the Takeover Panel's website.

(2) Rule 9 of the Takeover Code.