With effect from 30 September 2013, the application of the UK Takeover Code (the “Code”) is being extended to apply to a much wider scope of companies than before.

The revised Code will now apply to all companies traded on AIM with registered offices in the United Kingdom, the Channel Islands or the Isle of Man irrespective of where management and control are based - the exemption for AIM traded companies whose management and control was based outside those jurisdictions will no longer apply (the Code changes do not affect AIM traded companies incorporated outside those jurisdictions).

What are the Implications for AIM Listed Companies?

The Code’s extended application has several important implications for companies affected, their directors and shareholders:

  • There may be an obligation to make a market announcement regarding the Code’s application.
  • Websites may need updating to so as to the refer to the application of the Code.
  • Articles of Association may be incompatible with the application of the Code and may need amending to accommodate the Code’s application. Amendments may need to be discussed and cleared with the Takeover Panel.
  • Major shareholders and those “acting in concert” with them will need to consider what implications the Code’s application has for them, having regard to the company’s corporate activity and any changes to its share capital (including, for example, the issue of share options, warrants and other convertible instruments).
  • Directors and other officers may need training on the implications of the Code for them, and the duties and responsibilities it imposes on them. Please see our online guide: Public Company Takeovers in the United Kingdom: a Guide.

With appropriate forethought and planning, the implications of the Code’s application will usually be capable of being managed without material adverse consequences for companies, although there may be some isolated cases where significant difficulties may be encountered and a consultation with the Takeover Panel advisable with a view of achieving exemptions or dispensations from the Code’s provisions.