On 9 September 2009, the Panel Executive issued a Practice Statement in response to concerns that collective shareholder action could be constrained by the Panel's application of the Takeover Code's 'acting in concert' provisions and the mandatory offer requirements set out in Rule 9.

The Panel's statement follows the publication of Sir David Walker's consultation paper on corporate governance in UK banks and other financial entities published in July 2009, which included recommendations for more active shareholder engagement with the boards of investee companies, with the aim of promoting good corporate governance. The Practice Statement describes the way in which the Panel interprets and applies the relevant provisions of the Code in this area.

The Panel states that it does not consider that the relevant provisions of the Code act as a barrier to cooperative action by shareholders. The following actions, namely, discussions between shareholders about possible issues that might be raised with a company's board, or joint representatives to a board, or an agreement to vote in the same way on a particular resolution at a shareholder meeting would not of themselves lead the Panel to conclude that a concert party had been formed.

The statement from the Panel follows the recent clarification from the FSA regarding the interaction between shareholder engagement on the one hand, and the rules relating to market abuse and the disclosure of substantial shareholdings on the other (see our September 2009 E-Bulletin article: FSA letter to ISC chairman on shareholder engagement and the regulatory regime).

View Practice Statement No. 26 (11 page pdf).