Summary and implications

The Code Committee of the Takeover Panel has published guidance on the likely implementation date of the forthcoming Code amendments. The guidance also outlines the proposed transitional provisions where offer periods are already running on that implementation date.

All those engaged in or advising on takeovers should read the proposed transitional provisions and send any comments in writing to the Code Committee as soon as possible.

  • Implementation date: if the Code Committee publishes the Response Statement setting out the final text of Code amendments by the end of July, as anticipated, the likely implementation date of the revised Code is Monday 19 September.
  • Transitional arrangements: these will apply where an offeree is already in an offer period on the implementation date; their aim is to put all offer periods on the same footing.
  • Effect: a number of obligations will apply on or from the implementation date – e.g. an offeree already in an offer period must identify potential offerors by not later than 5 p.m. on the implementation date.

Implementation

The revised Code will apply to all offers and possible offers from the implementation date, except if the transitional provisions provide otherwise. These are outlined below.  

Transitional provisions

a) Requirement for a potential offeror to be identified

Proposed Rules 2.4(a) and (b) contain new requirements on identifying potential offerors.  

The Code Committee proposes that an offeree company must announce the identity of any potential offeror:

  • Where the offeree is in an offer period on the implementation date and if it was in talks with or had received an approach from that offeror at the beginning of the offer period.
  • This announcement must be made not later than 5 p.m. on the implementation date.

b) Requirement for a potential offeror to “put up or shut up” or obtain a deadline extension

Proposed Rule 2.6(a) contains a new requirement for potential offerors to “put up or shut up” or obtain a deadline extension within a 28-day period.

The Code Committee proposes that any potential offeror identified in an announcement on or before the implementation date must, by not later than 5 p.m. on the 28th day after the implementation date:  

  • Announce a firm intention to make an offer;  
  • Announce it does not intend to make an offer; or  
  • Together with the offeree company, obtain Panel consent to an extension of the deadline.  

c) General prohibition on offer-related arrangements

Inducement fees or other offer-related arrangements entered into before the implementation date will not be subject to the prohibition under proposed new Rule 21.2.  

d) Schemes of arrangement

If an offeror has announced a firm intention to make an offer by way of a scheme of arrangement before the implementation date, the provisions of the current Appendix 7 will apply, and not the proposed new Appendix 7.  

e) Offer documents and offeree board circulars

Where the offeror publishes the initial offer document before the implementation date, the offer document, offeree board circular and any other documents must comply with the Code provisions as they were before the implementation date. This applies to e.g. the offeree board circular or any revised offer document published after the implementation date.  

f) Improving the ability of employee representatives to make their views known

Under proposed Rule 25.9, if the employee representatives’ opinion is not received in time to be appended to the offeree board circular, the offeree company must publish it on a website and announce it via a RIS. Rule 25.9 and proposed new Note 1 on it will apply with effect from the implementation date, even if the offer document to which the employee representatives' opinion relates was published before the implementation date.