The UK Takeover Panel has published its consultation response to recent proposals to change the companies subject to the Takeover Code. The response confirms the changes to the Code which will be applied from the implementation date of 30 September 2013 to all companies and transactions to which it then relates, including those ongoing transactions which straddle that date.

The Panel's response will be of particular interest to the large number of Jersey and Guernsey holding companies whose shares are traded around the world, from New York and Toronto to London and Hong Kong. These companies benefit from the many advantages of being incorporated in leading international finance centres with a favourable tax environment and familiar but flexible corporate laws, but not all of them are currently subject to the Code.

Current position

The Takeover Code currently applies principally to:

  • Jersey and Guernsey companies whose shares are admitted to trading on a regulated market in the UK, e.g. London's Main Market, or any stock exchange in the Channel Islands or the Isle of Man, regardless of where the company is managed and controlled; and
  • Jersey public companies which are centrally managed and controlled in the UK, the Channel Islands or the Isle of Man.

The Code also applies to Jersey private companies and Guernsey companies which are centrally managed and controlled in the UK, the Channel Islands or the Isle of Man and which satisfy the "ten year rule" set out in the Code.

At present, therefore, the Code does not apply to Jersey or Guernsey companies listed on AIM which are centrally managed and controlled outside the UK, the Channel Islands and the Isle of Man. These AIM listed companies frequently include provisions in their constitutional documents designed to replicate the provisions of the Code as far as possible for the protection of shareholders, even though the company does not fall under the authority of the Panel itself.

The Changes - Key Points to Note

In general, the status quo is retained except that the Code will now also apply to Jersey and Guernsey companies whose shares are admitted to trading on a UK multilateral trading facility (MTF), e.g. AIM, regardless of where the company is managed and controlled.

This means that Jersey and Guernsey companies whose shares are admitted to trading on AIM and which are not currently subject to the Code because they are centrally managed and controlled outside the United Kingdom, the Channel Islands and the Isle of Man, will now have certainty that the Code applies to them and that they are subject to the jurisdiction of the Takeover Panel with effect from 30 September 2013.

It is suggested that these companies should:

  • familiarise themselves with the Code and consider whether any Code-like provisions in their articles should be removed, particularly if they conflict with the Code; and
  • determine whether the changes to the Code are likely to affect any relevant transactions which may be ongoing when the changes become effective on 30 September 2013.

It should be emphasised that the position under the Code will not change for any other Jersey public companies. So, for example:

  • a Jersey public company whose shares are admitted to trading on the Hong Kong or New York Stock Exchange and which is centrally managed and controlled outside the UK, the Channel Islands and the Isle of Man, will continue not to be subject to the Code; and
  • an unlisted Jersey public company will continue to be subject to the Code if it is centrally managed and controlled in the UK, the Channel Islands or the Isle of Man.