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Companies to which the Takeover Code applies

Posted: 03/02/2025


With effect from today, 3 February 2025, changes to the Takeover Code (the Code) have been introduced to narrow its application to UK companies not listed – or no longer listed – on any public market in the UK, or the Channel Islands or Isle of Man.

Specifically, the new rules have brought to an end the so-called ‘10-year rule’, which meant the Code continued to apply for that period to offers for private companies whose shares had been previously listed on a UK market or publicly traded in the UK. The Code will also no longer apply to public companies incorporated in, and managed from, the UK, but whose shares are not listed or are listed overseas.

Instead, there will now be a two-year run-off period for all companies which cease to be UK-quoted, after which the Code will no longer apply to them. A transitional period, also of two years, will apply to companies which cease to be subject to the Code as a result of the new rules.

Companies now subject to the Takeover Code

From today, the Code will apply to an offer for a company if it has its registered office in the UK, the Channel Islands, or the Isle of Man, and either:

  • its securities are admitted to trading on a UK regulated market, a UK multilateral trading facility (MTF), or a stock exchange in the Channel Islands or the Isle of Man (in each case, UK-quoted); or
  • the company has been UK-quoted at any time during the two years prior to the relevant date (being the date of the announcement of an offer or possible offer, or other event which has significance under the Code).

Companies not subject to the Takeover Code

Therefore, subject to the transitional provisions summarised below, the Code will no longer apply to various categories of UK (or Channel Islands or Isle of Man) companies, including:

  • unlisted public companies or public companies whose securities are, or were previously, traded solely on an overseas market;
  • private companies whose shares have been listed, or publicly traded, in the UK, the Channel Islands or Isle of Man or which have filed a prospectus in the 10 years prior to the relevant date (provided, as above, they have not been UK-quoted in the past two years); and
  • companies whose shares are, or were previously, traded using a matched bargain facility, such as Asset Match or JP Jenkins.

The Takeover Panel (the Panel) also took the opportunity in the response statement introducing the new rules (RS 2024/1) to make clear that companies not otherwise UK-quoted, but whose shares were traded via a trading platform such as the London Stock Exchange’s PISCES, the TISE Private Market, or a secondary market or crowdfunding platform, such as the Seedrs Secondary Market, are not subject to the Code.

The new rules have also codified existing Panel practice that companies with a sole beneficial owner are not subject to the Code, regardless of their history.

Transitional provisions

The amended Takeover Code has also introduced, temporarily, a two-year transitional period for companies which would otherwise have ceased immediately to be subject to the Code as a result of these rule changes. This is to provide companies with a period of time to adapt to the implications of no longer being subject to the Code, for example, should they choose to, by making amendments to their articles of association or by enabling shareholders to exit their investment if they do not wish to remain shareholders in a company without the protections afforded by the Code.

The Panel re-iterated in RS 2024/1 its preference for the transitional period to be the same as the run-off period introduced by the new Code rules, both two years. Consequently, the transitional period will end on 3 February 2027, from which date all companies to whom it applies will (unless they have become UK-quoted in that period) cease to be subject to the Code.

Conclusion

The new rules have been welcomed by both respondents to the Panel’s consultation, and practitioners generally, and should serve to remove some of the ambiguity around when the Code continues to apply to unlisted companies, as well as removing the apparent anomaly of the Code retaining its application to offers for private companies which have been listed only many years ago.


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