Changes to the UK Takeover Code Rules on frustrating action

Changes to the UK Takeover Code Rules on frustrating action and revised practice statement 5 on invocation of conditions

The UK Takeover Panel (the Panel) has published two statements as follows:

1. RS 2023/1 - this response statement sets out changes to the UK Takeover Code (the Code) following PCP 2023/1. PCP 2023/1 proposed changes to Rule 21 on frustrating action, including amending Rule 21.1 to state that the Rule does not restrict an offeree board from taking an action that is either not material or is in the ordinary course of business. The changes have been made broadly in the form proposed in PCP 2023/1 as expected. Please click here for our earlier briefing setting out the detail of the changes.

Together with the response statement the Panel has published a new Practice Statement 34 setting out how it interprets and applies Rule 21.1.  This provides useful guidance on how the revised rule is to operate in practice.

The changes will come into effect on 11 December 2023.

2. PS 2023/12 - this statement announces the publication of revised practice statement 5 in relation to Rule 13.5 of the Code, dealing with invoking conditions and pre-conditions to an offer. Rule 13.5(a) provides that an offeror may only invoke a condition or pre-condition so as to cause the offer not to proceed, to lapse or to be withdrawn with the consent of the Panel and Practice Statement 5 explains the way in which the Panel Executive will apply Rule 13.5(a) when an offeror wishes to invoke a condition to an offer or pre-condition so as to cause the offer not to proceed, to lapse or to be withdrawn. Changes to the practice statement include:

• An amended list of different conditions to an offer which explain whether Rule 13.5(a) applies to those categories

• New guidance relating to the Executive's approach to conditions relating to there being no Phase 2 reference to the UK Competition and Markets Authority as well as clarification that this also means a similar "in depth" review by another anti-trust or regulatory body.

The new practice statement comes into effect immediately.