The UK Takeover Panel has announced a consultation on substantial changes to the Takeover Code, aiming to clarify rules around concert parties, broaden definitions, and improve transparency in takeover transactions, potentially reshaping how bidders and targets operate.
The UK Takeover Panel has launched a consultation on a broad package of changes to the Takeover Code, many of which are framed as technical tidy-ups but several of which could materially affect how bidders, targets and advisers structure transactions.
According to the consultation paper, the Panel wants to tighten the rules around “acting in concert” by clarifying how standstill and voting agreements are treated. In particular, agreements that stop a shareholder reducing its stake, while still allowing it to buy more shares, would generally be treated as creating concert party status with directors, unless specific exceptions apply. The Panel also wants to make clear that any carve-out must allow acceptance of any offer for the company, whether or not the board recommends it. That could matter where parties have drafted lock-up arrangements on the assumption that a recommended-offer carve-out was enough.
The consultation also extends concert party treatment to some voting arrangements, including agreements requiring a shareholder to support the board on appointments or removals of directors. The Panel said there would still be room for more limited arrangements, such as provisions focused only on blocking a board-opposed resolution or opposing a board-backed one. Baker McKenzie, LexisNexis, Stephenson Harwood, Akin Gump, Eversheds Sutherland and Herbert Smith Freehills all described the proposals as part of a wider effort to codify existing Panel practice rather than overhaul the regime.
Another significant change would broaden the definition of a reverse takeover so that it captures acquisitions by a Code company that would involve issuing more than 100% of its existing voting equity share capital as consideration, whether the target is itself a Code company or not. The Panel also proposes extending the equality-of-information principle to reverse takeovers, which would mean information given to one bidder on a transaction would have to be shared with competing bidders on request, subject to the timing rules in the Code. The practical effect, according to the consultation, is to bring more board-led transactions within the same disclosure framework that already applies in standard takeover situations.
The paper also proposes changes to the rules on shareholder engagement and internal transfers within concert parties. It would clarify that shareholders talking among themselves about whether to accept an offer or support a scheme does not, on its own, create a concert party. It would also reverse the current approach to transfers between concert party members, so that such transfers would not normally trigger a mandatory offer obligation, although the Panel could still require one in appropriate cases. The consultation says that internal reorganisations should still be reviewed carefully where an individual member would move to or further above the 30% threshold.
Other proposals are aimed at making existing practice more explicit. The Panel wants to remove the detailed factors listed in the “put up or shut up” deadline extension rule and stop requiring the target board to comment on them. It also proposes to specify when frustrating action restrictions fall away if a potential offeror has not been identified publicly: the restrictions would lapse at 5.00 pm on the seventh day after an unequivocal rejection. In addition, a revised fairness opinion rule would require an adviser to say that a special deal or management incentive arrangement is fair and reasonable “so far as shareholders are concerned”, sharpening the focus on shareholder protection.
The consultation would also ease the current requirement to remove connected investment research from a target’s website when an offer period starts, while requiring any conflicts linked to consensus forecast figures to be disclosed. And it would impose a three-month restriction on a former bidder buying significant target assets after making a no-increase or no-extension statement, aligning that rule with the existing treatment of a no-intention-to-bid statement. The consultation closes on 2 October 2026, after which the Panel will publish its response and final amendments.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
