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06 November 2013
The UK Takeover Panel recently expanded the scope of the UK Takeover Code with the effect of bringing certain companies that were not subject to the code within its jurisdiction. UK incorporated companies traded on the Alternative Investment Market (AIM) will now be subject to the code, regardless of where their central management and control is located. The changes to the introduction of the code took effect from September 30 2013 and were announced in Response Statement 2012/3.
Previously, the code applied to an offer for a public company that had its registered office in the United Kingdom, the Channel Islands or the Isle of Man if it had securities admitted to trading on a regulated market in the United Kingdom or on a stock exchange in the Channel Islands or the Isle of Man.
However, the code also applied to an offer for a public company that had its registered office in the United Kingdom, the Channel Islands or the Isle of Man and whose securities were not admitted to trading on one of the these markets if the panel considered that it had its place of central management and control in the United Kingdom, the Channel Islands or the Isle of Man.
Under the amended regime, this residency test continues to apply to a company that has its registered office in the United Kingdom, the Channel Islands or the Isle of Man if it is a public company whose securities are admitted to trading solely on a public market which is not:
For example, the code will not apply to an offer for a public company with its registered office in the United Kingdom or Jersey, with securities listed on the New York Stock Exchange or NASDAQ and with its place of central management and control outside the United Kingdom, the Channel Islands and the Isle of Man.
However, when reviewing the scope of the code, the Code Committee determined that the residency test should no longer apply to offers for companies which have their registered offices in the United Kingdom, the Channel Islands or the Isle of Man and which have securities admitted to trading on a multilateral trading facility in the United Kingdom (eg, AIM or the ICAP Securities and Derivatives Exchange Growth Market).
As a result of this change, an offer for a public company with its registered office in the United Kingdom or Jersey, with securities admitted to trading on AIM and with its place of central management and control outside the United Kingdom, the Channel Islands and the Isle of Man became subject to the code as of September 30 2013.
A useful summary of the scope of application of the code following the changes is set out in Appendix B to the Code Committee's response statement.
While it is difficult to determine how many additional transactions would have been subject to the code over recent years as a result of these changes, it is clear that going forward a number of companies in the energy and natural resources sectors traded on AIM will now be subject to the panel's jurisdiction and a number of companies have taken the decision to announce that they are now subject to the provisions of the code.
It is still too early to assess whether the certainty of the code's application will encourage or hinder mergers and acquisitions for these companies, but ahead of any possible transaction they should now consider:
For further information on this topic please contact Will Pearce or Victoria Kershaw at Davis Polk & Wardwell London LLP by telephone (+44 20 7418 1300) or email (email@example.com or firstname.lastname@example.org). The Davis Polk & Wardwell website can be accessed at www.dpw.com.
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
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