Companies to which the Takeover Code applies

Introduction

The scope of the Panel’s jurisdiction is set out in section 3 of the Introduction to the Code. The Panel regulates takeover bids and merger transactions (however effected) of certain companies which have their registered offices in the UK, the Channel Islands or the Isle of Man, i.e. companies which are “UK registered”. The Panel does not regulate takeover bids and merger transactions of companies that are registered in any jurisdiction other than the UK, the Channel Islands or the Isle of Man.

On 3 February 2025 (the “implementation date”), changes will be made to the scope of the Panel’s jurisdiction. See below for a summary of the application of the Code (i) before the implementation date, (ii) during the two year transition period and (iii) following the end of the transition period.

The changes to the scope of the Panel’s jurisdiction resulted from the consultation on PCP 2024/1 (Companies to which the Takeover Code applies), which was published by the Code Committee on 24 April 2024. The amendments to the Code were set out in RS 2024/1 and made by Instrument 2024/3, which were published on 6 November 2024.

Current position until 3 February 2025

At present, the Panel regulates offers for UK registered companies if any of their securities are admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle of Man, i.e. companies which are “UK quoted”.

The Panel also regulates offers for:

• other public companies which are UK registered (see section 3(a)(ii) of the Introduction to the Code); and
• certain private companies which are UK registered (see paragraphs (A) to (D) of section 3(a)(ii) of the Introduction to the Code),

which are considered by the Panel to have their place of central management and control in the UK, Channel Islands or the Isle of Man (i.e. if the company is “UK resident”).

The private companies which fall within paragraphs (A) to (D) of section 3(a)(ii) of the Introduction to the Code are:

• companies which were UK quoted at any time during the 10 years prior to the relevant date*;
• companies in respect of which dealings in securities, and/or prices at which persons were willing to deal in securities, have been published on a regular basis for a continuous period of at least six months in the 10 years prior to the relevant date*;
• companies whose securities have been subject to a marketing arrangement as described in section 693(3)(b) of the Companies Act 2006 at any time during the 10 years prior to the relevant date*; and
• companies which have filed a prospectus at any time during the 10 years prior to the relevant date*.

These private companies are referred to as being in the “10 year run-off period”.

Position from 3 February 2025

From 3 February 2025, the Code will apply to a UK registered company if, on the relevant date*, either:

• any of its securities are UK quoted; or
• its securities ceased to be UK quoted within the previous two years,

in each case regardless of whether the company is UK resident.

Transitional arrangements

A two year transition period will run from 3 February 2025 to 2 February 2027.  This transition period is intended to provide time for companies to which the Code will cease to apply (“transition companies”), and shareholders in transition companies, to consider what action they may wish to take prior to the Code ceasing to apply to the company.  The transitional arrangements are set out in a Transitional Appendix which will be introduced into the Code from 3 February 2025.

During the transition period, the Code will continue to apply to a transition company in the same way as it did immediately before the implementation date.

A company will be a transition company if it is either:

• a company to which the current section 3(a)(ii) of the Introduction to the Code applies immediately prior to the implementation date; or
• a company to which the current section 3(a)(ii) of the Introduction would have applied immediately prior to the implementation date if that company had been UK resident at the relevant time.

Whether or not the Code applies to a transition company in respect of a specific transaction will depend on the circumstances at the time of the relevant transaction, including:

• whether the company is UK resident at the time; and
• in the case of a private company that was in a 10 year run-off period immediately before the implementation date, whether any of the 10 year run-off remains outstanding.

The diagram here summarises whether a company will be a transition company on the implementation date and the diagram here summarises whether a transition company will be a Code company in respect of a specific transaction.

Summary

See here for a summary of the application of the Code (i) before the implementation date (i.e. before 3 February 2025), (ii) during the transition period (i.e. from 3 February 2025 to 2 February 2027) and (iii) following the end of the transition period (i.e. from 3 February 2027).

During the transition period, the Code may apply to a company because:

• it is a UK quoted company;
• it was a UK quoted company on the implementation date but ceased to be UK quoted after the implementation date; or
• it is a transition company and the Code applies to it in respect of a specific transaction.

From 3 February 2027, the Code will only apply to a UK registered company that is UK quoted or was UK quoted within the previous two years.

Companies to which the Code does not apply

The Code does not apply to a UK registered company which is not UK quoted (and which has not recently been UK quoted) solely by virtue of its securities or other interests being traded using another platform, such as:

• a Private Intermittent Securities and Capital Exchange System (or PISCES);
• a private market; or
• a secondary market of a crowdfunding platform.

Subject to the transitional arrangements described above, and provided that the company had not been UK quoted at any time during the two years prior to the relevant date*, the UK registered companies to which the Code will no longer apply in the future include:

• a public or private company which ceased to be UK quoted more than two years prior to the relevant date*;
• a public or private company whose securities are, or were previously, admitted to trading solely on an overseas market;
• a public or private company whose securities are, or were previously, traded using a matched bargain facility;
• any other public company which is not UK quoted; and
• a private company which filed a prospectus at any time during the 10 years prior to the relevant date.

As indicated above, the Code does not apply to a company that is registered in any jurisdiction other than the UK, the Channel Islands or the Isle of Man.

*Relevant date is the date on which an announcement is made of an offer or possible offer for a company or on which some other event occurs in relation to the company which has significance under the Code.