Public M&A Update: Restrictions on Frustrating Action and Invoking Conditions & Pre-Conditions (October 2023)

Rule 21: Restrictions on Frustrating Action

The Panel issued PS 2023/11 on 27 October 2023 confirming the publication of RS 2023/1, which sets out amendments to Rule 21 of the Takeover Code.  Rule 21 restricts a target board from taking certain actions without shareholder approval where those actions may result in an offer / possible offer being frustrated. For a summary of the proposed amendments see Public M&A Update: Amendments to the Takeover Code effective 22 May 2023.

The amendments will take effect on 11 December 2023.

Rule 13.5: Invoking Conditions & Pre-Conditions

The Panel also issued PS 2023/12 on 27 October 2023 confirming the publication of revised Practice Statement No 5 in relation to Rule 13.5 of the Takeover Code.  The revised practice statement clarifies the Panel's approach to conditions regulating a Phase 2 investigation by the Competition and Markets Authority (or a similar ‘in depth’ referral), and the application of the 'Material Significance' requirement for a bidder to invoke a condition for its benefit.  The revised practice statement also sets out in greater detail the Panel’s practice in relation to the invocation of conditions generally.