Public M&A: Takeover Code changes on dual class share structures, IPOs and share buybacks now effective

The UK Takeover Code now contains detailed rules which set out how the Code applies to companies with a dual class share structure (DCSS). This follows the Takeover Panel's Public Consultation Paper (PCP 2025/1) published in July last year and Response Statement (RS 2025/1) published in December. Alongside the new DCSS framework, changes have also been introduced to IPO disclosure requirements for Code companies and to the rules around share buybacks. The amendments to the Code took effect on 4 February 2026. 

Although a DCSS structure can take a number of forms, these changes to the Code are focused on companies which have a class of shares with enhanced voting rights where each such share carries multiple votes. Typically, those shares are converted into ordinary shares or extinguished on the occurrence of a trigger event. For more detail on DCSS structures and trigger events see below.

Companies with a dual class share structure

The new Code provisions:

• explain how Rule 9 (the mandatory offer requirement) applies to a company with a DCSS;
• contain a dual acceptance test condition which applies when a contractual offer is made for a company with a DCSS (the first — the “pre-unconditional test” works by reference to the voting rights percentage immediately before the offer becomes unconditional and the second — the "post-unconditional test" by reference to the voting rights percentage immediately after any shares with enhanced voting rights are converted into ordinary shares or extinguished); and
• reflect other relatively minor changes to the Code which cover other issues which are likely to arise on an offer for a DCSS company.

IPO: New Takeover Code requirements

On an IPO which would result in a company becoming subject to the Code, the company will be required to make appropriate disclosure in respect of the Code in its admission document, including an explanation of the application of Rule 9 and disclosure of details of any person, or group of persons acting in concert, that will be, or is expected to become, interested in shares carrying 30% or more of the voting rights of the company. The Panel must be consulted so that guidance can be given on the appropriate disclosure.

The Panel's existing practice of granting a “Rule 9 dispensation by disclosure” has been codified. 

Share buybacks 

A revised Rule 37 has been introduced to cover share buybacks, dual class share structures and enfranchisement of non-voting shares. The amendments are designed to make the rule clearer, more concise and consistent with the amendments in relation to companies with a DCSS.

DCSS structures

The Public Consultation contained an overview of the DCSS structures which have been used by quoted companies in the UK. The Panel identified three groups:

• DCSS 1: Class B Shares held by one or more shareholders which carry multiple votes per Class B share (i.e. on all resolutions) from the point of issue, and which are extinguished or converted to ordinary shares on particular trigger events;
• DCSS 2: a single special share which confers effective majority or veto rights on some or 
  all resolutions from the point of issue, and which is extinguished on particular trigger events; and
• DCSS 3: a single special share which confers effective majority or veto rights on some or 
  all resolutions from the point of a third party obtaining control of a majority of the 
  ordinary shares, and which is extinguished on particular trigger events.

The changes to the Code are focused on DCSS 1 structures although it's worth noting that only the consultation paper and response statements refer to DCSS 1 to 3.

Typical trigger events identified by the Panel which will clause Class B or Special Rights shares to be converted or extinguished include:

• a “time sunset” of a specified number of years after the company’s IPO;
• the transfer of the Class B or special share(s) to any other person;
• the retirement or resignation of the holder of the Class B or special share(s);
• the death of the holder of the Class B or special share(s);
• the holder of the Class B or special share(s) ceasing to hold at least a specified percentage of the ordinary shares in the company; and
• an offer for the company by a person other than the holder of the Class B or special share(s) itself becoming unconditional (but not in the case of DCSS 3).

Further Information

If you would like to discuss this update, please speak to your usual Burges Salmon contact,  AJ Venter (Partner, Corporate and M&A), Guy Francis (Director, Corporate and M&A) or Nick Graves (Head of the Corporate Department).