13 January 2017

The recent decision by the Hearings Committee of the Takeover Panel, published on 10 January 2017, has emphasised the importance of dealing with the Panel in an open and co-operative way.

A serious breach of this requirement has resulted in the Panel exercising its cold-shouldering power. One individual was cold-shouldered for six years and the other for two years. Cold-shouldering was inevitable as both individuals lied systematically to the Panel Executive.

This is the most serious disciplinary sanction exercisable by the Panel which has only been used twice before.

The Takeover Code describes the consequences:

“The rules of the FCA and certain professional bodies oblige their members, in certain circumstances, not to act for the person in question in a transaction subject to the Code, including a dealing in relevant securities requiring disclosure under Rule 8 (so called “cold-shouldering”). For example, the FCA’s rules require a person authorised under the Financial Services and Markets Act 2000 (“FSMA”) not to act, or continue to act, for any person in connection with a transaction to which the Code applies if the firm has reasonable grounds for believing that the person in question, or his principal, is not complying or is not likely to comply with the Code.”

The effect of this sanction is to ban the person from working on any Code regulated transaction for the duration of the sanction.

Dealing with the Takeover Panel

Section 9 of the Introduction to the Takeover Code sets out the rules according to which persons dealing with the Takeover Panel must provide information and assistance to the Panel.

Section 9 (a) states:

“The Panel expects any person dealing with it to do so in an open and co-operative way. It also expects prompt co-operation and assistance from persons dealing with it and those to whom enquiries and other requests are directed. In dealing with the Panel, a person must disclose to the Panel any information known to them and relevant to the matter being considered by the Panel (and correct or update that information if it changes). A person dealing with the Panel or to whom enquiries or requests are directed must take all reasonable care not to provide incorrect, incomplete or misleading information to the Panel.”

The Committee noted:

"The Panel cannot effectively perform its statutory duty to enforce the Code and regulate the conduct of takeovers unless those who deal with it and to whom it directs enquiries take care to ensure that the information they provide to the Panel is correct, complete and not misleading. That such persons should at least act honestly and in good faith in their dealings with the Panel goes without saying and is vital to the efficacy of the regulatory regime. These obligations underpin the Code and compliance with them is essential if the Executive is to function effectively."

Further details

Details of the decision are contained in Panel Statement 2017/1.

The Committee found:

  • both persons involved in the underlying transactions had repeatedly attempted to mislead the Executive
  • both of them separately and on repeated occasions provided information to the Executive which they knew to be incorrect and misleading.

The Panel’s investigative process was always going to reveal the untrue, concocted story put forward by the individuals concerned. The Committee noted that the evidence produced by the Executive was irrefutable.

The Committee concluded there was “no conceivable excuse for the dishonest representations made systematically to the Executive.”  The Committee was particularly concerned by the misdating of a document provided to the Panel and commented: “Dishonestly misdating, and then proffering, a document in order to deceive a statutory regulator into believing that it was a contemporary acknowledgement of a debt can only merit the most serious sanction open to the Panel...”

If you would like to discuss this decision or any aspect of the Takeover Code please speak to your usual contact at Burges Salmon or Nick Graves.

Key contact

Nick Graves

Nick Graves Partner

  • Head of Corporate
  • Corporate Advice
  • Mergers and Acquisitions

Subscribe to news and insight


Our market-leading corporate lawyers specialise in delivering high value strategic transactions for a wide range of businesses.
View expertise