Takeover Panel Consults on Miscellaneous Code Amendments

The Takeover Panel has published a consultation paper PCP 2026/1, proposing a range of amendments to the Takeover Code.

While the Paper characterises most of these proposals as codifying existing practice or simplifying existing provisions, several carry real practical consequences that offerors, targets and their advisers should be alive to.

Acting in concert: standstill and voting agreements

• PCP 2026/1 proposes amendments to Note 5 of the definition of "acting in concert" to clarify that standstill agreements which restrict a shareholder from reducing its shareholding (but do not prevent it from increasing its stake) will generally result in the shareholder and directors being treated as 'acting in concert', subject to certain exceptions (regarding accepting or agreeing to accept an offer).
  
  
• The Panel has also proposed to make explicit that, for those exceptions to apply, standstill provisions must permit acceptance by a shareholder of any offer for the company's shares, whether or not board-recommended. This could have a real-world impact where parties have structured lock-up provisions on the assumption a carve-out for recommended offers was sufficient - it may be that under the revised Note 5, their drafting does not achieve the intended result.
  
  
• The same concert party treatment is proposed for voting agreements requiring a shareholder to support the board on director appointments or removals, regardless of the parties' prior relationship (including in relationship or settlement agreements with a previously dissenting shareholder). However, there is an exception: agreements that are limited to blocking a vote for a board-opposed resolution, or against a board-supported one, will not normally trigger concert party status.
  
  
• This codifies the Panel's long-standing view that arrangements which "lock up" a shareholder beside the board can create a de facto concert party, even without a formal joint bid. Corporates and sponsors negotiating standstill and voting agreements should take care that their drafting does not trigger any unintended consequences if the proposed changes to Note 5 do come into effect.

Reverse takeovers and equality of information

• The definition of "reverse takeover" is to be broadened so that it captures any acquisition by a Code company that might require it to increase its existing voting equity share capital by more than 100% as consideration, not just acquisitions of another Code company. This brings both acquisitions of non-Code companies and asset acquisitions squarely within the definition. It is sensible housekeeping as it gives the market clarity on scope without changing how the reverse takeover provisions actually operate in practice, since the Panel already applies several of them on this wider basis.
  
  
• PCP 2026/1 also proposes to extend Rule 21.3's equality-of-information principle to reverse takeovers (noting the proposed expanded definition). Therefore, once an offer situation has arisen, information given to a counterparty on a reverse takeover must be shared with competing bidders on request, but only information provided from the point the board became aware of a possible offer, mirroring the existing rule for asset sales.
  
  
• These changes reflect the Panel's broader "substance over form" approach: a sufficiently large transaction can transform the target, regardless of whether the counterparty happens to be a Code company. Extending the equality-of-information principle to these deals helps level the playing field between a board-sponsored transaction and a conventional takeover offer.

Simplifying Rule 9.1

This is the longest section of the consultation paper and contains its most substantive proposals, alongside a number of minor amendments that the paper itself confirms would not alter the effect of the relevant provisions.

• The first substantive point concerns collective shareholder action. The Panel proposes to update Practice Statement 26 to confirm that shareholders discussing their views on an offer (including whether to accept it or vote in favour of a scheme) will not, of itself, indicate that a concert party has formed. This is a welcome clarification for fund managers and institutional investors, for whom the risk of inadvertently forming a concert party through ordinary pre-decision engagement has long been a source of concern.
  
  
• The second concerns transfers of shares between members of a concert party. Under the current rules, an intra-concert-group transfer could trigger a mandatory offer obligation, which the Panel may then choose to waive. The proposal reverses this: no obligation will normally arise from an intra-concert party transfer, although the Panel retains the ability to require an offer where relevant factors warrant it. For example, a change in the group's dominant member, or a price paid significantly above market. This is a sensible change, since an internal transfer does not alter the concert party's aggregate holding. Parties considering internal reorganisations should note, however, that Panel consultation remains required where the transfer would take a single member's individual interest to, or further above, the 30% threshold.
  
  
• Third, Note 10 on convertible securities, warrants and options is to be amended to reflect the Panel's existing practice of granting a Rule 9 waiver, in certain circumstances, upon exercise of these instruments, even where no waiver was obtained at the time of issue.

PUSU deadline extensions and announcements

• Rule 2.6(c) is to be amended so that it no longer lists the specific factors the Panel takes into account when deciding whether to extend a "put up or shut up" deadline, and no longer requires the offeree board to comment on those factors in its extension announcement.
  
  
• This change is intended to reflect settled market practice. The Panel routinely grants extension requests on the basis that an offeree board seeking one will already have concluded it is in shareholders' interests, and the Panel does not in practice require boards to address the listed factors, taking the view that boards are best placed to judge what an announcement should say.

Frustrating Action

• The Notes to Rule 21.1 are set to be amended so that, where a potential offeror's identity has not been made public, the frustrating action restrictions lapse at 5.00 pm on the seventh day following the target board's unequivocal rejection of that approach. Boards will therefore know precisely when the door reopens to ordinary business decisions once they have turned an approach down.
  
  
• The change essentially puts into the Takeover Code something the Panel has already been doing in practice. Recent situations have shown boards are keen to establish exactly when they're free to resume M&A activity or capital management plans after rejecting an unnamed or preliminary approach. Fixing that point in the Takeover Code should also cut down on later arguments over whether a particular step taken afterwards amounted to improper frustration.

Rule 16 Fairness Opinion

• Rule 16 is to be amended so that, when an independent adviser must confirm a special deal or management incentivisation arrangement is "fair and reasonable," the opinion must expressly state this is "so far as shareholders are concerned." This reinstates wording first proposed in PCP 2009/2, which the Panel dropped at the time in response to industry concerns - a decision it now considers was misplaced. The change confirms the central role of the Rule 3 adviser in scrutinising management rollover and incentive arrangements, reflecting the Panel's clear expectation that management packages must be justifiable on their own merits, not simply a "side deal" to secure a recommendation.
  
  
• In practice, well-advised independent advisers are likely to have applied a shareholder-focused standard informally in any event, so the amendment is unlikely to materially change the substantive analysis an adviser undertakes. Its real effect is to make that standard explicit, sharpening the opinion into a more targeted piece of shareholder protection rather than a general endorsement of commercial terms.

Investment research and post-offer asset restrictions

• Under the current Rule 28.7 regime, connected investment research has to be deleted from a target's website the moment an offer period begins. The Panel now proposes to scrap that requirement, so shareholders retain access to more research throughout the process - the trade-off being that any firm behind a forecast feeding into a consensus profit forecast figure must have its connection to the relevant party spelled out.
  
  
• A related but distinct change targets Note 1(a) on Rule 35.1. A former bidder that made an unqualified no-increase or acceleration statement would be barred from buying significant target assets for three months after its offer lapses or is withdrawn, matching the equivalent restriction that already applies under Rule 2.8 to a "no intention to bid" statement.
  
  
• Investors are likely to view the research change favourably, since it allows research to remain available to shareholders during an offer period as long as any conflict is properly disclosed. As for the asset restriction, its logic is straightforward: having made a public commitment not to increase an offer or accelerate its timetable, a bidder shouldn't then be free to walk away and immediately hoover up the target's key assets on the side. The point of the statement was to give it real teeth.

Next Steps

The consultation period runs until 2 October 2026. Once responses are in, the Panel will issue a Response Statement setting out the final amendments.

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