RE: AIM shares, rule 9.3 Oct 2025 14:27
The UK Takeover Code, or City Code on Takeovers and Mergers, is a set of statutory rules and general principles that govern mergers and acquisitions (M&A) of public companies in the UK, the Channel Islands, and the Isle of Man. It is administered and enforced by the Takeover Panel.
Key objectives
The main objectives of the Takeover Code are to ensure:
Fair and equal treatment of shareholders: All shareholders of the same class must be given equivalent treatment by an offeror.
Shareholder protection: Shareholders must be given sufficient time and information to make properly informed decisions on a takeover bid.
Orderly market conduct: The Code provides a clear framework to regulate the conduct of takeovers, preventing false markets and ensuring an orderly process.
General principles
The Code is based on six General Principles that are interpreted to achieve their underlying purpose:
Equivalent treatment: All shareholders of the same class must be afforded equivalent treatment.
Sufficient information: Shareholders must have enough time and information to assess a bid.
Board responsibility: The board must act in the best interests of the company and not deny shareholders the opportunity to decide on a bid.
No false markets: Actions must not create a false market for the securities of the involved companies.
Funding certainty: A bidder must only announce an offer after ensuring it can be fully financed.
No undue disruption: A target company should not be hindered in its operations for an unreasonable amount of time.
Rule 9: The mandatory offer
A critical aspect of the Code is the requirement for a mandatory offer under Rule 9:
When it applies: A person (together with any "acting in concert" parties) must make a mandatory cash offer for a company if their interest in shares reaches or exceeds 30% of the voting rights.
****Highest price: The mandatory offer must be made at the highest price paid by the bidder or its concert parties for shares within the preceding 12 months.****
Waiver: In certain circumstances, the Takeover Panel can waive the mandatory offer obligation, usually requiring a vote by independent shareholders.
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