UK Public M&A Monthly Activity Update: July 2024

Firm Offers breakdown this month:

Year to date breakdown:

July 2024 Updates:

New UK Listing Rules in force

The FCA published a Policy Statement (PS24/6) in July 2024 containing the final new UK Listing Rules (UKLRs) to implement the long awaited restructuring of the UK listing regime (proposed in CP23/31). While the genesis of the rule changes is the desire to attract more companies to list in London, they will have a significant impact on existing listed companies.

UKLRs

The new rules, which involve a complete re-write of the rule book, came into force on 29 July 2024 – and obligations in the current rules not carried across to the new UKLRs fell away on that date.

Proceeding with substantially all of the trailed proposals from December 2023 and March 2024, the key changes for companies in the new Equity Shares (Commercial Companies) category are that:

• shareholder votes will no longer be required for significant/Class 1 transactions;
• shareholder votes will no longer be required for related party transactions;
• a modified sponsor regime will remain a cornerstone of investor and market protection;
• relationship agreements with controlling shareholders will no longer be mandatory; and
• there will be significant changes to the eligibility requirements for IPO candidates, moving to a disclosure-based rather than rules-based regime as well as adding institutions to the categories of people who can hold enhanced voting rights in a company with a dual class share structure.

All premium listed companies automatically migrated to the new Equity Shares (Commercial Companies) (ESCC) category; standard listed companies moved to the new transition category; and overseas companies with a secondary listing in London have their own category.

UK MAR and the DTRs continue to apply in the same way and are largely unchanged.

Further information

You will find more detail on the new UKLRs in our three snapshots:

• UKLR – new rules snapshot: this is a two page summary of the new UKLRs/ESCC;
• UKLR – changes for listed companies: this is a one page summary of the key changes for existing listed companies migrating from the premium segment to the new ESC; and
• UKLR – the final rules are out: this is a six page comparision of the CP23/31 proposals and the final UKLRs with further detail of any changes.

We also discuss the new listing regime in our On the Horizon podcast which you can listen to here.

We also discuss the impact the new rules will have on public M&A in the UK in episode 25 of our public M&A podcast series.

In particular we discuss:

• what the new listing regime looks like and the reasons behind the changes;
• what listed companies have to do when executing a significant transaction; and
• the rules around related party transaction and reverse takeovers.

To listen to the full conversation please visit SoundCloud, Spotify or iTunes.

All episodes in our UK public M&A podcast series are available on our public M&A podcast page.

Compensation order and cold-shoulder rulings for breaches of Takeover Code

The Takeover Panel and Takeover Appeal Board have issued a ruling pursuant to which:

• 3 individuals have been ordered to pay compensation of up to £32.5 million to former shareholders of MWB Group Holdings;
• 10 individuals (including the 3 ordered to pay compensation) have been cold-shouldered, including two Swiss lawyers and the chair of a French investment advisory firm; and
• another has been publicly censured.

The rulings relate to:

• a breach of Rule 9 in relation to MWB by the individuals who have been ordered to make the compensation payment;
• a breach of the requirement to take all reasonable care not to provide incorrect, incomplete or misleading information to the Panel (Section 9(a) of the Introduction to the Code) by those who have been cold-shouldered; and
• in the case of the public censure, a breach of Section 6(b) of the Introduction to the Code (not consulting the Panel when he was in any doubt as to whether a proposed course of action was in accordance with the Code).

Whilst the compensation order relates to a breach of Rule 9, most of the individuals have been cold-shouldered for misleading the Takeover Panel.

This is the first time a compensation order has been made under the powers given to the Panel under section 954 of the Companies Act, and only the fifth time the Panel has used its cold-shoulder powers. No FCA-regulated firm can act for an individual who has been cold-shouldered on any transaction subject to the Takeover Code for the duration of the Panel sanction (ranging in this case from one year to 5 years).

Ordinarily, the Panel Executive would have required a Rule 9 offer to made by the concert party members to the other MWB shareholders. However, as MWB was liquidated in 2013 and then removed from the Register of Companies on 15 April 2018, the Executive took the view that it was impracticable, if not impossible, to restore MWB to the Register with a view to reconstituting the company and requiring the Rule 9 offer. Accordingly, it sought a compensation order as an alternative.

The full detail is set out the Hearings Committee Ruling (PS 2024/16). A summary of the Panel's sanctions is set out in PS 2024/17. The Takeover Appeal Board ruling (TAB 2024/1) related only to the compensation order, rather than the facts or other findings.

We discuss the rulings in our episode 26 of our public M&A podcast series, which you can listen to here.