Public M&A – changes to the companies to which the Takeover Code applies

The rules that narrow the scope of companies to which the Takeover Code applies are now in force.

The changes to the Code, which came into force on 3 February 2025, were set out in RS 2024/1, published in November 2024.

Under the new rules:

• Companies in scope – The Code will apply to companies incorporated in the UK (or Channel Islands or Isle of Man) which are, or have in the last two years been, admitted to trading on a UK regulated market (such as the Main Market of the London Stock Exchange), a UK multi-lateral trading facility (such as AIM), or a stock exchange in the Channel Islands or the Isle of Man (collectively referred to as "UK-quoted").
• Companies that will no longer be in scope – The Code will no longer apply to: companies which were UK-quoted more than two years prior to the date of an offer; companies whose securities are, or were previously, traded solely on an overseas market; companies whose securities are, or were previously, traded using a "matched bargain facility"; any other unlisted public company; or a private company which has filed a prospectus at any time during the 10 years prior to the relevant date.
• Disclosure on delisting – When a company delists, it will have to make appropriate disclosure to its shareholders about the fact that the Code will cease to apply after two years. The Panel has published a Note to Advisers with further information on this.
• Transitional arrangements – Companies that will cease to be subject to the Code as a result of these changes, will remain in scope for a transitional period of two years from the implementation date of the rule changes, that is until 2 February 2027. This is to allow these companies to put in place alternative arrangements to protect shareholders such as making appropriate amendments to their articles of association or enabling shareholders to exit their investment (although there is no obligation to put any arrangements in place). The transitional provisions are set out in a new Transitional Appendix in the Code.

We discuss the rule changes in more detail in this episode of our public M&A podcast series and the Takeover Panel’s website has a page detailing the companies to which the Code applies.