Takeovers Panel clarifies guidance for target boards on when frustrating actions will not be unacceptable

Proposed changes to guidance to clarify target boards' scope to undertake frustrating actions are helpful and should help them manage their business when they are subject to a bid, actual or potential.

The Takeovers Panel released on 14 September 2016 a consultation paper on proposed changes to its Guidance Note 12 which deals with "frustrating actions".

A "frustrating action" is defined by the Panel as an action by a target, whether taken or proposed, in the context of a control transaction, by reason of which:

• a takeover bid may be withdrawn or lapse; or
• a potential takeover bid is not proceeded with.

The Guidance Note explains the Panel's policy on when a frustrating action will be unacceptable because it will interfere with the reasonable and equal opportunity of shareholders to participate in control transactions or inhibit the acquisition of control in an efficient, competitive and informed market.