Takeover Panel Consultation On Frustrating Action And Takeover Code Changes Now In Force

The Takeover Panel has published a consultation paper on possible amendments to Rule 21 on frustrating action (PCP 2023/1). The Takeover Code changes that were published in April are now in force.

Takeover Panel consultation paper (PCP 2023/1)

Rule 21.1 of the Takeover Code restricts the board of an offeree company from taking any action which may result in an offer or bona fide possible offer being frustrated, unless the target obtains shareholder approval, or the Panel gives its consent, for the action.

Overall, the Panel says it thinks Rule 21.1 operates satisfactorily and so it does not propose fundamental amendments to the Rule. However, it is proposing to:

• give companies more flexibility for actions which are either in the ordinary course of business for the particular company (such as buying or selling assets) or not material;