Forward -

The Takeover Panel (the Panel) is the principal regulator of the mergers and acquisitions process in the UK for companies that have their registered office in the United Kingdom, Channel Islands and the Isle of Man if any of their securities are admitted to trading on a regulated market in any of those jurisdictions. Historically, the Panel was only concerned with protecting shareholders in offeree companies from these jurisdictions, but its obligations were extended in line with the requirements of the European Takeover Directive in 2006. The Panel also regulates the acquisition of some private and unlisted companies which meet relevant criteria.

The Panel was established in 1968 following a number of high-profile offers during which what would now be considered dubious practices were used by the offeror or offeree to gain an advantage over the other party. Shareholders were often left ignorant of what exactly was happening. Prompted by the UK government, the City of London, through the auspices of the Bank of England, determined that a regulator with the sole purpose of overseeing takeovers should be established. The Panel was thus created. Participants in transactions governed by the Takeover Code (the Code) should always bear in mind the following fundamental points:

1. The overriding approach of the Panel is that shareholders are the owners of the company and they should decide its future, particularly at the crucial time of a takeover. The Panel therefore makes no decision on the merits of an offer, this being a matter for shareholders, but the Panel does try to ensure that shareholders are given sufficient time and information to make an informed decision.

2. From the outset, the Panel has been practitioner-based. In that regard it is a prime example of self-regulation, which means that, even today, the two major committees of the Panel (the Code Committee, responsible for proposing and implementing the Rules of the Code (the Rules) and the Hearings Committee, responsible principally for determining, following a complaint, whether the Panel Executive has acted in accordance with the objectives of the Rules) are comprised almost exclusively of senior practitioners of those bodies interested in the offer process, namely shareholders and hedge funds, as well as market practitioners such as lawyers, bankers and brokers and, of course, the companies themselves.

3. Perhaps most significantly, the Panel’s approach is principle-based. The original, very slim, Code contained a number of statements about the Panel’s approach which in time were codified as the General Principles: in essence the Rules of the Code flow from the General Principles as more explicit statements of those General Principles. However, the great advantage of principlebased regulation is that it enables the Panel to deal with unexpected events in offers, as it has done in the past with, for example, dual-listed company transactions, so called “virtual bids” and derivatives.