UK Takeover Code changes – what you need to know for Guernsey and Jersey companies

• The UK Takeover Code will be updated from 3 February 2025
  
  
• Companies with registered offices in the Channel Islands remain in-scope
  
  
• From 3 February 2027, the UK Takeover Code will only apply to companies that are UK quoted or were UK quoted within the preceding two years

With 2025 now upon us, we've turned our minds to changes to the United Kingdom's City Code on Takeovers and Mergers (the "Takeover Code") recently confirmed by the United Kingdom Takeover Panel (the "Panel"). 

The Panel regulates takeover bids and merger transactions (however effected) of certain companies which have their registered offices in the UK, the Channel Islands or the Isle of Man (defined in the Takeover Code as being "UK registered"). The Takeover Code does not apply to a company that is registered in any jurisdiction other than the UK, the Channel Islands or the Isle of Man – therefore, companies registered in Bermuda, BVI and Cayman are out-of-scope. 

Which companies are in-scope? 

From 3 February 2025, the Takeover Code will apply to a UK registered company if, on the relevant date (being the date on which an announcement is made of an offer or possible offer for a company or on which some other event occurs in relation to the company which has significance under the Takeover Code), either:

• any of its securities are UK quoted; or
• its securities ceased to be UK quoted within the previous two years,

in each case regardless of whether the company is UK resident.

Note that the current position under the Takeover Code considers whether or not a company is UK resident in determining the applicability of the Takeover Code. Following 3 February 2025 (and subject to the transitional provisions for transitional companies (see below)), the requirement for companies to have their place of central management and control in the UK, Channel Islands or the Isle of Man will be removed.

The Takeover Code does not apply to open-ended investment companies.

Which companies are excluded?

The Takeover Code does not apply to a UK registered company which is not UK quoted (and which has not recently been UK quoted) solely by virtue of its securities or other interests being traded using another platform, such as: (i) Private Intermittent Securities and Capital Exchange System (or PISCES); (ii) a private market (for example, TISE Private Markets); or (iii) a secondary market of a crowdfunding platform.

Subject to the transitional arrangements noted below, and provided the relevant company has not been quoted within the previous 2 years, the Takeover Code will no longer apply in the future to: (i) a public or private company which ceased to be UK quoted more than two years prior to the relevant date (being the date on which an announcement is made of an offer or possible offer for a company or on which some other event occurs in relation to the company which has significance under the Takeover Code); (ii) a public or private company whose securities are, or were previously, admitted to trading solely on an overseas market; (iii) a public or private company whose securities are, or were previously, traded using a matched bargain facility; (iv) any other public company which is not UK quoted; and (v) a private company which filed a prospectus at any time during the 10 years prior to the relevant date.

When will these changes take effect?

The changes to the Takeover Code will come into effect from 3 February 2025. 

A two year transition period will run from 3 February 2025 to 2 February 2027. This transitional period is intended to provide "transition companies", being companies which are currently subject to the Takeover Code but will be excluded from the amended regime, with sufficient time (alongside shareholders in transition companies), to consider what action they may wish to take prior to the Code ceasing to apply to the relevant company. 

These are welcome changes for Guernsey and Jersey quoted companies, particularly the significant shortening of the applicability period from 10 years to two years. This is good news for market participants looking for certainty around the applicability of the Takeover Code. 

On a related note, you may be interested to read our recent series on take private transactions for Guernsey, Jersey, Bermuda, BVI and Cayman entities on the London Stock Exchange. In addition, please also see our note on the benefits using of Guernsey and Jersey companies for UK and US listings.