Companies, transactions and persons subject to the Code
This section (except for sections 3(d) and (e)) sets out the rules as to the companies, transactions and persons to which the Code applies.
Companies
UK, Channel Islands and Isle of Man registered and quoted companies
The Code applies to any company which has its registered office* in the United Kingdom, the Channel Islands or the Isle of Man if any of its securities are admitted to trading on a UK regulated market, a UK MTF#, or a stock exchange in the Channel Islands or the Isle of Man.
Recently quoted companies
The Code also applies to any company (not falling within paragraph (i) above or paragraphs (iii) or (iv) below) which has its registered office* in the United Kingdom, the Channel Islands or the Isle of Man if any of its securities were admitted to trading on a UK regulated market, a UK MTF#, or a stock exchange in the Channel Islands or the Isle of Man at any time during the two years prior to the relevant date.
The “relevant date” is the date on which an announcement is made of an offer or possible offer for the company or on which some other event occurs in relation to the company which has significance under the Code.
Transition companies
During the transition period only, the Code applies to a transition company if, on the relevant date, the Code would apply to an offer for the company under paragraph (ii) of former section 3(a) of the Introduction (as if paragraph (ii) of former section 3(a) of the Introduction had remained in force on the relevant date).
See the Transitional Appendix for the definitions of “former section 3(a) of the Introduction”, “relevant date”, “transition company” and “transition period”.
Companies to which the Code does not apply
The Code does not apply to an open-ended investment company or to a company with a sole beneficial owner.
If a company which falls within paragraph (i) or paragraph (ii) above becomes a company with a sole beneficial owner, the Code will cease to apply to it and the Code will thereafter apply to the company only if it subsequently falls within paragraph (i) above.
Waivers
Where appropriate, the Panel may grant a waiver from the application of some or all of the provisions of the Code in respect of a company referred to in paragraph (ii) or paragraph (iii) above.
*In the case of a UK unregistered company, the reference to “registered office” shall be read as a reference to the company’s principal office in the UK.
#In the case of a company whose securities are or were admitted to trading on a UK MTF, the Code will apply only if the company approved trading, or requested admission to trading, of its securities on the relevant UK MTF.
Transactions
The Code is concerned with regulating takeover bids and merger transactions of the companies referred to in section 3(a) above, however effected, including by means of statutory merger or scheme of arrangement (as defined in the Definitions Section). The Code is also concerned with regulating other transactions (including offers by a parent company for shares in its subsidiary, dual holding company transactions, new share issues, share capital reorganisations and offers to minority shareholders) which have as their objective or potential effect (directly or indirectly) obtaining or consolidating control of the relevant companies, as well as partial offers (including tender offers pursuant to Appendix 5) to shareholders for securities in the relevant companies. The Code also applies to unitisation proposals which are in competition with another transaction to which the Code applies.
The Code applies to all the above transactions at whatever stage of their implementation, including possible transactions which have not yet been announced.
References in the Code to “takeovers”, “takeover bids”, “bids” and “offers” include all transactions subject to the Code as referred to in this section.
The Code does not apply to offers for non-voting, non-equity capital unless they are offers required by Rule 15.
Related matters
In addition to regulating the transactions referred to in section 3(b) above, the Code also contains rules for the regulation of things done in consequence of, or otherwise in relation to, takeovers and about cases where any such takeover is, or has been, contemplated or apprehended or an announcement is made denying that any such takeover is intended.
Dual jurisdiction
Takeovers and other matters to which the Code applies may from time to time be subject to the dual jurisdiction of the Panel and an overseas takeover regulator. In such cases, early consultation with the Panel is advised so that guidance can be given on how any conflicts between the relevant rules may be resolved.
Cancellation of admission to trading
A company referred to in paragraph (i) of section 3(a) above may decide that it wishes to cancel the admission of its securities to trading on a UK regulated market, a UK MTF, or a stock exchange in the Channel Islands or the Isle of Man. In such circumstances, early consultation with the Panel is advised so that guidance can be given on the appropriate disclosure to be made to shareholders about the fact that, as a result of the cancellation of the admission of its securities to trading, the company will fall within paragraph (ii) of section 3(a) above for a period of two years, following which the Code will cease to apply.
Code responsibilities and obligations
In addition to the companies referred to in section 3(a) above, the Code applies to a range of persons who participate in, or are connected with, or who in any way seek to influence, intervene in, or benefit from, takeovers or other matters to which the Code applies.
The Code also applies to all advisers to such persons, and all advisers in so far as they advise on takeovers or other matters to which the Code applies. Financial advisers to whom the Code applies have a particular responsibility to comply with the Code and to ensure, so far as they are reasonably able, that their client and its directors are aware of their responsibilities under the Code and will comply with them and that the Panel is consulted whenever appropriate.
The Code also applies to any directors, employees or representatives through whom any body corporate, partnership or other entity to which the Code applies acts. The Panel expects all bodies corporate, partnerships and other entities to which the Code applies to ensure that their relevant directors and employees receive appropriate and timely guidance in respect of the Code and will hold any such entity responsible for its directors’ and employees’ acts or omissions.
The Code imposes limitations on the manner in which directors can act in connection with takeovers, which may impinge on the duties that the directors of offeror and offeree companies might owe.
The Code applies in respect of the acts and omissions of any person in connection with a takeover or any other matter to which the Code applies, notwithstanding that the offeree company may since have ceased to be subject to the Code.
In this section 3(f), references to “directors” means, in relation to any body corporate, its directors and officers, in relation to any partnership, its partners, and, in relation to any other entity, those persons exercising equivalent functions on behalf of the entity concerned.
In cases of doubt, the Panel must be consulted as to the persons to whom the Code applies.