The Takeover Panel Updates on Private Equity and City Code

The Takeover Panel has made some significant updates on private equity and City Code. These changes aim to ensure that private equity firms are held to the same standards as other investors.

The Takeover Panel has clarified its rules on private equity firms being treated as "third party" bidders, which means they will be subject to the same rules as other investors. This includes disclosing their intentions and financing arrangements.

Private equity firms will now be required to disclose their ownership structure and financing arrangements, just like other bidders. This increased transparency will help to level the playing field and prevent unfair practices.

The Takeover Panel's updates will also apply to City Code, which governs takeover bids in the UK. This means that private equity firms will have to comply with the same rules as other investors when making takeover bids.

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Private equity firms have been involved in several high-profile takeover bids in recent years. The Takeover Panel has played a key role in regulating these transactions.

The Panel's rules require private equity firms to disclose their intentions and financial backing before making a bid. This helps to prevent surprise takeovers and gives listed companies time to consider their options.

In 2019, the Panel investigated a bid by a private equity firm for a UK-based retailer, citing concerns over the firm's lack of disclosure. The Panel's intervention ultimately led to the firm withdrawing its bid.

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As we explore the world of private equity, it's interesting to note that the UK's Takeover Panel has international equivalents.

In Australia, the equivalent is the Australian Takeovers Panel. This panel plays a crucial role in overseeing mergers and acquisitions in the country.

In Hong Kong, the Takeovers and Mergers Panel takes on a similar function.

Similarly, in Ireland, the Irish Takeover Panel is responsible for regulating takeovers.

New Zealand's Takeovers Panel also falls under this category.

The Swedish Securities Council, also known as Aktiemarknadsnämnden, serves as the equivalent in Sweden.

Here's a list of international equivalents to the Takeover Panel:

Private equity firms have been actively involved in the recent market fluctuations, with some notable actions taken by prominent players.

KKR's decision to cut its fees by 50% in 2020 is a prime example of this trend, demonstrating the industry's willingness to adapt to changing market conditions.

The COVID-19 pandemic has accelerated the shift towards digitalization, with private equity firms increasingly investing in technology-enabled businesses.

Blackstone's acquisition of a majority stake in Ancestry.com in 2020 is a notable example of this trend, highlighting the firm's focus on digital assets.

Private equity firms are also re-evaluating their investment strategies in response to the pandemic, with a growing emphasis on resilient businesses and sectors.

The likes of Apollo Global Management and Carlyle Group are leading the charge, with a focus on investing in companies with strong balance sheets and diversified revenue streams.

Private equity firms are also exploring new financing options, with a growing interest in sustainability-linked loans and other innovative financing structures.

The use of ESG (Environmental, Social, and Governance) factors in investment decisions is becoming increasingly prevalent, with private equity firms recognizing the importance of long-term sustainability.

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Companies that have traded their securities on certain platforms, such as PISCES or TISE Private Markets, are exempt from the Takeover Code.

Public companies that have traded solely on overseas markets like the NYSE or NASDAQ are also outside the Takeover Code's jurisdiction.

Private companies that filed a prospectus in the past 10 years are exempt, unless they were UK-listed within the previous two years.

During the transitional period, companies currently subject to the Takeover Code can explore alternative arrangements, such as amending their articles of association or allowing shareholders to exit their investments.

This transitional period is shorter than initially proposed, lasting just two years, giving companies a relatively short timeframe to adjust to the new regime.

Consider reading: 5 Years

The Directors General of the Takeover Panel have played a crucial role in shaping the organization's history. The first Director General was Ian Fraser, who led the panel from 1968 to 1972.

The panel has had a total of 24 Directors General since its inception. The most recent Director General, Omar Faruqui, took over in 2024.

Let's take a look at the list of Directors General, which spans over five decades:

If a company's securities are traded using matched bargain facilities and platforms like PISCES, TISE Private Markets, or crowdfunding secondary markets, it's excluded from the Takeover Code.

Companies whose securities are traded solely on an overseas market, such as the NYSE or NASDAQ, don't fall within its jurisdiction.

Private companies that filed a prospectus at any time during the 10 years prior to the relevant date are exempt, unless they were UK-listed within the previous two years.

If a company was UK-listed in the past, but not in the last two years, it's still exempt from the Takeover Code.

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Companies currently subject to the Takeover Code but falling outside the new regime will be subject to a two-year transitional period. This is a significant reduction from the initially proposed three-year period and is much shorter than the existing 10-year period.

During this time, transition companies can explore alternative arrangements to adapt to the new regime. They can amend their articles of association to better align with the new rules.

Transition companies can also allow shareholders to exit their investments, providing a way for them to adjust to the changing landscape. This can be a complex process, but it's a valuable option for those who need it.

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The Takeover Panel's timing is crucial to understand, especially when it comes to the implementation of new amendments. The amendments will take effect on 3 February 2025.

The transitional arrangements will be in place until 3 February 2027. This means that companies that are UK quoted or were UK quoted within the preceding two years will be subject to the Takeover Code.

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The timing of certain events can be crucial in legal cases.

The amendments to a specific law will take effect on 3 February 2025.

In some cases, transitional arrangements can provide a temporary reprieve.

These arrangements will cease on 3 February 2027, after which a new set of rules will apply to certain companies.

In the case of Panel v King [2018] CSIH 30, the court emphasized the importance of timely action in legal proceedings.

The case involved a dispute over a compensation claim, where the claimant's delay in pursuing their case led to a significant reduction in their entitlement.

A delay of just three months in serving the claim form can have a substantial impact on the outcome of a case, as seen in this instance.

The court's decision highlights the need for claimants to act swiftly in pursuing their claims, lest they risk losing out on potential compensation.

The court's ruling also underscores the importance of keeping track of deadlines and timelines in legal proceedings.

The Takeover Panel is a UK-based regulatory body responsible for reviewing and approving or blocking takeover bids. The Panel's primary goal is to ensure that companies are not taken over unfairly or without proper consideration for their stakeholders.

A takeover bid is a formal offer made by one company to acquire another company's shares, resulting in a change of control. The Panel reviews these bids to determine whether they are fair and reasonable.

The Panel's powers are derived from the Companies Act 1985, which gives it the authority to investigate and block takeover bids if it deems them to be unfair or contrary to the public interest.