• UK FB issued its analysis of and response to, UK TO Panel's consultation on proposed amendments to Rule 21 of the Takeover Code, dealing with frustrating actions.
• Follows UK TO Panel May 2023, proposed amendments on Rule 21.

Overview

• Rule 21.1 restricts board of offeree company from action that may lead to an offer being frustrated, unless offeree obtains shareholder approval, or panel gives consent.
• Proposed updates to rule and notes are for offeree firms' flexibility to conduct ordinary course activities/not restrict offeree board from actions unlikely to frustrate an offer.
• Includes new draft practice statement explaining rule 21.1 application if change made.

UK FB Response

• Generally welcomed proposals, which balance protecting offeror legitimate interests and allowing an offeree to continue to operate business in the ordinary course.
• Response offers suggestions where further clarity from UK TO Panel would be helpful.