Produced with input from Rebecca Cousin of Slaughter and May on market practice.
The nature of a mandatory offer
Most takeover offers are voluntary, in the sense that the offeror elects to make a bid for control of a company (or for a class of its shares), usually after careful consideration and preparation, and (subject to some restrictions) chooses the consideration to be offered and the conditions to be attached (see Practice Note: Voluntary, partial and tender offers).
One of the best known rules of the Code, however, is Rule 9, which requires a person (or persons acting in concert) to make a takeover offer for a company subject to the Code once that person’s shareholding (or those persons' combined shareholdings) in that company cross certain thresholds. Such an offer is known as a mandatory offer or a Rule 9 offer. Mandatory offers are in practice infrequent, as they are generally considered as something to avoid.
For details of which companies are subject to the Code, see Practice Note: The Panel and the regulatory framework of takeovers—Companies subject to the Code.
Rule
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