Mandatory offers

Published by a LexisNexis Corporate expert
Practice notes

Mandatory offers

Published by a LexisNexis Corporate expert

Practice notes
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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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United Kingdom
Key definition:
Mandatory offer definition
What does Mandatory offer mean?

Rule 9 of the Takeover Code requires a person to make a mandatory offer for a company when that person acquires an interest in the company’s shares which, either in itself or when aggregated with shares already held, carries 30% or more of the voting rights in the company.

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