Reverse takeovers
Reverse takeovers

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • Reverse takeovers
  • Key provisions
  • Definition of a 'reverse takeover'
  • Percentage ratio
  • Fundamental change
  • Shell companies
  • Reverse takeover: removal of the rebuttable presumption of suspension for most companies
  • Reverse takeover procedure: shell companies
  • Early engagement on reverse takeovers
  • Is a suspension required?
  • More...

Reverse takeovers

This Practice Note focuses on the regulatory requirements applicable where a company with a standard or premium listing on the Official List of the Financial Conduct Authority (FCA) (listed company) is carrying out or proposing to carry out a significant transaction which is a reverse takeover. It also considers the application of the City Code on Takeovers and Mergers (Takeover Code) to reverse takeovers.

A reverse takeover is essentially an acquisition by a listed company of target shares or assets which are larger than the listed company itself or which would result in a fundamental change in the business, the board or voting control of the listed company.

Key provisions

The key provisions a listed company must follow are those set out in the Chapter 5 of the Listing Rules (LR), specifically LR 5.6.

LR 5.6 applies to a listed company with a:

  1. premium listing of equity shares

  2. standard listing of equity shares, or

  3. standard listing of certificates representing equity securities, eg global depositary receipts

LR 5.6 does not apply where a listed company acquires the shares (or certificates representing equity securities) of a target with the same listing category as the listed company.

There are also provisions in the Companies Act 2006 (CA 2006), the Disclosure Guidance and Transparency Rules (DTR) and the Takeover Code which may apply depending on the circumstances.

If the listed company is going

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