The Takeover Code and share plans
Produced in partnership with Liz Pierson of Squire Patton Boggs
The Takeover Code and share plans

The following Share Incentives guidance note Produced in partnership with Liz Pierson of Squire Patton Boggs provides comprehensive and up to date legal information covering:

  • The Takeover Code and share plans
  • Bidder priorities for share plans
  • Option numbers
  • Treatment of share plans on the transaction
  • Bid co-operation agreement
  • Rule 15 proposals
  • Future incentives following the transaction
  • 'Business as usual' and frustrating action

FORTHCOMING CHANGE: In November 2018, the Code Committee of the Takeover Panel published a consultation on proposed amendments to the Takeover Code in relation to the withdrawal of the UK from the EU. In a response statement published in March 2019, the Panel stated that it intended to adopt these proposals subject to some minor amendments. For further details, see Practice Note: Brexit—UK takeover regime—Panel consultation on amendments to the Code.

For many, an announcement of a bidder's firm intention to make an offer for the shares in a company is the starting gun in a takeover process. For those dealing with the target company's share plans though, the starting gun was fired some weeks earlier when the initial approach was made to the target company. This period prior to announcement of a takeover right until the takeover completes is governed by the Takeover Code.Takeover Code

The Takeover Code applies to offers for all listed and unlisted public companies considered by the Takeover Panel to be resident in the UK, the Channel Islands or the Isle of Man, as well as to some private companies in certain circumstances. In this context, an offer includes both general offers and schemes of arrangement.

The purpose of the Takeover Code is to ensure shareholders and those with interests in shares, such as optionholders, are treated fairly, and to provide an orderly framework within which takeovers are conducted. As such, it regulates the extent to which a bidder can influence the treatment of employee options and share awards, the proposals that must be made to optionholders and the future incentives a bidder can offer existing management.