Takeover Panel consults on proposals to amend Rule 31.9 of the Code

United Kingdom

On 7 January 2003 the Takeover Panel published a Consultation Paper (PCP12) setting out its proposals to amend Rule 31.9 of the Takeover Code. The Rule prohibits a target company, without the consent of the Panel, making announcements about certain significant matters after Day 39 in the offer timetable, and is designed to ensure that the bidder and the target shareholders have available to them at an appropriate time all relevant information about the target.

During an offer period announcements by the target of certain positive results or developments in its business could have the effect of increasing the perceived value of the target's business, and could therefore cause the bidder and the target shareholders to change their views of the merits of the offer. Announcements of relevant information after Day 39 are therefore discouraged (although they can be made in exceptional circumstances), in order to ensure that the bidder has time to consider whether to make a revised offer, and that target shareholders have time to consider whether to accept the original offer. The bidder can normally revise its offer up to Day 46 to take account of such developments.

At present, the matters which are deemed to be price sensitive and prohibited by Rule 31.9 are announcements of trading results, profit or dividend forecasts, asset valuations and proposals for dividend payments. From time to time the Panel has had to consider whether the list of prohibited matters should be treated as exhaustive or interpreted more widely to cover other matters which could also have an effect on the perceived value of the target. The Panel is therefore consulting on whether the list should be extended to include announcements of any "material new information" (such as material acquisitions and disposals) about the target, and on various consequential amendments that it believes should follow from such a change. These include changing Rules 31.5 (no extension statements) and 32.2 (no increase statements) to allow a bidder to reserve the right not to be bound by a no extension or no increase statement if the target announces material new information with the Panel's consent after Day 39; and allowing the Panel discretion to re-set Day 46 to seven days after an announcement which is made (with the Panel's consent) after Day 39. Similarly, it is proposed that in a share for share offer the bidder should not be permitted, without the Panel's consent, to announce any material new information (which could increase the value of the securities offered as consideration) after Day 46.

The consultation period closes on 17 February 2003. Following this, the Panel will publish a Response Statement containing details of the responses received, the Panel's conclusions, and any amendments to be made to the Code. The Consultation Paper can be found on the Panel's website at


For further information please contact:

Michael Draper
Corporate Partner
Tel: +44 (0)20 7367 2068
e-mail: [email protected]

Peter Bateman
Corporate Professional Support Lawyer
Tel: +44 (0)20 7367 3145
e-mail: [email protected]