The Takeover Code ©The Panel on Takeovers and Mergers All rights reserved ISBN 0 9500466 6 3 PFBPH Typeset and printed by Donnelley Financial Solutions. COMMUNICATION WITH THE PANEL General enquiries Postal communications and “by hand” deliveries should be addressed to: The Panel on Takeovers and Mergers One Angel Court London EC2R 7HJ You may also contact the Panel as follows: Telephone: +44 (0) 20 7382 9026 Email: [email protected] Market Surveillance Unit The Panel’s Market Surveillance Unit may be contacted as follows: Telephone: +44 (0) 20 7638 0129 Email: [email protected] (Note: this email address is to be used solely for the transmission of disclosure forms and not for general enquiries or questions) Electronic filing of documents, announcements and other information Copies of documents, announcements and other information published in connection with an offer that are required to be sent to the Panel in electronic form should be sent by email to [email protected]. KEEPING THIS VOLUME UP-TO-DATE Future amendments or additions will be made by the issue of replacement or new pages. As and when amendments or additions are published they will be accompanied by an updated checklist of page references. In this way it will be possible to be sure that the volume is up-to-date. Further copies of the Code may be obtained at a price of £50 each. There is an annual charge of £25 for the amendments service. 5.7.21 PUBLICATION DATES First edition in loose-leaf format 19 April 1985 Second edition 26 January 1988 Third edition 25 October 1990 Fourth edition 8 July 1993 Fifth edition 16 December 1996 Sixth edition 12 July 2000 Seventh edition 1 May 2002 Eighth edition 20 May 2006 Ninth edition 30 March 2009 Tenth edition 19 September 2011 Eleventh edition 20 May 2013 Twelfth edition 12 September 2016 Thirteenth edition 5 July 2021 (From time to time amendments are issued.) 5.7.21 1 Contents—Summary THE CITY CODE ON TAKEOVERS AND MERGERS SECTION INTRODUCTION A GENERAL PRINCIPLES B DEFINITIONS C THE APPROACH, ANNOUNCEMENTS AND INDEPENDENT ADVICE D RESTRICTIONS ON DEALINGS E THE MANDATORY OFFER AND ITS TERMS F THE VOLUNTARY OFFER AND ITS TERMS G PROVISIONS APPLICABLE TO ALL OFFERS H CONDUCT DURING THE OFFER I DOCUMENTS FROM THE OFFEROR AND THE OFFEREE BOARD J PROFIT FORECASTS AND QUANTIFIED FINANCIAL BENEFITS STATEMENTS K ASSET VALUATIONS L DISTRIBUTION OF DOCUMENTATION DURING AN OFFER M OFFER TIMETABLE AND REVISION N RESTRICTIONS FOLLOWING OFFERS O PARTIAL OFFERS P REDEMPTION OR PURCHASE BY A COMPANY OF ITS OWN SECURITIES Q DEALINGS BY CONNECTED EXEMPT PRINCIPAL TRADERS R WHITEWASH GUIDANCE NOTE APPENDIX 1 FORMULA OFFERS GUIDANCE NOTE APPENDIX 2 DIRECTORS’ RESPONSIBILITIES AND CONFLICTS OF INTEREST GUIDANCE NOTE APPENDIX 3 RECEIVING AGENTS’ CODE OF PRACTICE APPENDIX 4 TENDER OFFERS APPENDIX 5 BID DOCUMENTATION RULES FOR THE PURPOSES OF SECTION 953 OF THE COMPANIES ACT 2006 APPENDIX 6 SCHEMES OF ARRANGEMENT APPENDIX 7 AUCTION PROCEDURE FOR THE RESOLUTION OF COMPETITIVE SITUATIONS APPENDIX 8 HEARINGS COMMITTEE RULES OF PROCEDURE APPENDIX 9 DOCUMENT CHARGES Doc 5.7.21 3 THE CITY CODE ON TAKEOVERS AND MERGERS Contents page INTRODUCTION 1 OVERVIEW A1 2 THE CODE A1 3 COMPANIES, TRANSACTIONS AND PERSONS SUBJECT TO THE CODE A2 4 THE PANEL AND ITS COMMITTEES A6 5 THE EXECUTIVE A8 6 INTERPRETING THE CODE A9 7 RULES OF PROCEDURE OF THE HEARINGS COMMITTEE A10 8 TAKEOVER APPEAL BOARD A10 9 PROVIDING INFORMATION AND ASSISTANCE TO THE PANEL AND THE PANEL’S POWERS TO REQUIRE DOCUMENTS AND INFORMATION A10 10 ENFORCING THE CODE A11 11 DISCIPLINARY POWERS A13 12 CO-OPERATION AND INFORMATION SHARING A14 13 FEES AND CHARGES A15 14 ISLE OF MAN A15 15 JERSEY A15 16 GUERNSEY A15 GENERAL PRINCIPLES B1 DEFINITIONS C1 5.7.21 4 CONTENTS CONTINUED RULES SECTION D. THE APPROACH, ANNOUNCEMENTS AND INDEPENDENT ADVICE RULE 1. THE APPROACH D1 RULE 2. SECRECY BEFORE ANNOUNCEMENTS; THE TIMING AND CONTENTS OF ANNOUNCEMENTS D2 2.1 Secrecy D2 2.2 When an announcement is required D2 Notes on Rule 2.2 1. Panel to be consulted D3 2. Clear statements D4 3. Rumour and speculation during an offer period D4 4. When a dispensation may be granted D4 2.3 Responsibilities of offerors and the offeree company D5 2.4 The announcement of a possible offer D5 Notes on Rule 2.4 1. Consequences of subsequent acquisitions of interests in shares D6 2. Indemnity and other dealing arrangements D6 3. Formal sale process D6 2.5 Terms and pre-conditions in possible offer announcements D6 Notes on Rule 2.5 1. Reservation of the right to set a statement aside or to vary the form and/or mix of consideration D8 2. Duration of restriction D8 3. Statements by the offeree company D8 4. Dividends D9 2.6 Timing following a possible offer announcement D9 Notes on Rule 2.6 1. Deadline extensions D11 2. Formal sale process D11 2.7 The announcement of a firm intention to make an offer D11 Notes on Rule 2.7 1. Intentions of the offeror with regard to the business, employees and pension scheme(s) D13 2. Persons acting in concert with the offeror D14 3. Reservations to a previous statement in relation to the terms of a possible offer D14 2.8 Statements of intention not to make an offer D15 Notes on Rule 2.8 1. Prior consultation D15 2. Setting aside a statement to which Rule 2.8 applies D16 3. Concert parties D16 4. Media reports D17 5. Significant asset purchases D17 5.7.21 5 CONTENTS CONTINUED 2.9 Announcement of numbers of relevant securities in issue D18 Notes on Rule 2.9 1. Options to subscribe D18 2. Treasury shares D18 2.10 Irrevocable commitments and letters of intent D18 Notes on Rule 2.10 1. Disclosure in firm offer announcement D19 2. Method of disclosure D19 3. Contents of announcement D20 4. Letters of intent procured prior to the commencement of the offer period D20 2.11 Distribution of announcements to shareholders, employee representatives (or employees) and pension scheme trustees D20 Notes on Rule 2.11 1. Where a circular summarising an announcement made under Rule 2.7 is sent D22 2. Shareholders, persons with information rights and employee representatives (or employees) outside the UK, the Channel Islands and the Isle of Man D22 3. Holders of convertible securities, options or subscription rights D22 RULE 3. INDEPENDENT ADVICE D23 3.1 Board of the offeree company D23 Notes on Rule 3.1 1. Management buy-outs and offers by controllers D23 2. When there is uncertainty about financial information D23 3. Where the independent adviser is unable to advise whether the financial terms of the offer are fair and reasonable D23 3.2 Board of an offeror company D23 Notes on Rule 3.2 1. General D24 2. Conflicts of interest D24 3.3 Disqualified advisers D24 Notes on Rule 3.3 1. Independence of adviser D24 2. Investment trusts D24 3. Success fees D25 5.7.21 6 CONTENTS CONTINUED SECTION E. RESTRICTIONS ON DEALINGS RULE 4. E1 4.1 Prohibited dealings by persons other than the offeror E1 4.2 Restriction on dealings by the offeror and concert parties E1 Notes on Rules 4.1 and 4.2 1. Other circumstances in which dealings may not take place E2 2. Consortium offers and joint offerors E2 3. No-profit arrangements E2 4. When an offer will not be made E2 5. No dealing contrary to published advice E3 6. Discretionary fund managers and principal traders E3 4.3 Gathering of irrevocable commitments E3 Note on Rule 4.3 Irrevocable commitments E3 4.4 Dealings in offeree securities by certain offeree company concert parties E3 Note on Rule 4.4 Irrevocable commitments and letters of intent E4 4.5 Restriction on the offeree company accepting an offer in respect of treasury shares E4 4.6 Securities borrowing and lending transactions by offerors, the offeree company and their concert parties E4 Notes on Rule 4.6 1. Return of borrowed relevant securities E4 2. Notice in lieu of disclosure E5 3. Discretionary fund managers and principal traders E5 4. Financial collateral arrangements E5 4.7 Sale of all or substantially all of the offeree company’s assets E5 RULE 5. TIMING RESTRICTIONS ON ACQUISITIONS E7 5.1 Restrictions E7 Notes on Rule 5.1 1. When more than 50% is held E7 2. New shares, subscription rights, convertibles and options E7 3. Allotted but unissued shares E7 4. “Whitewashes” E8 5. Maintenance of the percentage of the shares in which a person is interested E8 6. Discretionary fund managers and principal traders E8 7. Gifts E8 5.7.21 7 CONTENTS CONTINUED 5.2 Exceptions to restrictions E8 Notes on Rule 5.2 1. Single shareholder E9 2. Rule 9 E9 3. Revision E9 4. After an offer lapses E9 5.3 Acquisitions from a single shareholder — consequences E10 Notes on Rule 5.3 1. If a person’s interests are reduced E10 2. Rights or scrip issues and “whitewashes” E10 5.4 Acquisitions from a single shareholder — disclosure E10 Note on Rule 5.4 Disclosure of the identity of the person dealing E10 RULE 6. ACQUISITIONS RESULTING IN AN OBLIGATION TO OFFER A MINIMUM LEVEL OF CONSIDERATION E11 6.1 Acquisitions before a firm offer announcement E11 6.2 Acquisitions after a firm offer announcement E11 Notes on Rule 6 1. Adjusted terms E12 2. Acquisitions prior to the three month period E12 3. No less favourable terms E12 4.