UNITED KINGDOM: Takeover Panel Consultation on Presumptions of the Definition of Acting in Concert

Friday May 27 2022

The Code Committee of the Takeover Panel has published a public consultation paper, PCP 2022/2, which sets out proposed amendments to the Takeover Code with regard to the presumptions of the definition of “acting in concert” and related matters.

The consultation proposes to raise the threshold in what is currently presumption (1) of the definition of “acting in concert” (which relates to companies) from 20% to 30%, so as to align it with the threshold in the Code’s definition of “control”;

Additionally, it proposes to make explicit that the presumption of acting in concert applies to interests in:

• shares carrying voting rights (whether or not the shares are also equity share capital); and/or
• (ii) equity share capital (whether or not the shares also carry voting rights);

It also explains that the (new) 30% threshold applies differently to interests in voting share capital and (voting or non-voting) equity share capital in that:

• voting control does not “dilute” through a chain of ownership (i.e., if A owns or controls shares carrying 30% or more of the voting rights in B, which in turn owns or controls shares carrying 30% or more of the voting rights in C, then A is presumed to control C); and
• equity investment does (normally) “dilute” through a chain of ownership (i.e., if A owns or controls 30% or more of the equity share capital in B, which in turn owns or controls 30% or more of the equity share capital in C, A is treated as, in effect, having an equity interest of 9% in C). However, equity ownership of 50% or more is not treated as “diluting” through the chain of ownership as an owner of more than 50% of the equity share capital in a company is deemed to control that company (as referenced in the Note on Definitions at the end of the Definitions Section of the Code);

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