The UK takeovers regime following Brexit
On October 30, 2018 the Department for Business, Energy and Industrial Strategy published the Takeovers (Amendment) (EU Exit) Regulations 2019 in draft. These amend Part 28 Companies Act 2006 (CA 2006) to enable the domestic takeovers regime to operate effectively on a freestanding basis outside the EU framework once the UK leaves the EU and will come into force on exit day.
The EU Takeovers Directive (Directive 2004/25/EC) established the legal framework through which company takeovers are regulated in the EEA and it was transposed into UK domestic law by Part 28 CA 2006. The purpose of the draft Regulations is to make the changes needed to fix deficiencies in the CA 2006 arising from the UK’s exit from the EU and so preserve, so far as possible, the current takeover regime.
The draft Regulations amend CA 2006 by removing references to EU law and transposing specific Articles of the Takeovers Directive into a new Schedule 1C CA 2006. As under the current CA 2006, the Takeover Panel is required to make rules giving effect to these provisions.
The only Article of the Takeovers Directive currently referred to in CA 2006 that is not being transposed in this way is Article 4.2 concerning shared jurisdiction. The EU takeovers regime includes a system of shared jurisdiction for companies that have their registered office in one EEA member state and whose securities are only admitted to trading on a regulated market in one or more other EEA member state(s). The shared jurisdiction regime works on a reciprocal basis within the EU legislative and cooperative framework and this reciprocal arrangement will no longer apply to the UK after Brexit. As a result, the draft Regulations remove the requirement for the Takeover Panel to implement the shared jurisdiction regime from the CA 2006. This means that offers for companies that have their registered office in the UK and that satisfy the “residency test” under the Takeover Code will be subject to the sole jurisdiction of the Takeover Panel. Offers for companies that have their registered office in an EEA member state and their securities admitted to trading only on a regulated market in the UK will no longer be regulated by the Takeover Panel.