The Modern Takeover Code and Takeover Panel

Abstract

Abstract This Chapter commences the book’s analysis of the Takeover Code and the Panel. The Chapter considers the structure and operation of the Panel and the structure and the scope of application of the Code. It commences with an analysis of the nature of the regulatory system, which before 2006 would have been described as self-regulation of the takeover market and today is more appositely described as market-controlled regulation. The Chapter considers the pros- and cons- of self/market regulation and argues that the standard advantages that are claimed for this form of regulation, as compared to state regulation, are not clearly established in the context of takeovers. Furthermore, the Chapter argues that here are several concerns about self-regulation that are raised by Takeover Panel regulation. In particular, recent events raise concerns about the regulatory outlook of the Panel and its reticence to consider the broader effects of its rules, and a concern that self-regulatory “status anxiety” may generate overreaction to certain events and distorted rule responses. Resulting in Code rules that are the product of a narrow understanding of their effects and status anxiety rather than a neutral policy assessment of the effects of the rules. The Chapter then details the legal foundations of the Takeover Panel’s power to regulate takeovers put in place to implement the Takeover Directive and considers the make-up and the roles of the different Panel bodies – the Code and Hearings Committees and the Panel Executive – and the role of the Takeover Appeal Board. Although the UK Government’s and the Panel’s objective in implementing the Directive was to maintain business as usual, the Chapter identifies operational changes that result from implementation. The Chapter then proceeds to consider the structure of the Code. It considers the Code’s General Principles and their relationship to Code rules and to a set of core underlying Code principles which the Chapter describes as the Code’s grund principles. The Chapter then considers the status of the Code rules as an autonomous “non-legal” set of rules and analyses the more complex relationship between the Code rules and company law generated by the Directive. The Chapter concludes with an analysis of the scope of application of the Code and the Directives conflict of laws’ rules for addressing EEA cross takeover regulation conflict.