In light of the Government's recent actions to stabilise the UK financial system, the Treasury has published new regulations modifying the definition of "concert party" for the purposes of the mandatory offer provisions set out in Rule 9 of the Takeover Code. Rule 9 effectively provides that where a person together with persons "acting in concert" with him acquires or consolidates control (that is, 30 per cent or more of the voting rights) in a public company, he must extend a cash offer to all other shareholders in respect of all of their shares in that company. The new regulations, set out in the Takeover Code (Concert Party) Regulations 2008, came into force on 28 November 2008.

The new regulations broadly provide that for the purposes of Rule 9:

(i) persons whose shares are held by the Treasury (whether through a nominee or otherwise) as a result of the exercise of powers under the Banking (Special Provisions) Act 2008, and
(ii) persons participating in the Government's recapitalisation scheme announced in October 2008,

will not be regarded as acting in concert with each other, the Treasury, the Secretary of State or UK Financial Investments Limited (UKFI) (the entity set up by the Government to manage its shareholdings in banks) by virtue of the Treasury holding shares in each of those persons.

In addition, the Treasury, the Secretary of State or UKFI will not be regarded as acting in concert with each other or those persons listed in sub-paragraphs (i) or (ii) above by virtue of the Treasury's relationship with, and the Secretary of State's and UKFI's functions in relation to, those persons.

22 December 2008

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