Changes to the Takeover Code (the Code) are expected to offer significant advantages to Guernsey, Jersey, UK and Isle of Man companies listed on the Alternative Investment Market (AIM) of the London Stock Exchange.  The Code establishes rules applying to takeovers and is principally designed to ensure fair and equal treatment of shareholders in relation to takeovers. 

A senior team from Carey Olsen across both Guernsey and Jersey was extensively involved in the consultation process and has welcomed these changes to the Code. 

The Takeover Panel’s amendments to the Code, which come into effect on 30 September 2013, will make all companies listed on AIM, and which are incorporated in Guernsey, Jersey, UK and Isle of Man, subject to the Code. Currently, only companies which are treated by the Takeover Panel as being centrally managed and controlled in Guernsey, Jersey, UK or Isle of Man are subject to the Code.   As a result of these changes it will no longer be necessary to satisfy such residency test for the Code to apply. This is expected to be welcomed by those companies which are managed and controlled elsewhere such as the large number of Chinese, Asian and other international groups which are listed on AIM.  

Carey Olsen corporate partner, Mike Jeffrey, said: “In our experience, AIM-listed companies wish to be subject to the Takeover Code and have, until now, been forced to rely on provisions within their constitutional documents which replicated the Code if they are managed and controlled in places such as China and the Far East. However, in practice, these provisions could not fully replicate the position under the Code, not least because the Takeover Panel did not have jurisdiction to oversee takeovers.

 “These companies should now consider removing such provisions from their documents particularly if there is any inconsistency with the provisions of the Code.  Also, companies which are incorporated in jurisdictions other than Guernsey, Jersey, UK and Isle of Man should consider whether they wish to migrate to such jurisdictions to take advantage of Code application. 

“Already known for sophisticated corporate laws, electronic trading and communication enabling provisions and tax neutrality, these changes to the Code enhance Guernsey and Jersey’s reputation internationally for groups seeking to list their shares,” said Mr Jeffrey.   

The Takeover Code will continue to not apply to open-ended investment companies.