UK Takeover Code reform: what you should know

The UK Takeover Code has recently undergone significant reform effective from 3 February 2025. The changes mark one of the most substantial jurisdictional developments in the Code’s history with a narrower application and clarification of its scope. We consider the key changes and what they mean for businesses below.

Key changes

The companies now captured by the Code are mainly companies whose registered office is in the UK, Channel Islands, or Isle of Man, and whose securities are admitted to trading on a UK regulated market, multilateral trading facility (such as AIM), or a stock exchange in the Channel Islands or Isle of Man. However, the Code also applies to companies that have ceased to be UK-quoted in the last two years. This replaces the previous 10-year rule with a much shorter two-year run-off period.

The recent reform also clarifies that the Code does not apply to companies whose shares are only traded on alternative platforms (e.g., PISCES or crowdfunding secondary markets) or to companies having a sole beneficial owner.

Further, the Code no longer considers where a company’s central management and control is located. This closes a loophole where companies could delist and move their board overseas to escape the Code’s jurisdiction.

Implications for businesses

• Reduced Regulatory Burden – Many companies, particularly private ones and those never listed on a UK market, will no longer be subject to the Takeover Code. This removes the associated compliance costs and procedural hurdles, especially during sales or restructuring.
• Increased Certainty – The reforms provide greater clarity for companies, shareholders and investors about whether the Code applies to a particular company which in turn reduces surprises during transactions and simplifies the due diligence exercise.
• Shareholder Protections – Companies wishing to preserve some of the protections afforded to them because of the Code should consider alternative arrangements such as amending their constitutional documents to incorporate key provisions particularly regarding shareholder protections on an exit.

There is a transitional period of two years, until 2 February 2027, applicable to companies that would otherwise no longer fall under the remit of the Code following its reform. This gives business some time to adapt to the changes.

Overall, the 2025 reforms to the UK Takeover Code mark a decisive shift towards focusing regulatory oversight on companies with a genuine UK public market presence.

Our equity capital markets team has considerable experience advising listed companies and their sponsors, nominated advisers and brokers in relation to compliance and governance issues. If you or your business require any assistance with corporate governance matters, please do not hesitate to contact Daniel Bellau, or any other member of the Corporate team.

 

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