Takeover Panel Confirms Changes Relating To Dual Class Share Structures, IPOs And Share Buybacks

This article highlights the key changes to the UK Takeover Code (Code) announced by the Takeover Panel (Panel), and summarises the updates affecting dual class share structures, IPOs and share buybacks ahead of implementation in February 2026.

On 2 December 2025, the Panel published a response statement and Code changes relating to dual class share structure (DCSS) companies, IPOs and share buybacks.

Overview of the Takeover Panel code changes

The Panel has broadly adopted the rules as proposed in its consultation from July this year; see our detailed analysis of the consultation for more detail. The amendments to the Code will take effect on Wednesday 4 February 2026 (the implementation date) and the Code, as amended, will be applied from the implementation date to all companies and transactions to which it relates, including any on-going transactions which straddle that date, except where to do so would give the amendments retroactive effect.

In brief, the changes:

• create a framework for the application of the Code to DCSS companies following the changes to the UK Listing Rules last year, which allowed DCSS companies to list on the equity shares (commercial companies) category of the London Stock Exchange. A DCSS company is generally used to provide a founder or majority shareholder with enhanced voting rights and protection against a change of control. Founder shareholders have Class B shares which carry multiple votes from the point of issue, but which are extinguished or converted to ordinary shares on particular trigger events, such as a "time sunset" of a specified number of years after the company's IPO, the transfer of the Class B to another person, or the retirement or resignation of the founder;

• clarify the application of the mandatory offer requirements under the Code to a DCSS company where a shareholder's percentage of voting rights is increased following a trigger event. If, as a result of Class B shares being extinguished or converted on a trigger event, the percentage voting rights of a shareholder increase, this would be treated as an "acquisition" of an interest in shares for the purposes of the mandatory offer requirement under Rule 9 of the Code. If this increase crosses a mandatory bid threshold, the shareholder would then be required to make a mandatory bid under Rule 9.1 of the Code. However, the changes provide that the Panel will normally grant a dispensation from the resulting mandatory bid obligation, save where the trigger event is the expiry of a time sunset, or at the time it acquired interests in the Class B shares the shareholder had reason to believe that a trigger event would occur. A dispensation can however still be available for the time sunset trigger provided that the IPO admission document includes an appropriate statement of the maximum percentage of voting rights the relevant shareholder would hold following the time sunset (or other trigger event). This calculation is based on the company's share capital at the time of IPO and, except with the Panel's consent, assumes that neither the shareholder nor any person acting in concert with it has acquired additional interests in shares between the company's admission to trading and the time sunset (or other trigger event). Any such acquisitions would, on the face of it, invalidate the Rule 9 dispensation by disclosure;

• make the acceptance condition to a contractual offer for a DCSS company subject to two tests, both of which need to be satisfied for the offer to become or be declared unconditional. Under Rule 10 of the Code, a contractual offer must include an acceptance condition that is not capable of being satisfied unless the bidder has acquired, or agreed to acquire, shares carrying over 50% of the voting rights in the target. For a DCSS company there will be two tests, being: (1) a "pre-conditional test", looking at whether shares carrying more than 50% of the voting rights immediately before the relevant Class B shares convert or are extinguished have been acquired by the bidder or accepted to the offer; and (2) a "post-conditional test" looking at whether shares which would carry more than 50% of the voting rights immediately after the Class B shares convert or are extinguished have been acquired by the bidder or accepted to the offer;

• provide that any announcement by a DCSS company of the numbers of securities in issue under Rule 2.9 must explain the voting rights carried by each class of shares. The Panel must be consulted on the form of announcement;

• in relation to IPOs, introduce a requirement for a company to make disclosures in respect of the Code and any controlling shareholders (and their concert parties) on an IPO, and to consult the Panel for guidance on that disclosure; and

• in relation to share buybacks, make the provisions clearer on when buybacks may trigger a Rule 9 mandatory bid, and make amendments to the disqualifying transactions regime to remove restrictions on a company carrying out a share buyback under an annual shareholder authority. Currently, when a person crosses the Rule 9 mandatory offer threshold due to a company share buyback, they are typically exempt from making an offer if independent shareholders approve a waiver; however, this waiver can be lost if the person acquires shares knowing that a buyback was planned. In practice, companies seeking general buyback authority at AGMs have limited the Panel's ability to grant such waivers. To address this, the revised rules clarify that the Panel will normally refuse a Rule 9 waiver if the person, or anyone acting in concert, acquired voting shares while having reason to believe that a specific buyback, redemption, or purchase of the company's shares would occur, whether because the company had announced the programme or for another reason.

Future developments

The Panel Executive has informed the Code Committee that it intends to publish two new Notes to advisers in relation to IPOs and Rule 9 waivers (which will replace the current Note to advisers in relation to the disclosure of information on Rule 9 of the Code in Rule 9 waiver and IPO documents) on the Panel's website on or before the implementation date.

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