The Importance of Rule 8 of the Takeover Code

Takeover Code
Rule 8 of the Takeover Code

The Takeover Code is an active regulation regarding takeovers and mergers that has been live in the UK since 1968. Though the code has developed over the years to reflect the changing financial landscape in the City of London, at its core its primary aim remains the same: to ensure fair treatment for all shareholders in takeover bids.

Rule 8 of the Takeover Code more specifically regards the disclosure of dealings and positions, an addendum which has been in force since it became a part of the Companies Act of 2006, and forms a vital piece of regulation to be adhered to by all parties during a takeover bid.


Understanding and meeting the requirements of Rule 8 within the Takeover Code is essential to ensure a person or collective do not breach the terms and risk sanctions that might impact upon their takeover bid.
Persons are required by Rule 8 to make public their positions when dealing in relevant securities of the parties to the offer during the offer period. Disclosure must be made by:

  • Any person interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror.
  • Any collective of two or more persons acting together pursuant to an agreement or understanding to acquire or control and interest in relevant securities of an offeree company or a paper offeror, whether formal or informal.

There are times when some of these persons are expected only to make disclosures to the Takeover Panel (who enforce the Takeover Code) privately rather than publicly: for example, a Private Dealing Disclosure must be made by an exempt fund manager linked with a party to the offer dealing for the benefit of discretionary investment clients.

Under Rule 8.3(a) of the Takeover code, any person interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror on the UK regulated market must make an Opening Position Disclosure once they have commenced the offer period. This forms an announcement which details the person’s interests and short positions in, or rights to subscribe for, any relevant securities of any party involved in the offer. Such a disclosure must be made before a deadline of 3.30pm London time on the 10th business day after the beginning of the offer period.

The code also specifies that if a person already deals in any securities of the offeree company or any paper offeror and becomes interested in more than 1% of relevant securities. Such a disclosure must contain details of the dealing concerned and their interests in the companies involved, and must be made no later than 3.30pm London time on the business day that follows the date of the relevant dealing.

Breach of Code

The Executive –the section of the Takeover Panel who ensure the day by day imposition of the code – are faced with determining the seriousness of the breach of the code based on criteria such as duration, recklessness, and the individual’s prior disciplinary record.  Any person who has failed to meet the requirements of the above, or indeed any other areas of the Takeover Code – may face disciplinary proceedings and could even face sanctions imposed by the panel.

Staying on Top of Rule 8

To avoid the risk of incurring sanctions that could seriously impact upon a takeover bid, it is therefore essential for all parties to meet the requirements of Rule 8 to the letter. Staying aware of Rule 8 and the other sections of the Takeover Code is therefore a vital part of managing any bid process, and such an operation should be done with meticulous care and diligence throughout.

April Orchid is well known finance and business content provider within the business and finance industry. She prides herself on writing clear incisive articles with her strong understanding of today’s financial commerce with thanks to Una Vista –