Practice Statement 35: Profit forecasts, quantified financial benefits statements and investment research
On 3 July 2025, the Takeover Panel Executive published Practice Statement 35 to outline how the Executive interprets and applies Rule 28 of the Takeover Code on profit forecasts and quantified financial benefits statements (a “QFBS“) made by an offeree company or a securities exchange offeror and investment research published by a connected firm.
The guidance includes the following:
- Application of Rule 28 following the rejection of an approach: Where an offeree company publishes a one-off profit forecast after the unequivocal rejection of an offer approach, the offeree will normally need to produce a report if an offer period subsequently commences, though the Executive confirmed that it may grant a dispensation in appropriate circumstances, in which case the offeree would need to give directors’ confirmations. For example, a dispensation might be granted if the one-off profit forecast is made more than seven days after the offeror’s approach has been unequivocally rejected.
- QFBS: When a possible offer is required to be announced, the Executive may agree to the publication of a QFBS without the necessary reports. The Executive will take into account the view of the offeree company and the date by which the offeror expects the reports to be published.
- Offeree company profit forecast provided to an offeror: Where a profit forecast is provided privately by the offeree company to an offeror in due diligence and which is then subsequently required to be included in a proxy statement published by a US offeror or other relevant document in connection with satisfying a condition to the offer, the Executive will normally grant a dispensation from the requirement to publish reports, provided the forecast is not used in arguments as to the merits of the offer and the document explains the limited purpose for which the forecast was prepared.
- Aspirational targets: Forward-looking statements ending more than three years from the date on which they are made are treated as aspirational and therefore fall outside the Rule 28 reporting requirements.
Practice Statement 36: Unlisted share alternatives
On 3 July 2025, the Takeover Panel Executive also published Practice Statement 36, stating guidance on how the Executive interprets and applies the Takeover Code to an unlisted share alternative to a cash offer. The Executive flagged that offerors should consult with it on the terms of a proposed alternative offer and related disclosures early in the process.
In particular, the Executive is concerned that all offeree company shareholders are treated equally and are given sufficient time and information to enable them to reach a properly informed decision on the offer.
The guidance includes the following, which largely explains existing market practice:
- Minimum and maximum acceptance thresholds: An offeror may specify an aggregate maximum and minimum acceptance threshold for an unlisted share alternative.
- Exchange ratio: The terms of the unlisted alternative should be on a “per offeree company share” basis and, if not 1:1, the exchange ratio should not be structured so as to exclude offeree company shareholders below an individual minimum numerical threshold.
- Equivalent treatment: The rights and restrictions relating to the unlisted shares are for the offeror to determine, but all offeree shareholders should be afforded equivalent treatment and there should be no special deals with favourable conditions which are not being extended to all shareholders. Shareholders should also be given sufficient time and information to make a properly informed decision.
- Percentage threshold rights: It may be acceptable for an offeror to grant certain governance rights to a shareholder who holds at least a specified percentage of the shares in the offeror, such as right to appoint a director or to attend board meetings as an observer, consent rights in relation to certain reserved matters or information rights. However, the Executive would pay particular attention to any proposed percentage threshold rights to determine whether the rights are consistent with General Principle 1 and Rule 16.1.
- Disclosure: Detailed disclosure should be made to shareholders of the rights and restrictions relating to unlisted shares being offered and include a summary of the relevant provisions of the offeror’s articles of association and any shareholders’ agreement, with those documents being published on a website from the time the offer document is published.
Dual class share structures, IPOs and share buybacks
Following its consultation on dual class share structures (“DCSS“), IPOs and share buybacks earlier in 2025, on 2 December 2025, the Takeover Panel published its Response Statement, setting out a new framework for the application of the Takeover Code to companies with DCSS, introducing new disclosure requirements for IPO admission documents and clarifying the Takeover Code in relation to share buybacks.
The new framework for the application of the Takeover Code to a DCSS company primarily apply to a structure where the class B or special shares carry multiple votes per class B or special share from issue which are extinguished or converted to ordinary shares on a trigger event. The amendments clarify the application of the mandatory offer requirement to a company with a DCSS where, following a trigger event, the percentage of voting rights held by a shareholder increases above the mandatory offer threshold. The changes also introduce a requirement for an acceptance condition to a contractual offer for a DCSS company to be subject to two tests, to take into account the voting rights before and after the trigger event.
The new disclosure requirements for IPO admission documents require companies to make disclosures in respect of any controlling shareholders and their concert parties in the admission document, and to consult the Takeover Panel in relation to that disclosure.
These amendments became effective from 4 February 2026.
Minor amendments to the Takeover Code: LEI numbers in Rule 2.9 announcements
With effect from 4 February 2026, the Takeover Code now requires the publication of a company’s legal entity identifier (LEI) when it makes an announcement pursuant to Rule 2.9 of the Takeover Code.
