Review of UK Takeover Bid Regulations

Earlier this week the Confederation of British Industry (CBI) called for a tightening of the Takeover Code because too many British companies were being taken over by foreign interests,

It agrees with business secretary Vince Cable that many mergers fail to create value for shareholders, and that our liberal takeover regime means British firms attract more bids than European and US competitors.

The CBI’s views were contained in its submission to the Takeover Panel, which is reviewing the rules after last year’s uproar over the £11.7bn takeover of Cadbury by Kraft of the US. The public consultation on possible reforms ended today.

Although protectionism is being rejected, the application of public interest test has resounded from several quarters.

In February 2010, The Code Committee of the Takeover Panel in London, England launched a consultation to review the Takeover Code. A Public Consultation Paper was released on June 1, 2010. The authority of the panel derives from statute in Britain under Chapter 1 of Part 28 of the Companies Act 2006,

942 The Panel

(1) The body known as the Panel on Takeovers and Mergers (“the Panel”) is to have the functions conferred on it by or under this Chapter.

(2) The Panel may do anything that it considers necessary or expedient for the purposes of, or in connection with, its functions.

(3) The Panel may make arrangements for any of its functions to be discharged by—

(a) a committee or sub-committee of the Panel, or

(b) an officer or member of staff of the Panel, or a person acting as such.

Tobia Croff of Shearman & Stearling LLP has a guest post this morning on The Harvard Law School Forum which provides an excellent summary of the Panel’s Paper.


  1. Governments should not be in the business of setting up barriers for efficient commerce. If it makes financial sense for a foreign entity to buy a domestic company, that company must be sold. To do otherwise is to create inefficiencies in the system and cause slowdowns in economic growth. Governments have yet to learn this.

  2. Vitali,
    As you know, I’m generally in favour of freer trade. But would you be completely against some barriers, or at least a level of review, where there are legitimate concerns over the standards of regulation in other jurisdictions?
    Could they at least play a role in encouraging other jurisdictions to act more stringently in enforcing their own regulations?