On 15 May 2013 and following an extensive consultation process, the UK Takeover Panel published a statement confirming that the UK Takeover Code will apply automatically to all companies registered in the UK, Isle of Man or Channel Islands (UK registered companies) whose shares are admitted to trading on a UK-based multilateral trading facility such as AIM or the ISDX Growth Market with effect from 30 September 2013.

Currently such companies are subject to the Takeover Code only if the Panel considers their place of central management and control to be in the UK, Channel Islands or the Isle of Man (the so called “residency test”).

The residency test has been the subject of criticism in the past as it is based on the Panel’s subjective judgment of potentially variable factors, such as the residency of a target company’s directors, which led to target companies being uncertain as to whether the Code applied to them or not.

In its initial proposals, the Panel had also intended to abolish the residency test in respect of UK registered companies whose shares are admitted to trading on overseas markets. However, in light of concerns raised during the consultation process that the automatic application of the Code to such companies may conflict with the local takeover rules of the overseas markets, the Panel has decided to retain the residency test when considering whether the Code applies to them.

This means, for example, that a UK registered company listed on the TSX will continue to be outside the scope of the Takeover Code unless it satisfies the residency test (which in many cases it obviously will not).

The Code will also continue to apply automatically to UK registered companies whose shares are admitted to trading on a UK/EEA regulated market (such as the London Stock Exchange).