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Developments in the London equity capital markets: Changes to UK Takeover Code, QCA Code report and FCA insider dealing fines 20 March 2026

In this fourth article in our current series, we focus on changes to the UK Takeover Code (the “Code”) which came into effect on 4 February 2026; the recent report published by the Quoted Companies Alliance (the “QCA”) on its Corporate Governance Code (the “QCA Code”); and fines issued to two individuals for insider dealing in shares of an AIM company by the Financial Conduct Authority (“FCA”).

Our previous articles in relation to developments in the London equity capital markets can be found here.

"They represent a continued effort by the Panel to modernise the UK's takeover regime in alignment with recent reforms to the UK Listing Rules."

UK Takeover Code changes: dual class share structures, IPOs and share buybacks

On 2 December 2025, the Code Committee of the Takeover Panel (the “Panel”) published Response Statement RS 2025/1, setting out significant amendments to the Code. These changes, which follow (and largely adopt) the proposals set out in PCP 2025/1, primarily focus on the application of the Code to companies with dual class share structures (“DCSS”), new disclosure requirements for IPO admission documents and a clarification of the rules governing share buybacks.

The amendments took effect on 4 February 2026 and apply to all transactions from that date. In particular, they represent a continued effort by the Panel to modernise the UK’s takeover regime in alignment with recent reforms to the UK Listing Rules, ensuring the Code remains fit for purpose as more companies with weighted voting rights seek London listings.

A new framework for DCSS companies

The most significant aspect of RS 2025/1 is the introduction of a formal framework for companies categorised as DCSS 1. This usually involves a structure where Class B shares carry multiple votes per share from issue but are extinguished or converted into ordinary shares upon certain trigger events (for example, the founder’s retirement or a transfer of the shares or a ‘time sunset’ of a specified number of years after the company’s IPO).

The key changes include:

  • Mandatory bid requirement (Rule 37.2) – the Code now clarifies that if a trigger event causes a shareholder’s percentage of voting rights to increase (for example because the founder’s high-vote shares convert to ordinary shares), this may trigger a mandatory offer obligation under Rule 9.1. The Panel will typically grant a dispensation unless the trigger event was the expiry of a time sunset or if the shareholder had reason to believe at the time of acquiring their shares that such a trigger event (other than a time sunset) would occur.
  • The two-test acceptance condition (Rule 10.1) – for contractual offers made for DCSS 1 companies, the offer must now satisfy two separate tests to become unconditional as to acceptances:
  1. Test 1 (pre-unconditional): the bidder must have acquired or agreed to acquire shares carrying more than 50% of the voting rights immediately before the Class B shares convert or are extinguished; and
  2. Test 2 (post-unconditional): the bidder must also have acquired or agreed to acquire shares which would carry more than 50% of the voting rights immediately after the Class B shares convert or are extinguished.
    .
    This mechanism ensures that an offer can only succeed if the majority of the voting power, both before and after the imminent simplification of the capital structure, is in favour of the deal.
IPOs

Under a new Section 3(e)(i) Introduction to the Code, companies undergoing an IPO that will bring them within the jurisdiction of the Code after the IPO must make specific disclosures in respect of the Code in their admission documents, including an explanation of the application of Rule 9 and details of any controlling shareholders (and their concert parties). The Panel must be consulted so that guidance can be given on the appropriate disclosure.

The Panel has also introduced a ‘Rule 9 dispensation by disclosure’. This allows the Panel to grant a dispensation from the obligation to make a Rule 9 mandatory offer at the time of the IPO, provided that appropriate disclosures regarding concert parties and potential future increases in voting rights are included in the admission document.

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"Companies undergoing an IPO that will bring them within the jurisdiction of the Code after the IPO must make specific disclosures in respect of the Code in their admission documents."

These amendments codified the Panel’s pre-existing practice in these areas.

The Panel has issued a new note to advisers in relation to IPOs or admissions to trading, which sets out the procedure to be followed where a company is considering an IPO or admission to trading falling within section 3(e)(i) of the Introduction to the Code. It also includes pro forma drafting to be included in the admission document (contained in the Annex to the note), which should be amended to reflect the particular facts.

Share buybacks

The Panel has redrafted Rule 37.1 to make the regime for share buybacks clearer and more concise. The changes draw a clearer distinction between ‘directors and related persons’ (generally required to seek a Rule 9 waiver, requiring shareholder approval) and ‘innocent bystanders’ (shareholders who unintentionally cross a threshold due to the company’s buyback) (generally granted a dispensation, not requiring shareholder approval, unless they acquired shares at a time when they had reason to believe a buyback would take place).

The Panel has also removed certain ‘disqualifying transaction’ restrictions, making it easier for companies to conduct buybacks under their normal annual shareholder authority.

Minor and consequential amendments

In a separate publication (Panel Statement 2025/20), the Panel also announced minor housekeeping changes effective from 4 February 2026:

  • LEI requirements – any announcement made under Rule 2.9 (concerning the number of relevant securities in issue) must now include the legal entity identifier (“LEI”) of the party making the announcement; and
  • FCA Handbook definition – this has been updated to reflect the replacement of the Prospectus Regulation Rules on 19 January 2026 by a new FCA sourcebook as a result of the coming into force on that date of the new Public Offers and Admissions to Trading regime (see our article here).
Commentary

For founders and investors in high-growth companies considering a London IPO with a dual-class structure, these changes provide welcome clarity. However, the two-limb test of the acceptance condition and the potential for mandatory bids on the expiry of time sunsets mean that the long-term implications of DCSS structures must be carefully modelled at the pre-IPO stage.

As always, parties involved in potential transactions should consult the Panel if they are in any doubt as to how these new provisions may apply.

QCA Corporate Governance Code

The QCA published a report on the QCA Code, its voluntary corporate governance code for small and mid-sized quoted companies, in December 2025. This demonstrates its widespread usage among growth companies as well as how flexibly it is being applied.

The analysis was conducted in September 2025 and involved reviewing the annual reports and accounts and corporate governance statements for the previous 12 months for all companies on AIM, Aquis and the Equity Shares Transition category of the London Stock Exchange’s Main Market (the category created for issuers previously admitted to the Standard List in connection with the 2024 UK Listing Rules changes). As not all companies apply the 2023 QCA Code, the review covered disclosures under both the 2018 and 2023 versions.

"92% of AIM-quoted companies currently adopt the QCA Code."

Key findings

The key findings were that:

  • 92% of AIM-quoted companies currently adopt the QCA Code. For AIM’s UK quoted companies the figure is 97%;
  • on Aquis, over 73% of companies adopt it and 53% of Equity Shares (Transition) companies adopt it;
  • 26% of AIM-quoted QCA Code followers have adopted the 2023 version of the QCA Code, the rest still apply the 2018 version (but most say they will implement the 2023 version for their 2025 annual report);
  • AIM companies are making greater use of the QCA Code’s flexibility: 20% of followers stated they do not fully apply the Code, twice the proportion of two years ago. Over a third of Aquis companies do not fully apply it;
  • it is the smallest companies on AIM that are most likely to take advantage of that flexibility: more than 30% of companies with a sub-£5m market cap explain how they depart from the QCA Code; deviation is half that rate for those with a market cap in excess of £100m;
  • the Financial Reporting Council’s UK Corporate Governance Code is the second most widely used governance code for AIM companies with 4% choosing to adopt it; and
  • other codes adopted by AIM companies are a mix of jurisdictional and sector-specific codes (e.g. ASX Corporate Governance Principles and Recommendations, the AIC Code of Corporate Governance, Guernsey Financial Services Commission Code and the Corporate Governance Code of Canada). Over half of the Australian companies trading on AIM apply the ASX Code and the situation is similar for Canadian companies, with 50% of the companies following the Canadian code. Many of these companies have a dual listing in their own jurisdiction and on AIM.
Commentary

The report confirms that the QCA Code remains overwhelmingly the preferred governance framework for small and mid-sized quoted companies and its application is broad spanning different industries, company sizes and jurisdictions. The QCA has also pointed out that there is scope to extend the QCA Code’s reach. It has already been voluntarily adopted by certain private companies, and it could also provide a proportionate framework for companies joining any of the PISCES platforms that will enable private companies to trade their shares on an intermittent basis (see our article on PISCES here).

"The QCA Code remains overwhelmingly the preferred governance framework for small and mid-sized quoted companies."

The QCA is clear that, in order to be able to understand and apply the principles of the QCA Code and show a commitment to good governance, it expects each company to invest in its own copy of the QCA Code. Further information on the QCA can be found here.

FCA fines for insider dealing

The FCA announced in February 2026 that it has fined two individuals a total amount of £108,731 for insider dealing in shares in Bidstack Group plc, an advertising technology company admitted to trading on AIM until April 2024.

One of the individuals had access to inside information about a major upcoming deal between Bidstack and a large video game publisher in his capacity as interim Chief Financial Officer at Bidstack. Before the deal was announced to the public, he passed this confidential information to the second individual who bought 1.3 million shares through a trading account. When the deal was made public, the share price rose by more than 125% and the second individual made more than £9,000 in profit on sale of the shares. The FCA was notified of the suspicious trade and investigated.

The FCA determined that the individuals’ conduct breached Article 14 of the UK Market Abuse Regulation relating to insider dealing and unlawful disclosure of inside information. Both individuals were fined and the second individual was also required to return the profit he made on the shares as part of his penalty. Both fines were discounted by 30% for early settlement.

Commentary

"Tackling financial crime is a priority for the FCA and it takes a robust approach to taking action against anyone who misuses or exploits inside information for their own gain."

This matter serves as a useful reminder to companies that:

  • tackling financial crime is a priority for the FCA and it takes a robust approach to taking action against anyone who misuses or exploits inside information for their own gain, trading on details other investors couldn’t have known, and thereby undermines trust in UK markets; and
  • they need to ensure that all their directors and senior management are fully aware of what comprises insider dealing and market manipulation under the UK market abuse and insider dealing regimes and what the consequences are of any such breach.

Conclusion

In this series of articles, we have outlined a number of developments designed to improve the attractiveness and operation of the London equity capital markets and UK fundraisings. There have been quite a few changes and, as 2026 progresses, we will be watching with interest how these changes progress and meet their aims.

London Trainee Sam Gunnewicht also contributed to this article.

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