4 TAKEOVER CODE - STANDSTILL AGREEMENTS

4.1 Introduction
On 22 August 2006 the Panel Executive published practice statement 16 to clarify Note 5 of the Rules of the Takeover Code (the "Code") on the definition of "acting in concert". The statement supersedes the statement on standstill agreements contained in the Panel's 1995-6 Annual Report.

The statement provides informal guidance to companies involved in takeovers and to practitioners, it is not binding on the Executive or the Panel, nor does itself form part of the Code.

4.2 Definition of "Acting in Concert"
Note 5 on the Definition of "Acting in Concert" states as follows:

"Agreements between a company, or the directors of a company, and a person which restrict that person or the directors from either offering for, or accepting an offer for, the shares of the company or from increasing or reducing the number of shares in which he or they are interested, may be relevant for the purpose of this definition. In cases of doubt, the Panel should be consulted."

4.3 Clarification in Practice Statement No. 16
The Executive wished to clarify that where a standstill agreement is entered into they will not normally consider a concert party to exist between the parties to the agreement, provided the agreement does not in any way restrict any of those parties from either accepting an offer for the company's shares at any stage, or agreeing to accept any offer for the company's shares either before or after its announcement.

Where there is an agreement of this kind to which the company's financial or nominated advisor and/or its sponsor(s) and/or underwriter(s), rather than the company itself (and/or its directors), was a party, the above principle would also usually apply. For example, an agreement that was entered into at the time of an equity offering with a view to ensuring an orderly aftermarket in the company's shares.

The Executive went on to state that the Panel should be consulted in advance where parties intend to enter into a standstill agreement to which neither the company (and/or its directors) nor its financial or nominated adviser, its sponsor or underwriter is a party (for example, an agreement between two shareholders), or in any other case where there is doubt.

4.4 Commentary
The content of this practice statement is relevant, for example, in relation to lock in undertakings given by the directors of a company to the company and its nominated adviser/sponsor in connection with an application for listing of the company's shares. Usually such lock in undertakings contain carve outs permitting the director to accept an offer in connection with a takeover etc. This practice statement clarifies that providing such carve outs are included, the parties should not be regarded as acting in concert. It is important to check the wording of the carve outs in any lock in to ensure this is the case.

If you require further information on any matter covered in this note, please contact your principal contact at Charles Russell or Simon Gilbert, Clive Hopewell or Alexander Keepin (London), Francis Rundall, Richard Norton, or Adrian Mayer (Cheltenham), Catherine Drew or Geoff Sparks (Guildford) or Peter Elliott (Oxford) on 0207 203 5000.

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