Investors holding shares in Union Jack Oil are watching a rare public dispute unfold around the Union Jack Oil takeover bid from Reabold Resources, with two formal letters of complaint now submitted to the UK Takeover Panel alleging the regulator is failing in its core duty to protect minority shareholders.
What the Takeover Panel Is Supposed to Do
The Takeover Panel was established in 1968 as an independent body with a clear remit: to issue and administer the City Code on Takeovers and Mergers and to supervise and regulate bids to which that Code applies. Its own stated mission is ‘to ensure fair treatment for all shareholders and an orderly framework for takeover bids.’
The Takeover Code comprises six General Principles, 38 Rules and nine Appendices. Among those General Principles is a requirement that all holders of the same class of shares in a target company receive equivalent treatment, meaning equal access to information, comparable offer terms, and no side arrangements with favoured shareholders. The full framework is set out in guidance published by Burges Salmon, which summarises the Code’s equal-treatment obligations.
Two Letters, One Accusation: the Panel Is Falling Short on Union Jack Oil
A blogger writing under the name Fagash submitted a letter arguing that the Panel is not living up to that mission in the context of the Reabold offer for Union Jack Oil. A second, more detailed letter followed from Peter Brailey, taking the criticism further. Neither letter has been published in full in the public domain, but both allege the regulator is falling short of its obligations to ordinary shareholders.
The Panel does have teeth when it chooses to use them. Under the Code, any person holding 1% or more of relevant securities in a target or bidder during an offer period must disclose their holdings and any dealings. Breaches of these disclosure rules, alongside the wider equal-treatment principles, can trigger enforcement.
How serious can enforcement get? On 30 July 2024 the Takeover Appeal Board published a statement confirming that 11 individuals had been sanctioned for their roles in a series of sham transactions involving shares in MWB Group Holdings. Those individuals had held approximately 29.7% of the voting shares in MWB Group and increased their stake to more than 50% without making a mandatory offer to other shareholders as required by Rule 9 of the Code. The outcome included compensation orders and cold-shoulder sanctions, described in detail by Morgan Lewis. That case shows the Panel can act decisively when it concludes the Code has been broken.
Why This Matters for Union Jack Oil Shareholders
The crux of the complaints appears to be that the Panel is not applying that same rigour here. When a takeover bid is live, smaller shareholders depend almost entirely on the Code’s equal-treatment rules to protect them. A bidder dealing with a large institutional holder behind closed doors, or allowing selective disclosure of material information, would cut against the very principles the Code exists to enforce.
Retail investors in Union Jack Oil who are weighing whether to accept or reject the Reabold offer need confidence that the process is being supervised properly. If the Panel declines to act on the concerns raised, shareholders can escalate to the Takeover Appeal Board, which operates as a separate supervisory layer above the Panel itself.
For now, the Panel has not publicly responded to either letter. Whether it acts, and how quickly, will tell Union Jack Oil shareholders a good deal about how seriously the regulator takes its own stated mission on this bid.
