1---
 2meta: 
 3  date: false
 4  reading_time: false
 5title: "City Code"
 6date: 2023-10-05
 7description: "City Code - The City Code on Takeovers and Mergers, originated in 1968, ensures fair practices and equal information access in takeover and merger situations."
 8tags: ["City Code", "Takeovers", "Mergers", "Economics", "United Kingdom"]
 9---
10
11## Background
12
13The City Code, formally known as the City Code on Takeovers and Mergers, is a set of rules and guidelines that govern corporate takeovers and mergers in the United Kingdom. Instituted in 1968 by a panel overseen by the Bank of England, its primary purpose is to ensure that all investors receive equal treatment and have access to comprehensive, fair information related to mergers and acquisitions.
14
15## Historical Context
16
17The introduction of the City Code in 1968 came at a time when the corporate landscape in the United Kingdom was experiencing increased merger and takeover activity. Prior regulations around these business practices were limited, leading to the potential for unfair advantages and imbalances. By establishing a standardized code of conduct, the City Code aimed to promote transparency and fairness in these financial transactions.
18
19## Definitions and Concepts
20
21- **City Code**: A framework providing guidelines for the conduct of takeovers and mergers in the UK.
22- **Takeover Panel**: The group responsible for the creation and enforcement of the City Code.
23- **Equal Access to Information**: Mandate that all shareholders be provided comprehensive information regarding a takeover or merger, ensuring informed decision-making.
24- **Fair Advice**: Guarantee that stakeholders receive unbiased and fair recommendations concerning takeover or merger offers.
25
26## Major Analytical Frameworks
27
28### Classical Economics
29
30In classical economics, the prominence lies in market efficiency and self-regulation. The City Code, though not explicitly founded on classical principles, aligns with the overarching goal of promoting market order and investor protection.
31
32### Neoclassical Economics
33
34Neoclassical economics emphasizes the importance of accurate information for rational decision-making. The City Code's adherence to providing equal access to full information aligns with these principles.
35
36### Keynesian Economic
37
38Keynesian theory focuses on economic stability through regulation and intervention. The City Code represents a targeted intervention to foster stable and predictable conditions for mergers and takeovers.
39
40### Marxian Economics
41
42Marxian economists might critique the City Code as a means to reinforce existing market structures and power dynamics rather than challenging them.
43
44### Institutional Economics
45
46Institutional economists would see the City Code as an essential regulation for guiding the behavior of firms and maintaining ethical standards within financial markets.
47
48### Behavioral Economics
49
50From a behavioral standpoint, the provision of complete and fair information can help mitigate biases and cognitive errors that investors might face during complex financial decisions like takeovers and mergers.
51
52### Post-Keynesian Economics
53
54Post-Keynesians might support the City Code as it advocates for regulatory oversight to address market imperfections and ensures equitable treatment among investors.
55
56### Austrian Economics
57
58Austrian economists might critique the City Code for potential over-regulation, arguing that market participants should negotiate takeovers and mergers without enforced guidelines.
59
60### Development Economics
61
62In the context of developing economies, a similar code could contribute significantly to market trust and mitigates risks associated with corporate takeovers and mergers.
63
64### Monetarism
65
66Monetarists, focused on market-based solutions, may view the City Code as a necessary regulation that supports overall market stability by ensuring transparency and fairness.
67
68## Comparative Analysis
69
70When comparing global approaches to regulating mergers and takeovers, the City Code of the UK is often seen as a robust model, distinguished by its specific focus on fairness and equal information dissemination. Many other jurisdictions may look to the City Code as a reference for best practices in merger and acquisition regulation.
71
72## Case Studies
73
74Several high-profile corporate takeovers in the UK, such as the takeover of Cadbury by Kraft in 2010, illustrate the practical application and the impact of the City Code in ensuring fair play and informed decisions among stakeholders.
75
76## Suggested Books for Further Studies
77
78- "The Law and Practice of Mergers and Acquisitions" by Edwin L. Burtell
79- "Takeovers and the European Legal Framework: Managing Opportunities and Risks" by Jeremy Grant and Nigel Boardman
80- "Mergers, Acquisitions, and Other Restructuring Activities" by Donald DePamphilis
81
82## Related Terms with Definitions
83
84- **Takeover**: The acquisition of one firm by another.
85- **Merger**: The consolidation of two or more companies into a single entity.
86- **Investor**: An individual or organization that allocates capital with the expectation of a future financial return.
87- **Bank of England**: The central bank of the United Kingdom, responsible for overseeing financial stability.