Section 980(1) Squeeze-Out Notice UK: How It Works
We're not a law firm — we help you find the right legal support. For advice on your situation, speak to a legal adviser or find a solicitor.
Part ofCompanies House Forms UK
When a takeover offer clears the 90 percent threshold, the Companies Act 2006 lets the successful bidder reach across and pick up the last sliver of shares held by those who never said yes. That mechanism is the squeeze-out, and it begins with a formal notice under section 980(1).
The notice tells a minority shareholder, in writing, that the offeror intends to buy their shares on the same terms the majority accepted. It is a powerful tool, but it comes with strict conditions on thresholds, timing, and wording. Miss one of them and the notice can be challenged in court.
This page walks through what the notice does, when it can be served, what happens to the shares afterwards, and where a phone conversation with an experienced legal adviser can save you time. If you are acting for the offeror, a target director, or a holdout shareholder, the principles are the same.
What this document is
A section 980(1) notice is the written communication that starts the compulsory acquisition, often called the squeeze-out, of shares held by shareholders who did not accept a takeover offer. It sits inside Part 28 Chapter 3 of the Companies Act 2006, which governs takeovers of UK companies.
The notice can only be issued once the offeror has acquired, or contracted to acquire, at least 90 percent in value of the shares the offer relates to and 90 percent of the voting rights carried by those shares. Where the offer covers different classes of share, the 90 percent test has to be met for each class separately.
Once served, it tells the non-assenting shareholder that the offeror intends to acquire their holding on the same terms that were offered to, and accepted by, the majority. The shareholder then has a window to apply to court if they want to challenge the acquisition or the terms.
Absent a successful challenge, the shares transfer to the offeror and the consideration is held on trust for the former holder.
How to use this document
- Confirm the 90 percent threshold has been crossed. Before anything else, check the offeror has acquired or contracted to acquire at least 90 percent in value and 90 percent of voting rights in the shares to which the offer relates. Where more than one class is involved, the test applies to each class independently. Get the maths right, because an early notice is an invalid notice.
- Act within the statutory time limit. The notice cannot be served once the statutory window has closed. That window generally runs for a set period from the date the 90 percent threshold is met, subject to a longer backstop from the date of the offer. Diarise the cut-off carefully and build in time for printing, posting, and proof of service.
- Prepare the notice in the prescribed form. The notice must be given in the form required by the Secretary of State and filed with Companies House. It needs to identify the offer, the shares being acquired, the consideration, and the shareholder's right to apply to court. Any inaccuracy in these details can give a challenger leverage.
- Serve the notice on each non-assenting shareholder. Send the notice to every holder of shares covered by the offer who has not accepted it, using the address on the register of members. Keep evidence of dispatch. At the same time, send a copy to the company so it can update its records and flag the position to the registrar if required.
- Complete the transfer after the objection window closes. If no shareholder successfully applies to court within the six-week period, the offeror may send the company a copy of the notice, an instrument of transfer, and the consideration. The company then registers the offeror as the holder and holds the consideration on trust for the former shareholder.
Common questions
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.
Common questions
Q Who can serve a section 980(1) notice?
Only an offeror in a takeover offer governed by Part 28 of the Companies Act 2006 can serve this notice, and only once the 90 percent acquisition and voting rights thresholds have been met. The offer itself has to qualify as a takeover offer under the statute, which has specific requirements around the terms being the same for all holders of the shares, or each class of shares, involved.
Q What happens if a shareholder objects to the notice?
A non-assenting shareholder has six weeks from the date of the notice to apply to the court under section 986. The court can order that the acquisition does not go ahead, or set different terms where it is just to do so. If no application is made within that period, the offeror can proceed to complete the transfer and the shareholder loses the chance to block the squeeze-out.
Q Does the 90 percent test count shares the offeror already owned?
The detail here matters. Shares that the offeror or its associates already held before the offer are generally excluded from the calculation, because the offer does not relate to them. The test looks at shares the offer is open on. Getting this wrong is one of the most common grounds for a challenge, so the calculation should be checked carefully before any notice is sent.
Q What consideration does the non-assenting shareholder receive?
The shareholder is entitled to the same consideration that was offered under the takeover and accepted by the majority. Where the original offer gave a choice between different forms of consideration, such as cash or shares, the notice should set out which options remain open to the holder and the default that will apply if they do not respond within the period stated in the notice.
Q Can the minority shareholder force the offeror to buy them out?
Yes. The flip side of the squeeze-out is the sell-out right under section 983. Where the offeror has crossed a 90 percent threshold of all the shares in the company, or all the shares of a particular class, a minority shareholder who did not accept the offer can require the offeror to buy their shares on the offer terms. This is a separate procedure with its own timing rules.
Q Does the notice need to be filed at Companies House?
A copy of the notice is generally required to be filed with the registrar of companies, along with a statutory declaration by the offeror, or a director or secretary where the offeror is a company, confirming that the conditions for giving the notice have been satisfied. Filing obligations carry criminal liability if ignored, so this step should not be treated as a formality.
Q How does this interact with the Takeover Code?
For public companies within its scope, the Takeover Code runs in parallel with Part 28 of the Companies Act. The Code sets timing, disclosure, and conduct rules for the offer itself, while the statutory squeeze-out procedure governs how the final shares are mopped up. Offerors need to comply with both, and in practice the Code timetable drives when the 90 percent threshold is likely to be reached.
If you're dealing with this kind of situation, speak to an experienced legal adviser who can walk you through it — from £89.
Sources
This guide is based on primary UK law and official guidance.
- LegislationCompanies Act 2006, Part 28 Chapter 3 (squeeze-out and sell-out)legislation.gov.uk
- Guidance · Companies HouseCompanies House forms and filinggov.uk
- Official SourceThe Takeover Panelthetakeoverpanel.org.uk
Legal helpline
Unsure whether the 90 percent test is met?
Squeeze-out notices have to satisfy strict thresholds, timing windows, and filing rules, and a single miscalculation can expose the offeror to court challenge. An experienced legal adviser can talk through the procedure based on what you describe on the call, so you know what to check before anything is sent.
- Plain-English answers to your specific questions about the section 980(1) procedure
- Practical perspective on the 90 percent threshold and timing based on what you describe
- A clearer sense of what to watch out for in your circumstances
- Guidance tailored to what you describe about your next steps
Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.