Topping right meaning

A topping right is a bidder’s contractual right, typically built into a soft or semi‑hard irrevocable undertaking from a shareholder in a public takeover, to be given a defined window to increase its offer so that it exceeds a competing offer; if the bidder “tops” the rival bid, the undertaking does not lapse. Also called a matching right or right to top, it is a market term rather than one defined in legislation or case law. In the UK, topping rights are generally prohibited as “offer‑related arrangements” under Rule 21.2 of the City Code on Takeovers and Mergers (Takeover Code). The Takeover Panel may, however, grant derogations, commonly where there is a formal sale process, the offeree is in serious financial difficulty, or a white knight is being brought in to compete with a hostile bidder. In Ireland, usage and effect are broadly consistent under the Irish Takeover Rules, with the Irish Takeover Panel able to permit comparable limited exceptions. In practice, topping rights in public M&A are now rare and closely scrutinised; parties usually rely on Panel‑approved auction procedures rather than shareholder undertakings containing matching or topping mechanics.