| On 15 December 2010, the Malaysian Securities Commission introduced a new Code on Take-overs and Mergers 2010 (Code), replacing the previous 1998 Code. It introduces improved protection for investors, enhances transparency of information through greater disclosure and puts a heavier onus on independent directors of the target company (offeree). According to Wong & Partners, the Code is now extended to real estate investment trusts (REITs) listed in Malaysia as well as companies incorporated outside, but listed in Malaysia. Accordingly, unit holders of Malaysian listed REITS and shareholders of foreign incorporated companies are now given the same protection as shareholders of listed Malaysian companies, under the Code. The Code now obligates a potential offeror to make an announcement as to whether there is a take-over or possible take-over, if there is untoward movement or increase in the volume of share turnover offer of an offeree. The Code now spells out the principles of conduct required by offerors, advisers, and the board of directors of the offeree involved in a take-over offer. These include the requirement for all stakeholders to observe good standards of commercial behaviour so that minority shareholders are given a fair and equal opportunity to consider the merits and demerits of a take-over offer, to provide fair and equal treatment to all shareholders and in particular, minority shareholders, and to ensure that there is full, frank and complete disclosure of information. The Code also prescribes two new categories of Parties Acting in Concert (PACs), in addition to the presumed categories of PACs under the CMSA. The first relates to a company, its directors and shareholders, where there is an agreement, arrangement or understanding between them, which restricts the ability of the director or shareholder from offering or accepting a take-over offer or from increasing or reducing its shareholdings in the company (Restriction). The second relates to partners in partnership (where “partnership” is not given its strict legal interpretation, but is defined to simply mean two or more persons having a business arrangement and common interest in several companies between them) and where such Restriction exists. The Code now makes very clear that a scheme of arrangement, compromise, amalgamation or selective capital reduction (Schemes), will be treated as take-over offers and fall within the purview of the Securities Commission. Additionally, the new Code imposes more onerous disclosure obligations, particularly on the board of the offeree and the independent adviser. However, the timeframe for the issuance of such circular has not changed. It is still required to be issued within ten days of the dispatch of the offer document of the offeror. While the new Code does not introduce drastically new principles, it does develop further detail on existing provisions, establishes new parameters for greater investor protection and enhances transparency of take-over offers to minority shareholders and the investing public. |
Latest Updates
Who’s Afraid of AI? - Tech Tales with Paul Haswell
Join Paul Haswell, a partner at K&L Gates in Hong Kong, as he explores the transformative impact of technology on the legal profession in his new column for IHC Magazine. Paul offers insights into the challenges and opportunities for ...
Related Articles
Related Articles by Jurisdiction
Latest Articles
Who’s Afraid of AI? - Tech Tales with Paul Haswell
Join Paul Haswell, a partner at K&L Gates in Hong Kong, as he explores the transformative impact of technology on the legal profession in his new column for IHC Magazine. Paul offers insights into the challenges and opportunities for ...
