Covid-19: SC announces flexibilities to Take-Over Rules

To ensure that take-over offers can still continue during the Movement Control Order (‘MCO’) period, the Securities Commission Malaysia (‘SC’) announced certain flexibilities to the requirements under the Capital Markets and Services Act 2007 (‘CMSA’) and the Rules on Take-overs, Mergers and Compulsory Acquisitions (‘Rules’) on 23 April 2020.
 
The flexibilities granted in relation to the take-over regime are set out below.
 
  1. Service of Notice and Documents 
For the purpose of complying with the requirements relating to the delivery of take-over offer documents under paragraphs 9.10(5)(b), 11.02(1), 11.03(1), 11.04(1) & 12.03(1)(b) of the Rules and sections 222(1) & 223(2) of the CMSA:
 
  1. The offeror or the board of the offeree may provide an electronic copy of the required notices and documents under the above-referred provisions on a website, as a means of making available such notices and documents.
  1. However, the offeror or the board of the offeree, as the case may be, is required to send concurrent notification to all offeree shareholders, to inform them of the publication of the notice or document on the website and provide details of the relevant website (‘Summary Notification’). The Summary Notification is to be sent out to the offeree shareholders:
  1. in hard copy form, by post to the offeree shareholders' registered address in Malaysia maintained with Bursa Malaysia Depository Sdn Bhd (‘Bursa Depository’); or
  1. in electronic form, by e-mail to the offeree shareholder's e-mail address registered with Bursa Depository, where a shareholder has already opted for electronic delivery.
  1. For the purpose of paragraph 1 above, the designated websites on which the required notices and documents are to be placed are:
  1. Bursa Malaysia Bhd's website[1], where the offeror or the offeree company is a publicly listed company in Malaysia; and
  1. the SC’s website[2], where neither the offeror nor the offeree company is publicly listed in Malaysia.
  1. Advisers (including independent advisers), offerors and the board of the offerees must ensure that the Summary Notification is sent out for the purpose of:
  1. the copy of the written notice under paragraph 9.10(1) of the Rules to be provided to all offeree shareholders (paragraph 9.10(5)(b) of the Rules);
  1. the publication of the offer document on the website to be provided to all offeree shareholders (paragraph 11.02(1) of the Rules); and
  1. the publication of the offeree board circular and independent advice circular on the website to be provided to all offeree shareholders (paragraphs 11.03(1) and 11.04(1) of the Rules).
  1. The Summary Notification must include the relevant information including, but not limited to, the following:
  1. the salient information regarding the take-over offer: 
     
    1. the name of the offeror, the ultimate offeror; and persons acting in concert;
    2. the name of the offeree; and
    3. the key terms of the offer, i.e. the securities to which the offer is extended to, the offer price, mode of consideration, and important dates on the offer timeline;
  1. in the case of a publication of the offer document, a copy of the Form of Acceptance and Transfer and a copy of the Bursa Depository Transfer of Securities Request Form (‘FTF010’) must be provided with the Summary Notification;
  1. in the case of a publication of an offeree board circular and independent advice circular, a brief summary of the opinion and recommendation by the board of the offeree and the independent adviser;
  1. a statement requiring shareholders to register their e-mail addresses with Bursa Depository via Bursa Malaysia's website[3] or via the Bursa Anywhere application; and
  1. in relation to paragraph (iv) above, to include a cautionary statement on the importance for shareholders to register their e-mail addresses, as in the event of any further restriction to movement or any other emergency, an electronic documentation and service may be the only mode that can be employed.
  1. e-acceptance and e-transfer
  1. Offeree shareholders are to be provided with two methods of sending their completed Form of Acceptance and FTF010 (collectively ‘Forms’) to the share registrar and the Authorised Depository Agent (ADA), respectively:
  1. via e-mail, to the e-mail addresses provided in the Forms; or
  1. via post, to the postal address provided in the Forms.
  1. To ensure the process of e-acceptance and e-transfer is undertaken smoothly, clear instructions must be given to the offeree shareholders.
  1. Offeree shareholders are to be encouraged to send the Forms via e-mail to avoid risk of possible delay which posting of physical documents may pose.
  1. Extension for Settlement of Consideration
  1. The period during which an offeror must pay the cash consideration to all accepting shareholders under paragraph 14.01(1) of the Rules is extended from 10 days to 12 days from:
  1. the date the offer becomes or is declared wholly unconditional, if the valid acceptances are received during the period when the take-over offer is still conditional; or
  1. the date of the valid acceptances, if the valid acceptances are received during the period after the take-over offer is or has become or has been declared wholly unconditional.
  1. Declaration for Compulsory Acquisition
  1. For the purpose of complying with the requirement under section 222(1)(B) of the CMSA pertaining to a copy of a statutory declaration that is required to accompany the notice of compulsory acquisition, the offeror shall instead:
  1. submit a declaration to the SC confirming that the conditions for the giving of the notice are satisfied; and
  1. provide a copy of the declaration referred to in sub-paragraph (i) above together with the notice of compulsory acquisition to the dissenting shareholders.
  1. However, the flexibility provided in paragraph 10 above shall apply only where the right to invoke a compulsory acquisition under section 222 of the CMSA arises during the MCO period.
  1. Other Extension of Time
  1. Other than the flexibilities and extension of time granted above, advisers are required to consult with the SC at the earliest opportunity if there is any need for an extension of time to comply with any provision of the Rules due to any anticipated difficulties in complying with the stated timelines during the MCO period. The SC shall assess each request for extension on a case-to-case basis.
The SC added that although the flexibilities set out above are applicable to general offers, it may consider according similar flexibilities in other take-over related documents such as whitewash transactions and schemes to which the Rules apply.
 
Comments
 
The regulatory flexibilities accorded by the SC, which apply only during the subsistence of the MCO, are welcome as they enable new take-over offers to be launched during the MCO period as well as offers that have already been launched to continue.