Better protection for investors
Investors can expect greater protection following the introduction of the new Malaysian Code on Take-Overs and Mergers 2010 (2010 Code) that came into effect yesterday.
The last major review of the code was in 1998.
Its major changes also came from extensive consultations with various parties, they added.
"The 2010 Code replaces the Malaysian Code on Take-Overs and Mergers 1998," the SC announced yesterday.
"The 2010 Code, together with its Practice Notes (PNs), provides protection to a wider group of investors, enhances transparency and improves efficiency in line with capital market developments, locally and abroad," it added.
Key changes in the 2010 Code benefiting shareholders included protection for investors of foreign companies and real estate investment trusts (REITs) listed on the local bourse, shorter settlement periods and enhanced disclosures in offer documents and independent advice circulars.
Effective immediately, all companies, including foreign incorporated ones and REITs listed on Bursa Malaysia, are subjected to the code.
In the past, the code only regulated public companies incorporated under the Companies Act 1965, regardless whether they were listed or not.
The 2010 code now allows a voluntary takeover offer to be carried out with a higher acceptance threshold as a condition.
The new code has reduced the settlement period in a takeover offer to 10 days from 21 days for settlement via cash consideration, and 14 days for settlement via shares.
Schemes of arrangement, compromise, amalgamation and selective capital reductions now have the same effects as takeover offers.
The Securities Commission believes that there should be parity in the protection afforded to shareholders in the implementation of such schemes.
Another major change in the code relates to the announcement on potential takeover offers.
It also waived the need for the Securities Commission's approval for the appointment of independent advisers by the board of an offeree.
The Securities Commission (SC) said the revised code will also institute higher standards of governance in takeover and merger activities.
The last major review of the code was in 1998.Given the number of developments in the capital market in the last 10 years, the commission felt that it was time to reissue the code, industry observers said.
Its major changes also came from extensive consultations with various parties, they added.
"The 2010 Code replaces the Malaysian Code on Take-Overs and Mergers 1998," the SC announced yesterday.
"The 2010 Code, together with its Practice Notes (PNs), provides protection to a wider group of investors, enhances transparency and improves efficiency in line with capital market developments, locally and abroad," it added.
Key changes in the 2010 Code benefiting shareholders included protection for investors of foreign companies and real estate investment trusts (REITs) listed on the local bourse, shorter settlement periods and enhanced disclosures in offer documents and independent advice circulars.
Effective immediately, all companies, including foreign incorporated ones and REITs listed on Bursa Malaysia, are subjected to the code.
In the past, the code only regulated public companies incorporated under the Companies Act 1965, regardless whether they were listed or not.
The 2010 code now allows a voluntary takeover offer to be carried out with a higher acceptance threshold as a condition.
The new code has reduced the settlement period in a takeover offer to 10 days from 21 days for settlement via cash consideration, and 14 days for settlement via shares.
Schemes of arrangement, compromise, amalgamation and selective capital reductions now have the same effects as takeover offers.
The Securities Commission believes that there should be parity in the protection afforded to shareholders in the implementation of such schemes.
Another major change in the code relates to the announcement on potential takeover offers.
The 2010 Code requires a potential offeror or offeree to make an announcement on possible offers where there are unusual changes in the price of the potential offeree's shares.
If the offeror denies that he is making an offer for the offeree, he will be barred from making any takeover bid within six months.
The code now requires only one-stage application to be made, instead of two stages previously, for exemptions from mandatory offer obligations arising from the issuance of new securities and share buyback schemes.
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