SOUTH AFRICA Law and Practice Contributed by: Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
General Offer A general offer involves an individual offer to each shareholder of the target company. Unlike a scheme of arrangement, shareholder approval is not required, nor does it require the support of the target board, and it can therefore be used in a hostile takeover. If the offer is accepted by at least 90% of the share - holders, the bidder may then compulsorily acquire the shares of the remaining non-accepting shareholders (on the same terms and conditions as the accepting shareholders). Partial offers are also permitted, where control is acquired but the amount is less than 100%. A key advantage to a general offer is that it does not trigger an appraisal right for dissenting shareholders, which is particularly useful when all or part of the con - sideration is not cash. Takeovers and mergers in relation to “regulated com - panies” (both public and private companies meeting certain criteria) are regulated by the Takeover Regu - lation Panel (TRP) in accordance with the Compa - nies Act and the Takeover Regulations published thereunder (the “Takeover Regulations”). The TRP is empowered to regulate any affected transaction or offer, without regard to the commercial advantages or disadvantages of the transaction, so as to: 2.2 Primary Regulators Takeover Regulation Panel • ensure the integrity of the marketplace and fairness to the holders of securities of regulated companies; • ensure the provision of (i) necessary information to holders of securities of regulated companies, to the extent required to facilitate the making of fair and informed decisions, and (ii) adequate time for regu - lated companies and holders of securities to obtain and provide advice with respect to offers; and • prevent actions by regulated companies that are designed to impede, frustrate or defeat an offer or the making of fair and informed decisions by the holders of that company’s securities. A transaction which is subject to the Takeover Regula - tions may not be implemented prior to the TRP issuing a compliance certificate in relation thereto. The Takeover Regulations and the relevant provisions of the Companies Act will be triggered when there
is an offer proposal which, if accepted, would result in an “affected transaction” in respect of a regulated company. Affected transactions include: • a transaction or series of transactions amounting to the disposal of all or the greater part of the assets or undertakings of the company; • an amalgamation or merger; • a scheme of arrangement; • an acquisition of, or announced intention to acquire, a beneficial interest in any voting securi - ties of a regulated company; • an announced intention to acquire the remaining voting securities of the company not already held by that person or persons acting in concert with that person; The Issuer Services Division of the JSE regulates the conduct of listed companies, mainly through the sponsor of the relevant listed company. All submis - sions and communications with the JSE will be con - ducted through a sponsor. The JSE Listings Require - ments (the “Listings Requirements”) apply to target companies whose shares are listed on the JSE and/ or to bidders whose shares are also listed on the JSE, and these entities must accordingly comply with these requirements when conducting M&A activities. Any de-listing of the shares of the target company as a result of the takeover offer or the listing of any consid - eration shares as part of that offer will be regulated in accordance with the continuing obligations and listing criteria set out in the Listings Requirements. Competition Commission and Competition Tribunal A notifiable “merger” as defined in the Competition Act No 89 of 1998 (as amended) (the “Competition Act”) is reportable and cannot be implemented with - out the prior approval of the Competition Commission (and, in the case of large mergers also the Competi - tion Tribunal) (see 2.4 Antitrust Regulations for further discussion). • a mandatory offer; and • compulsory acquisition. Johannesburg Stock Exchange (JSE)
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