SOUTH AFRICA Law and Practice Contributed by: Michael Katz, Matthew Morrison, Madison Liebmann and Sinovuyo Damane, ENS
rities are approached on the same basis as ordinary shares in the Takeover Regulations. Furthermore, if a transaction involving a trade in derivative instruments of a company results in the acquisition of control of that company, as contemplated by the Competition Act (as discussed in 2.4 Antitrust Regulations ), it may trigger a notifiable merger, which would require the approval of the competition authorities. 4.6 Transparency A shareholder is not required to disclose the purpose of its acquisitions or its intention regarding control of the company, save that where a binding offer is made to a company by a bidder, the bidder must, inter alia, disclose in its offeror circular the reasons for the offer and its intentions regarding the continuation of the business of the offeree company. The requirements (and content) as regards disclosure are regulated by the Takeover Regulations and, where applicable, the JSE Listings Requirements. There is no specific stage at which a target is required to disclose a deal. Rather, there are certain disclosure obligations that are required as a result of certain occurrences relating to, and at different stages of, a deal. Cautionary Announcement The Takeover Regulations set out certain obligations regarding confidentiality and transparency. For exam - ple, all negotiations between the independent board and an offeror must remain and be kept confidential. If there is a leak of price-sensitive information, however, or if there is a reasonable suspicion that such a leak has occurred, the relevant information must immedi - ately be disclosed in a cautionary announcement that must be prepared and released by the target. There is a similar requirement expressly contained in the JSE 5. Negotiation Phase 5.1 Requirement to Disclose a Deal
providing details relating, directly or indirectly, to such issuer that constitutes price-sensitive information”. In practical terms, this means that, upon the conclusion by a JSE-listed company of a transaction agreement with an offeror in relation to an offer, the principal terms of the offer must be made public. Firm Intention Announcement A firm intention announcement must be made when either a mandatory offer is triggered, or when an offeror has communicated a firm intention to make an offer and is ready, able and willing to proceed with an offer. The responsibility for making such announce - ment rests with the independent board of the target. A firm intention announcement is required to con - tain information on a range of matters that are pre - scribed in the Takeover Regulations, including (i) the identity of the offeror and its concert parties, (ii) the consideration offered, (iii) the terms of the offer, (iv) the details of the cash confirmation provided to the TRP, (v) the estimated timetable of the offer, (vi) the details of any beneficial interest in the target company held by the offeror and any of its concert parties, and (vii) other details of support received from any of the offeree company shareholders. Once the firm intention announcement has been published, the offeror must proceed with its offer. Circular Within 20 business days after a firm intention announcement has been published, the offeror must publish an offeror circular. The Takeover Regulations prescribe the information that must be contained in an offeror circular. Within 20 business days of the offeror circular being posted, the independent offeree board is required to post its circular. Similarly, the Takeover Regulations prescribe the information that is required to be contained in the offeree circular. If a transaction is one that is “friendly”, it is considered market practice to combine the offeror and offeree circular. In such a case, the circular will be a combined offer circular prepared by the offeror and offeree. A combined offer circular must contain the information required for both an offeror circular and an offeree response circular. The same time periods apply in respect of a combined offer circular.
Listings Requirements (see below). General Disclosure Obligations
The JSE Listings Requirements provide that “with the exception of trading statements, an issuer must, with - out delay, unless the information is kept confidential for a limited period of time, release an announcement
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