MALAYSIA Law and Practice Contributed by: Munir Abdul Aziz, Ee Von Teo and Addy Herg, Wong & Partners
7. Takeovers 7.1 Public-to-Private
sider the arrangements between the funds/portfolio companies; and determine whether any entity/per - sons will be considered PAC for the purpose of the transaction in question. 7.4 Consideration For a mandatory general offer (ie, where the obligation to make the general offer by the acquirer is triggered as the acquirer is entitled to exercise control or meets the takeover threshold), the offeror must provide a wholly cash consideration, or another consideration accompanied by a wholly cash alternative. For a voluntary general offer (where an offer is made voluntarily and simultaneously to all the shareholders of the target to acquire the shares of the target), an offeror is required to provide a wholly cash considera - tion as an alternative in the following circumstances: • where 10% or more of the voting shares of the target have been purchased for cash by the offeror and PAC during the offer period and within the six-month period before the beginning of the offer period; or • where the Securities Commission determines that it is necessary to give effect to the requirement under the TO Code. 7.5 Conditions in Takeovers For a mandatory general offer, no conditions can be attached, other than the condition that the offer is subject to the offeror having received acceptances that would result in the offeror (and its PAC) holding in aggregate more than 50% of the target’s voting shares. For a voluntary general offer, an offeror is required to make the offer conditional upon the offeror receiv - ing acceptances that result in the offeror holding an aggregate of more than 50% of the target’s voting shares. No condition can be imposed that is depend - ent on either an event that is within the control or is a direct result of the offeror’s action, or the subjective interpretation or judgement of the offeror. For instance, financing conditions would not be permitted, as the offeror must have adequate financial resources to fulfil the offer obligation and offer the full cash option.
Public-to-private transactions involving private equi - ty-backed bidders are common and are often under - taken through a combination of private equity inves - tors and existing shareholder(s) and/or management. The target company (and its board) will be subject to announcement obligations in the takeover process. The legal regime also imposes rigorous rules against insider trading and market abuse, and the relationship and/or communication between the bidder and target (and/or the management) must be carefully managed. Therefore, thorough and rigorous planning for such a transaction and the takeover process is fundamental, to address the regulatory hurdles and restrictions. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers The material shareholding disclosure obligation rests on a substantial shareholder holding 5% or more inter - est in shares in public listed entities. The substantial shareholder is required to give notice to the listed entity of: • its interest in shares in the listed entity; • any change in the percentage/level of such inter - est; or • where it ceases to be a substantial shareholder. 7.3 Mandatory Offer Thresholds Pursuant to the Malaysian Capital Markets and Servic - es Act 2007 and the TO Rules, the applicable thresh - olds for triggering a mandatory general offer are as follows: • where the offeror, including persons acting in concert (“PAC”) with the offeror, acquires, holds or exercises control of more than 33% of the target company’s voting shares; or • where the offeror (together with PAC) already holds between 33% and 50% of the target company’s voting shares and subsequently acquires more than 2% of the target company’s voting shares in any six-month period. As the concept of PAC is very broad under the TO Rules, private equity-backed bidders will need to con -
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