SECURITIES COMMISSION ACT 1993

MALAYSIAN CODE ON TAKE-OVERS AND MERGERS 1998

ARRANGEMENT OF CODE

PART I
PRELIMINARY

Short title and commencement

IN exercise of the powers conferred by subsection 33A(1) of the Securities Commission Act 1993 [Act 498], the Minister, on the recommendation of the Commission having regard to the matters under subsection 33A(5) of the Act, prescribes the following code:

(1) This code may be cited as the Malaysian Code On Take-Overs And Mergers 1998.

(2) This Code shall come into operation on 1 January 1999.

Interpretation
(1) In this Code, unless the context otherwise requires-
“chief executive” has the same meaning as is assigned to that expression in subsection 2(1) of the Securities Industry Act 1983 [Act 280] ;

“company” has the same meaning as is assigned to that expression in subsection 33(1) of the Act;

“competing take-over offer” in relation to an offeror, does not include a take-over offer that has been revised by the offeror;

“convertible securities” means securities such as warrants, options and other securities that are issued by the offeror or offeree which are convertible into new voting shares of the offeror or offeree;

“director” has the same meaning as is assigned to that expression in the Companies Act 1965 [Act 125] ;

“market day”, in relation to a stock exchange, means a day on which the stock market of the stock exchange is open for trading in securities;

“mandatory offer” means a take-over offer made or to be made under section 33B of the Act;

“offer document” means an offer document referred to in section 13;

“offeree shareholders” means holders of voting shares of the offeree to which the take-over offer relates other than the offeror;

“offer period” means the period commencing from the date the offeror makes an announcement of a proposed or possible take-over offer under subsection 12(1) or sends a written notice and announcement under subsection 12(3), whichever is earlier, until –

(a) the first closing date of the take-over offer; or

(b) the date when the take-over offer becomes or is declared unconditional as to acceptances, lapses or is withdrawn, if this date is later than the date referred to in paragraph (a) ;

“officer” has the same meaning as is assigned to that expression in subsection 33(1) of the Act;

“partial offer” means a voluntary take-over offer in which a person offers to acquire the same percentage but less than 100% of any class of the voting shares of a company from all offeree shareholders;

“press notice” means a notice given to at least three daily newspapers circulating generally throughout Malaysia, one of which shall be in the national language and one in the English language;

“relevant stock exchange” means the stock exchange on which the securities of the company are listed;

“reverse take-over” means a situation where an offeror makes a take-over offer for the voting shares of an offeree by means of an exchange of shares such that if the take-over offer is accepted, the shareholders of the offeree would control the offeror;

“securities exchange offer” means a take-over offer which involves an issue or an exchange of securities or both;

“stock market” has the same meaning as is assigned to that expression in subsection 2(1) of the Securities Industry Act 1983;

“take-over offer” includes a revised take-over offer;

“voluntary offer” means a take-over offer that is not a mandatory offer.

(2) For the purposes of this Code, a reference to a take-over offer becoming or being declared unconditional as to acceptances means the condition referred to in section 17 has been fulfilled.
(3) For the purposes of ascertaining whether an obligation under subsection 6(4) has arisen, where there are different classes of voting shares of an offeree carrying different rights to vote, each voting share of the offeree carrying the right to more than one vote shall be deemed to consist of such number of voting shares as shall correspond to the number of voting rights which are attached to that voting share.
(4) For the purposes of this Code, an agreement, arrangement or understanding means an agreement, arrangement or understanding whether formal or informal, whether written or oral, whether express or implied, or whether or not having legal or equitable force.
Service by post
PRELIMINARY Service by post 3. Where a provision in this Code requires a document to be posted, then, until the contrary is proved, delivery of the document –

(a) shall be presumed to be effected by properly addressing, prepaying and posting by ordinary post the document; and

(b) shall be presumed to have been effected at the time when the document would have been delivered in the ordinary course of the post.

Application of Parts of the Code

PRELIMINARY Application of Parts of the Code 4.

(1) Part II shall only apply to mandatory offers.

(2) Part III shall only apply to partial offers.

(3) Unless otherwise stated, Parts IV to IX shall apply to mandatory offers and voluntary offers, including partial offers.

Principles
PRELIMINARY Principles 5. In accordance with the provisions of subsection 33A(3) of the Act, it is hereby declared that the acquisition of voting shares shall take place in an efficient, competitive and informed market and shall have cognisance of the objectives as stated in subsection 33A(5) of the Act.
Offer document

PART IV
ANNOUNCEMENTS, WRITTEN NOTICES
AND DOCUMENTS TO SHAREHOLDERS
Offer document 13.

(1) The offeror shall submit the offer document and other information in relation to the take-over offer in such form and manner as the Commission may require for its consent within four days from the date of sending of the written notice made under subsection 12(2) or paragraph 12(3)(a).

(2) The offeror shall disclose in the offer document all such information as the offeree shareholders and their professional advisers would reasonably require, and would reasonably expect to find, in an offer document or for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer and the extent of the risks involved in doing so.

(3) The information required by subsection (2) to be included in an offer document shall be-

(a) information which is within the knowledge of –
(i) an offeror and all persons acting in concert with the offeror;
(ii) if the person referred to in subparagraph (i) is a corporation, its officers and associates; or
(iii) an expert appointed by such person referred to in subparagraph (i) in relation to the take-over offer; and
(b) information which the persons referred to in paragraph (a) would be able to obtain by making such enquiries as were reasonable in the circumstances.

(4) For the purposes of subsection (3), a person shall, unless the contrary is proved, be presumed to have been aware at a particular time of a fact or occurrence of which an employee or agent of the person having duties or acting on behalf of the employer or principal was aware of at the time.

(5) Where the Commission has granted its consent to the offer document, the offeror shall include in the offer document a statement that the Commission has consented to the offer document under this section and that the consent of the Commission shall not be taken to indicate that the Commission recommends the take-over offer to offeree shareholders. (6) Without prejudice to the generality of subsection (2), the offeror shall include in the offer document all such information and statements as required under Schedule 1.

(7) The offer document as consented to by the Commission under subsection (1) shall be posted by the offeror to the board of directors of the offeree and offeree shareholders within thirty-five days from the date of the sending of the written notice made under subsection 12(2) or paragraph 12(3)(a).

Offeree board of directors’ comments on the take-over offer

ANNOUNCEMENTS, WRITTEN NOTICES
AND DOCUMENTS TO SHAREHOLDERS
Offeree board of directors’ comments on the take-over offer 14.

(1) The board of directors of the offeree shall circulate its comments on the take-over offer to every holder of voting shares to which the take-over offer relates, including any other forms of consideration offered by the offeror, within ten days from the date that the offer document was posted in accordance with subsection 13(7).

(2) The board of directors of the offeree shall disclose in a circular made under subsection (1) to every holder of the voting shares to which the take-over offer relates all such comments and information as the holders of such voting shares and their professional advisers would reasonably require, and would reasonably expect to find, in such circular or for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer and the extent of the risks involved in doing so.

(3) The comments and information required under subsection (2) to be included in the circular shall be-

(a) information which is within the knowledge of –
(i) the board of directors of the offeree; or
(ii) an expert appointed by the board of directors of the offeree in relation to the take-over offer; and
(b) information which the persons referred to in paragraph (a) would be able to obtain by making such enquiries as were reasonable in the circumstances.

(4) For the purposes of subsection (3), a person shall, unless the contrary is proved, be presumed to have been aware at a particular time of a fact or occurrence of which an employee or agent of the person having duties or acting on behalf of the employer or principal was aware of at the time.

(5) Without prejudice to the generality of subsection (2), the circular shall include, but is not limited to, such comments and information on –

(a) the offeror’s stated intentions regarding the continuation of the business of the offeree;
(b) the offeror’s stated intentions regarding any major changes to be introduced in the business, including any plans to liquidate the offeree, sell its assets or re-deploy the fixed assets of the offeree or make any other major change in the structure of the offeree;
(c) the offeror’s stated long-term commercial justification for the proposed take-over offer;
(d) the offeror’s stated intentions with regard to the continued employment of the employees of the offeree and of its subsidiaries; and
(e) the reasonableness of the take-over offer, including, the reasonableness and accuracy of profit forecasts for the offeree, if such forecast is included by the offeror in the offer document.

(6) No person shall send a circular of the board of directors of the offeree to the offeree shareholders without the consent of the Commission.

Independent advice circular

ANNOUNCEMENTS, WRITTEN NOTICES
AND DOCUMENTS TO SHAREHOLDERS
Independent advice circular 15.

(1) The board of directors of the offeree shall appoint an independent adviser in relation to the take-over offer and the substance of such advice must be made known to the holders of the class of the voting shares to which the take-over offer relates in an independent advice circular.

(2) The board of directors of the offeror shall appoint an independent adviser where the take-over offer being made is a reverse take-over or where the board of directors of the offeror is faced with a conflict of interest situation.

(3) The substance of any advice given to the board of directors of the offeror under subsection (2) shall be made known to the all holders of voting shares of the offeror.

(4) In the case of a reverse take-over, the board of directors of the offeror shall obtain the approval of the holders of voting shares of the offeror for the reverse take-over prior to the posting of the offer document to all holders of voting shares to which the take-over relates.

(5) Where the offeror or offeree has convertible securities outstanding the appointed independent adviser shall make known his or its advice to such holders of those securities, together with the views of the board of directors of the offeror or of the offeree, as the case may be, on the take-over offer or proposal.

(6) No person shall send an independent advice circular to the board of directors of the offeree or offeree shareholders without the consent of the Commission.

(7) An independent advice circular required to be sent to the board of directors of the offeree or offeree shareholders shall be posted to the relevant holders of voting shares within ten days from the date the offer document was posted in accordance with subsection 13(7).

(8) The appointment of the independent adviser by the board of directors of the offeree shall be subject to the approval of the Commission.

(9) The independent adviser shall disclose in the independent advice circular all such information as the holders of voting shares of the offeror, the board of directors of the offeree and all holders of voting shares to which the take-over offer relates and their professional advisers would reasonably require, and would reasonably expect to find, in an independent advice circular or for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer and the extent of the risks involved in doing so.

(10) The information required by subsection (9) to be included in the circular shall be-

(a) information which is within the knowledge of the independent adviser; and
(b) information which the independent adviser would be able to obtain by making such enquiries as were reasonable in the circumstances.

(11) For the purposes of subsection (10), a person shall, unless the contrary is proved, be presumed to have been aware at a particular time of a fact or occurrence of which, an employee or agent of the person having duties or acting on behalf of the employer or principal was aware of at the time.

(12) Without prejudice to the generality of subsection (9), an independent adviser shall include in the circular to the board of directors of the offeree or offeree shareholders all information and statements as required under Schedule 2.

Profit forecasts and asset valuation
ANNOUNCEMENTS, WRITTEN NOTICES
AND DOCUMENTS TO SHAREHOLDERS
Profit forecasts and asset valuation

16. (1) Where profit forecasts are provided by the offeror or the offeree, they shall ensure that such profit forecasts shall comply with the following:

(a) there shall be at least a profit forecast for the current financial year and in the event that the forecast year is less than three months of the current financial year the period of the forecast will be the current financial year and the next immediate financial year ;
(b) the assumptions, including the commercial assumptions, upon which the profit forecasts are based, shall be stated in any document sent to offeree shareholders in connection with a take-over offer;
(c) the accounting policies and calculations for the forecasts shall have been examined and reported on by the auditors, consultant accountants or any other financial adviser of the offeror or the offeree; and
(d) when a profit forecast includes a period in which trading has already commenced, any previously published profit figures which are available in respect of any expired portion of such period together with comparable figures for the preceding year shall be stated.

(2) A financial adviser mentioned in the document shall also comment on the profit forecasts. (3) The offeror or offeree shall include in the document a statement that the relevant advisers, including the consultant accountant and financial adviser, have given and not withdrawn their consent to the publication of their name therein.

(4) Where any valuation of assets is given by the offeror or the offeree, they shall include in the document containing the valuation –

(a) the basis of valuation;
(b) an opinion of an independent valuer supporting the valuation; and
(c) a statement that the independent valuer has given and has not withdrawn his or its consent to the publication of his or its name therein.