Shareholders can expect more user-friendly take-over offer documents

Kuala Lumpur, 25 April 2001

Shareholders of companies involved in take-over transactions can expect more user-friendly take-over offer documents with the implementation of the Securities Commission's (SC) Guidelines on Offer Documentation. The Guidelines relate to the Malaysian Code on Take-overs and Mergers 1998 (the Code), which governs the conduct of take-overs of companies in Malaysia, and is issued pursuant to Section 33A(4) of the Securities Commission Act 1993 and Practice Note 1.1 of the Code.

While the Guidelines take immediate effect, the SC is giving practitioners two months to familiarise themselves with the requirements of the Guidelines. This means that take-over offer documents issued from 1 July 2001 onwards must be in compliance with the said Guidelines.

The Guidelines, which are available on the SC website at, is intended for the purpose of ensuring that advice given to shareholders in the course of a take-over offer is clear, simple to follow, prepared to the highest standards of care, and as commercially and financially informative as possible. This is in line with the SC's move towards a full disclosure-based regulatory (DBR) environment which calls for, among others, enhanced disclosure in documentation.

In this regard, the Guidelines assist principals and advisers for take-over exercises to meet the underlying objectives of the Code, which is to ensure clarity of process, protect the interests of minority shareholders of companies involved in take-overs and provide timely and adequate information to shareholders.

Under the Guidelines, parties to a take-over transaction have the option of issuing a joint document combining the offer document with the independent advice circular, in certain specified circumstances. This means greater convenience for offeree shareholders who will be able to assess both the offer and the views of the offeree board and the independent adviser in a single document. The joint document also benefits issuers as it reduces the overlap of information in the documentation required for offers under the Code.

Additionally, the Guidelines provide specimen formats for offer documents, independent advice circulars and the joint documentation, which facilitate consistency in the preparation of those documents. The specimen formats are meant to be a guide and, for practical reasons, are not exhaustive and can be adapted to suit the individual requirements of each particular transaction.


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