Takeovers and Mergers

Question 1

Which provision regulates the TRP?

Answer 1

Section 196.

Question 2

Which provisions deal with the functions and powers of the TRP?

Answer 2

Section 119.

Question 3

To whom do the Takeover Regulations apply?

Answer 3

Regulated companies.

Question 4

What are regulated companies?

Answer 4

1. Public companies
2. SOEs unless exempted
3. Private companies where more than 10% of shares have changed hands in the preceding 24 months
4. Where MOI provides for the application of the regulations

Question 5

What is the vesting of control?

Answer 5

The acquisition of control of a company by a person or persons acting in concert who previously did not have control. (mandatory offers)

Question 6

When is control said to vest?

Answer 6

In terms of Reg 81(e) and 86 (1), where a person or persons acting in concert acquire more than 35% of the voting rights attaching to the securities of a regulated company.

Question 7

What is control in terms of the Takeover Regulations?

Answer 7

In terms of Regulation 81(e), a holding of a beneficial interest in a regulated company equal to or exceeding the specified percentage of voting rights in that regulated company.

Question 8

What are voting rights?

Answer 8

Ito section 1, the rights of any holder of the company’s securities to vote in connection with that matter (profit company); or rights of a member to vote in connection with the matter (non-profit)

Question 9

What are voting securities?

Answer 9

Securities that carry voting rights or are presently convertible to securities that carry voting rights.

Question 10

Which regulation deals with the requirements for concert parties?

Answer 10

Regulation 84.

Question 11

What are the requirements for concert parties?

Answer 11

1. Agreement/arrangement/understanding between the parties
2. Conduct pursuant to the agreement/arrangement
3. Co-operation between the parties
4. Co-operation pursuant to the agreement
5. Purpose of the co-operation must be to enter into or propose an affected transaction.

Question 12

What is the first type of affected transaction?

Answer 12

Vesting of control- section 123

Question 13

What is the second type of affected transaction?

Answer 13

Becoming the sole holder of securities- section 117(1)(c)(iv) and (v)

Question 14

What is the third type of affected transaction?

Answer 14

Consolidation of control- section 117(1)(c)(iv) and (v).

Question 15

When is the third type of affected transaction triggered?

Answer 15

When an existing controlling shareholder acquires 5% or more of additional voting shares in a 12 month period.

Question 16

What is the fourth type of affected transaction?

Answer 16

Disposal of assets- section 117(1)(c)(i) read with section 112.

Question 17

The status of which company determines the applicability of the Regulations to the transaction?

Answer 17

Offeree regulated company (Reg 99).

Question 18

What is regulation 99?

Answer 18

The approach.

Question 19

What is the ‘approach’?

Answer 19

An approach with a view to an offer being made, or an offer, must be made only to the board of the offeree regulated company.

Question 20

What case holds that the approach can be made to the board and the shareholders simultaneously?

Answer 20

La Lucia Sands v Barkhan.

Question 21

What is a cautionary announcement?

Answer 21

In terms of regulation 100, a cautionary announcement must be published regarding price sensitive information that would concern a possible or proposed offer that is the subject of negotiations.

Question 22

What is a firm intention announcement ito regulation 101?

Answer 22

An announcement that must be made when a mandatory offer is required or when an offeror has communicated a firm intention to make an offer and is ready, able and willing to proceed with the offer.

Question 23

When must a firm intention announcement be made?

Answer 23

Ito regulation 101(3), immediately when:
1. a mandatory offer is required (offeror announces)
2. the board of the offeree regulated company has received a formal written offer (offeree announces).

Question 24

What is the written offer that must be made to the board of the offeree regulated company?

Answer 24

Ito section 117(1)(c)(v), the announced intention to acquire a beneficial interest in the remaining voting securities of a regulated company not already held by a person or persons acting in concert.

Question 25

When must the offeror post the offer document to the offeree regulated company?

Answer 25

Ito regulation 102(2):
1. Within 20 business day after the date of publication of a firm intention announcement
2. Longer period allowed by the Executive Director, on good cause shown/

Question 26

Which provision regulates what the offer document must contain?

Answer 26

Regulation 106(4)-(6).

Question 27

What is the information ito regulation 106(4)-(6)?

Answer 27

1. Identity of offeror and any concert parties
2. Terms of the offer
3. Reasons for the offer and the offeror’s intention regarding the continuation of the business of the offeree regulated company and the continuation in office of the directors of the offeree regulated company
4. Statemets of direct and indirect beneficial interests in or holdings of securities, or actions to be affected or a negative statement of there are no such interests or holdings