Securities Commission Malaysia to introduce a rule book in revised framework on takeovers and mergers

The Securities Commission Malaysia (SC) launched a rule book on the revised Takeovers and Mergers Framework to facilitate market activities in a fast changing environment, whilst ensuring appropriate shareholder protection.

The Rules on Takeovers, Mergers and Compulsory Acquisitions 2016 stipulates operational and conduct requirements in relation to takeovers and is issued as an SC guideline under section 377 of the Capital Markets and Services Act 2007.

The Rules come into force today together with the revised Malaysian Code on Takeovers and Mergers 2016 which sets out the broad principles to be adhered to by all parties involved in any takeover or merger transaction. It includes, amongst others, the principle that all shareholders must be treated equally in any takeover transaction and should not be disadvantaged by the treatment or conduct of any relevant party to a takeover.

In line with the SC’s efforts to move towards a proportionate regulatory regime, the enhancements seek to ensure that the takeover framework will be facilitative to commercial realities while providing protection to shareholders where required. These include specifying that sizeable unlisted public companies are subject to the Code, removing the limitation that takeover schemes can only be initiated by parties holding over 50% equity interest and providing clear guidance on required conduct during a takeover offer.

The SC had worked with market practitioners and investors to ensure the incorporation of the markets’ view in the formulation of the enhanced framework. The Rules and revised Code are available on the SC’s website.

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