Amendments to listed cos regulations: ‘Primary objective is to protect interests of minority shareholders’

ISLAMABAD: The primary objective of new amendments to the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017, is to provide equity and protect the interests of minority shareholders.

The SECP has made amendments to the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017.

According to a technical release issued by former chairman Federal Board of Revenue (FBR) Shabbar Zaidi, the acquisition of control of a listed company by another person or company is an important subject of corporate regulations.

In Pakistan, these regulations are governed under the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017.

Zaidi said that major amendments have been made in these regulations by the Securities and Exchange Commission of Pakistan (Commission) in January2024.

Technical Release 2/2024, which deals with the major amendment in Takeover Law, said that two important subjects of takeover laws are the “determination of minimum offer price” and “mode of payment”. The regulations have been substantially amended to bring these in line with best practices.

Zaidi stated that the minimum offer price (regulation) is the soul of these regulations. It requires a minimum price to be paid under the public offer.

In amended regulations, a concept of frequently traded shares or otherwise has been retained, however, the term “frequently traded shares” has been defined with modifications.

The purpose of this amendment is that the minority shareholders are paid the correct price for the shares. The net assets value determined by a Chartered Accountant firm based on audited financial data not older than six months from the date of public announcement of offer has been dispensed with in case of frequently traded shares.

This effectively means that in the case of frequently traded shares the minimum price has two criteria; being the price in the stock exchange and the price paid by the acquirer, Zaidi added.

Under the amended regulations public announcement shall be made, in case an acquirer is a company, after passing the Board resolution, unlike the past requirement after entering into negotiations for a share purchase agreement. This is an important and sensitive procedural change.

Copyright Business Recorder, 2024