Eligibility criteria for acquisition of listed company spelt out

The draft Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2016 will make eligible a person, who is a shareholder of the target company, to participate in the public offer for acquiring the listed company.
Sources told Business Recorder here on Monday that the last date for submission of comments on the draft Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2016 is December 23, 2016. The stakeholders may submit their comments to the SECP by the said deadline. As per the draft regulations, a consultant to the issue duly licensed by the SECP can be appointed as manager to the offer and payments to the shareholders of the target company can be made in form of cash only, they added.
The eligibility criteria under the said regulations revealed that all Global Depository Receipt and American Depository Receipt holders are entitled to participate in the public offer as on the date of book closure and convertible security holders (where the period of conversion falls within the offer period) shall be eligible to participate in the public offer.
A person who is a shareholder of the target company as on the date of book closure shall be eligible to participate in the public offer, the SECP said. The SECP has proposed that an acquirer, who acquires voting shares pursuant to section 109 of the Securities Act beyond the thresholds prescribed, shall within two working days of the acquisition of shares make a disclosure of the acquisition to the target company, the securities exchange and the Commission.
If any information given by the target company under these Regulations is found to be false and the target company gains any benefit from the false information, the target company shall be liable to a penalty. Before making any public announcement of intention, the acquirer shall appoint a consultant to the issue duly licensed by the Commission, as manager to the offer to assist it in the acquisition of shareholding beyond the limits prescribed in section 111 of the Act or control of the target company, the SECP said.
The securities exchange shall make the information about the public announcement of intention available, on the same day, by placing the information on its website, posting it on its notice board, notification on the automated information system and making an announcement on the house of the securities exchange, the SECP said.
The SECP said that a public announcement of offer shall be made by the acquirer through the manager to the offer within 180 days of making the public announcement of intention in the newspapers. Provided that the Commission may upon the request of the acquirer and after being satisfied that the request is reasonable, extend the aforementioned time period by a maximum of ninety days.
The notice of the public announcement of offer shall be submitted through manager to the offer to the target company (at its registered office for being placed before the board of directors of such company), the securities exchange and the Commission.
The securities exchange shall make the information about the public announcement of offer available, on the same day by placing the information on its website, posting it on its notice board, notification on the automated information system and making an announcement on the house of the securities exchange.
The acquirer, manager to the offer, target company or any person making a competitive bid shall comply with the offer timetable as prescribed under schedule. The acquirer may acquire any number of voting shares through an agreement but where the acquisition attracts the provisions of section 111 of the Act, the acquirer shall make a public announcement of offer to acquire at least fifty per cent of the remaining voting shares of the target company.
Where the public offer is made conditional upon minimum level of acceptances, such minimum level shall not be more than thirty-five per cent of the remaining voting shares, the SECP said. As per procedure for competitive bid and acceptance of public offer, the SECP said that the public announcement of first and subsequent competitive bids shall be made within twenty-one days of the public announcement of the first offer.
The custodians of Global Depository Receipts holders or American Depository Receipts holders shall upon the request of the respective holders convert the Global Depository Receipts or American Depository Receipts, as the case may be, into shares and tender the same to the manager to the offer during the acceptance period in the designated CDC account.
The manager to the offer shall send a written confirmation of receipt to the custodians of Global Depository Receipts holders or American Depository Receipts holders, the shareholders of the target company and convertible security holders who have tendered their shares to the manager to the offer as acceptance of the public announcement of offer.
The SECP said that the acquirer shall, within a period seven days from the date of closure of public offer, open a special bank account and deposit therein such sum as would, together with the security furnished under regulation 15, make up the entire sum due and payable to the shareholders as consideration for acceptances received and accepted in terms of public offer.
The SECP said that the acquirer shall announce its public announcement of offer only after careful and responsible consideration and the acquirer and its Consultant to the Issue must be satisfied that it can and would continue to be able to implement the take-over offer in full.
If any director of an acquirer that is a public company is faced with a conflict of interest as a result of a proposed acquisition, the acquirer's board of directors shall establish an independent committee to assess the proposed public offer. In case the acquirer is a company, whether incorporated in Pakistan or outside Pakistan, the public announcement, brochure, circular, offer letter or any other advertisement or publicity material issued to shareholders in connection with a public offer shall state that the directors accept the responsibility for the information contained in such documents:
Provided that if any of the directors desires to exempt himself from responsibility for the information in such documents, such director shall issue a statement to that effect together with reasons thereof in the public announcement of offer.
Persons, other than the acquirer, representing or having interest in the target company or an insider or a beneficial owner of more than ten per cent of the voting shares during the last twelve months, shall not participate in any matters concerning or relating to a public offer including any preparatory steps leading to the offer.
The acquirer shall ensure that firm financial arrangements for fulfilment of the obligations under the public offer and suitable disclosures in this regard have been made in the public announcement.
The acquirer shall, within a period of 21 days from the date of the closure of public offer, complete all procedures relating to the public offer including payment of consideration to the shareholders who have accepted the public offer. The acquirer shall comply with all the requirements of the Act, these regulations and the regulations of the securities exchange at all times.
The target company shall furnish to the acquirer, within seven days of the request of the acquirer or within seven days from the date mentioned in the public announcement of offer, whichever is later, a list of convertible security holders as are eligible for participation containing name, address, shareholding and folio number, and of those persons whose applications for registration of transfer of the securities are pending with the company.
The target company shall ensure that the acquirer and the Consultant to the Issue are provided with all relevant and material information which they require for the purposes of due diligence. The board of directors of the target company shall send its unbiased comments and recommendations on the public offer to the shareholders "if so desired by the acquirer(s) or shareholder(s) of the target company," draft regulations added.