HONG KONG: SFC issue guideline on Hong Kong Takeovers Code

Friday January 6 2012

The Securities and Futures Commission of Hong Kong has issued guidelines to fund managers on dealing with disclosure obligations under Rule 22 of the Code on Hong Kong Takeovers and Mergers.

Rule 22 of the Hong Kong Takeovers Code requires parties to an offer and their respective associates to disclose dealings in relevant securities of the offeree company and the offeror (in the case of a securities exchange offer) conducted for themselves or on behalf of discretionary clients during an offer period.

To ensure that Hong Kong takeovers are conducted within an orderly framework, the SFC are keen to emphasise the importance of timely and accurate disclosure of relevant information by associates and any party who may have the ability to exercise a material influence over the outcome of an offer.

`Set out below are some practical guidance on the steps a fund manager, who is an associate under the Takeovers Code, might take to ensure timely and appropriate compliance with its dealing disclosure obligations. The SFC emphasise that ultimately it is an obligation for each fund manager to take all appropriate measures to ensure compliance with the Takeovers Code. Practical guidance to fund managers:

(a) Identifying relevant companies in an offer period

(i) Review regularly the Offer Period Tables under Prospectuses, Takeovers & Mergers &Takeovers and Mergers & Offer Period Tables on the SFC website for details of current offer periods under the Takeovers Code.

(ii) Monitor regularly HKExnews on the HKEx website to see whether an announcement has been issued by, or in relation to, a relevant company that has commenced an offer period.

(iii) Subscribe to the News Alerts service on the HKEx website to receive relevant information.

(iv) Monitor regularly media sources such as newspaper and financial news services to identify takeovers-related articles.

(b) On-going training of staff

(i) All appropriate individuals should have proper training on the relevant provisions of the Takeovers Code.

(ii) Compliance personnel should keep themselves fully up-to-date on changes to the Takeovers Code.

(c) Proper compliance systems

A fund manager should ensure that adequate and proper compliance systems are in place to enable it to fully discharge its obligations under the Takeovers Code including dealing disclosure obligations under Rule 22.

Click on the above link for more details.