HONG KONG: Takeover Dealing Disclosure Rules Updated

Monday July 16 2018

The Securities and Futures Commission (SFC) have published conclusions to their consultation issued 19 January 2018, on proposed changes to the Codes on Takeovers and Mergers and Share Buy-backs (Codes).

The Consultation Paper was divided into six parts, with Part 5 focusing on clarifying the scope of disclosure of holdings and dealings in relevant securities.

The proposed amendments to the disclosure of holdings and dealings rules include:

• Offeror to announce details of its relevant securities in a Cash offer: Under Rule 22.1 an offeror’s associates are required to disclose their dealings in offeree securities in all offers (i.e., cash offers and securities exchange offers). There was concern that the current drafting of Rule 3.8 does not require an offeror to disclose details of its securities in a cash offer.
  The SFC proposes to amend Rule 3.8 to clarify that an offeror must announce details of its relevant securities in all offers by removing the words “unless it has stated that its offer is likely to be solely in cash” to prevent difficulty for offeror shareholders, when determining whether they hold a 5% interest within the meaning of class (6) and are required to disclosure under Rule 22.1 in cash offers.
• Timing of dealing disclosure extended from 10:00am to 12:00 noon & T+2 for US Dealings: Disclosure must be made no later than 10.00 a.m. 12.00 noon on the business day following the date of the transaction. Where or, Where dealings have taken place on stock exchanges in the time zones of the United States and there may be difficulty in disclosing dealings by 10.00, no later than 12.00 noon on the second business day following the date of the transaction.
• REIT’s trustee and REIT’s management company required to make dealing disclosures: In cases where the offeree company is a REIT, the disclosure obligations under paragraph 2 of Schedule II and Note 2 to such paragraph should also apply to any person who is an associate of the offeree company by virtue of classes (7) and (8) of the definition of associate.

The Changes are effective immediately.

Click on the above link for further information.