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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Takeover Rules Module (TKO) [VER7/02-16]
Sourcebook Modules
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DFSA Codes of Practice
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Financial Markets Tribunal
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  • TKO 4 Mandatory Bids

    • TKO 4.1 Requirement for a mandatory bid

      • TKO 4.1.1

        Subject to TKO Rule 4.1.2, when:

        (a) any PersonG acquires, whether by a series of transactions over a period of time or not, SharesG which carry 30% or more of the voting rights of a Reporting EntityG ;
        (b) two or more PersonsG are acting in concert, and they collectively hold SharesG which carry less than 30% of the voting rights of a Reporting EntityG , and any one or more of them acquires SharesG and such acquisition has the effect of increasing to 30% or more their collective holding of SharesG carrying voting rights of the Reporting EntityG ;
        (c) any PersonG holds not less than 30% of SharesG carrying voting rights of a Reporting EntityG and such PersonG acquires additional SharesG and such acquisition has the effect of increasing that person's holding of SharesG carrying voting rights by more than 3% from the lowest percentage holding of that PersonG in the 12 month period ending on and inclusive of the date of the relevant acquisition; or
        (d) two or more PersonsG are acting in concert, and they collectively hold not less than 30% of SharesG carrying voting rights of a Reporting EntityG , and any one or more of them acquires additional SharesG and such acquisition has the effect of increasing their collective holding of SharesG carrying voting rights by more than 3% from the lowest percentage holding of such PersonsG in the 12 month period ending on and inclusive of the date of the relevant acquisition;

        such PersonG must extend BidsG under these RulesG to the holders of any class of equity ShareG capital, whether voting or non-voting, and also to the holders of any class of voting non-equity ShareG capital of which such PersonG , or PersonsG acting in concert with him, hold SharesG .


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.1 Guidance

          1. Under Article 9 of the Markets Law 2012 the DFSAG may waive or modify the application of the Markets Law 2012 or of the RulesG .
          2. Where an obligation to make a Mandatory BidG arises as a consequence of PersonsG acting in concert, the DFSAG should be consulted at the earliest opportunity to determine, where appropriate, which PersonG or PersonsG should mount the BidG and consequently whether any waiver or modification from this RuleG is appropriate. The DFSAG may, for example, require the BidG to be made by the PersonG who acquired the shares which triggered the obligation under TKO Rule 4.1.1 to make the Mandatory BidG .
          3. A definition of "acting in concert" is provided in TKO Rule 1.4.1. As a consequence of that definition, TKO Rule 4.1.1 may require a BidG to be made even when no single PersonG in a group acting in concert holds 30% or more of the voting rights.
          4. Where a PersonG acquires shares independently from other shareholders, and subsequently groups together with other shareholders to co-operate or to consolidate control of a Reporting EntityG , and their existing shareholdings amount to 30% or more of the voting rights in the Reporting EntityG , the DFSAG would not normally require a BidG to be made under TKO Rule 4.1.1. However, having once joined together, TKO Rule 4.1.1 may apply. For example, a Mandatory BidG may be required when a member of the group acquires further shares carrying voting rights such that the total of the groups holdings reach 30% or more.
          5. The DFSAG will entertain an application for waiver or modification relating to the amount of permissible creep under TKO Rule 4.1.1(c) or (d) only in exceptional circumstances. Without in any way limiting the DFSA'sG discretion, such a circumstance may include where there is a dilution of voting rights by the issue of new shares or otherwise and it is appropriate to net off the dilution against acquisitions.

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]
          [Amended] DFSA RM87/2012 (Made 14th June 2012). [VER5/06-12]

      • TKO 4.1.2

        TKO Rule 4.1.1 does not apply in relation to an acquisition of SharesG of a Reporting EntityG which is the result of:

        (a) exercise of a right conferred by law of a minority shareholder to have his shareholding compulsorily acquired by a BidderG ; or
        (b) exercise of a right conferred by law of a BidderG to compulsorily acquire the shareholding of a minority shareholder.

        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.2 Guidance

          1. An example of a right described in TKO rule 4.1.2(a) appears in Article 85 of the Companies Law.
          2. Provisions described in TKO Rule 4.1.2(b) are commonly referred to as "squeeze-out" or "mopping-up" provisions. See for example Article 83 of the Companies Law.

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.1.3

        BidsG for different classes of equity ShareG capital must be fair and appropriate, having regard to current circumstances, and the DFSAG must be consulted in advance in such cases.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.3 Guidance

          1. The DFSAG may waive or modify the application of the RulesG if it is satisfied that circumstances are appropriate. See TKO Chapter 16 of these RulesG .
          2. When the issue of new SharesG as consideration for an acquisition or a cash subscription would otherwise result in an obligation to make a Mandatory BidG under the RulesG in this TKO Chapter 4, the DFSAG will normally dispense with such obligation if there is a waiver thereof by a majority of independent votes at a meeting of the shareholders. The requirement for a Mandatory BidG will also be dispensed with, provided there has been a majority of independent votes at a properly constituted meeting of shareholders, in cases involving the underwriting of an issue of SharesG . The DFSAG may in its discretion grant a dispensation in cases where an underwriter incurs an obligation under these RulesG unexpectedly, for example as a result of an inability to obtain sub-underwriters for all or part of his liability. Where a waiver or modification is granted as per this GuidanceG , consideration should also be given as to whether the definition of "voting rights" in TKO Section 1.4 will require consequential modification.
          3. Notwithstanding the fact that, at a general meeting of the Reporting EntityG , the issue of new SharesG is made conditional upon the prior approval of a majority of votes of shareholders independent of the transaction:
          a. the DFSAG will not normally dispense with an obligation under this Section if the PersonG to whom the new SharesG are to be issued or any PersonsG acting in concert with him have acquired relevant SharesG in the TargetG in the 12 months prior to the posting of the Bid DocumentG but subsequent to negotiations, discussions or the reaching of understandings or agreements with the DirectorsG of the TargetG in relation to the proposed issue of new SharesG ;
          b. a waiver by independent votes shall be invalidated if any acquisitions are made in the period between the posting of the Bid DocumentG to the shareholders and the meeting.
          4. The DFSAG may dispense with the requirement of a Mandatory BidG where the approval of independent votes to the transfer of existing SharesG from one holder to another is obtained.

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.2 Conditions and consents

      • TKO 4.2.1

        A Mandatory BidG made under these RulesG must be conditional only upon the BidderG having received acceptances in respect of SharesG which, together with SharesG acquired or agreed to be acquired before or during the BidG , will result in the BidderG and any PersonG acting in concert with it holding SharesG carrying more than 50% of the voting rights.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.2.2

        No acquisition of SharesG which would give rise to a requirement for a Mandatory BidG under these RulesG may be made if the making or implementation of such BidG would or might be dependent on the passing of a resolution at any meeting of shareholders of the BidderG or upon any other conditions, consents or arrangements.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.3 Consideration to be offered

      • TKO 4.3.1

        Mandatory BidsG made under these RulesG must, in respect of each class of SharesG involved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the BidderG or any PersonG acting in concert with it for SharesG of that class during the Bid PeriodG and within the preceding six months.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.3.1 Guidance

          1. If the BidderG considers that the highest price should not apply in a particular case, the BidderG should consult the DFSAG . The DFSAG may waive or modify the application of TKO Rule 4.3.1 if it is satisfied that circumstances are appropriate to provide a dispensation from this RuleG . See TKO Chapter 16 of these RulesG . Factors that the DFSAG may take into account include the size or timing of the relevant acquisitions, the attitude of the Governing BoardG of the TargetG , whether SharesG had been purchased at high prices from DirectorsG or other PersonsG closely connected with the BidderG or TargetG , and the number of SharesG purchased in the preceding six months.
          2. The DFSAG should be consulted where there is more than one class of SharesG involved.
          3. Also note related provisions, TKO Rule 3.1.1 (acquisitions before a Bid PeriodG ) and TKO Rule 5.2.1 (requirement for a BidG in cash).

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.3.2

        The cash BidG or any cash alternative must remain open after the BidG has become or is declared unconditional as to acceptances for not less than 14 days after the date on which it would otherwise have expired.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.4 Obligations of directors selling shares

      • TKO 4.4.1

        When a DirectorG of a Reporting EntityG sells SharesG owned or controlled by him in that Reporting EntityG to an identifiable purchaser as a result of which the purchaser is required to make a BidG under the RulesG in this Chapter, such DirectorG must stipulate as a condition of the sale that the purchaser undertakes to fulfil his obligations under the RulesG .


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.4.2

        In addition, such DirectorG must not resign from the Governing BodyG until the first closing date of the BidG or the date upon which the BidG becomes or is declared unconditional, whichever is the later.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.5 Restrictions on exercise of control by a bidder

      • TKO 4.5.1

        No nominee of a BidderG or PersonsG acting in concert with it may be appointed to the Governing BodyG of the TargetG , nor may a BidderG and PersonsG acting in concert with it exercise the votes attaching to any SharesG held in the TargetG , until the Bid DocumentG has been posted.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]