KARACHI, Dec 13: The Securities and Exchange Commission of Pakistan (SECP) held a round table meeting on Tuesday, with representatives of the corporate sector on proposed amendments to the 2008 Takeover Regulations.
The SECP stated in a press release after the conference that the regulator had taken the initiative in the light of feedback of the corporate sector to remove the hurdles faced during acquisition process and to encourage takeovers of listed companies. The SECP said that the discussion at the meeting included areas like introduction of chain acquisition principle, takeover fee, clarification on negotiated weighted price, introduction of chartered accountant as valuer for valuation of financial assets, fixing responsibility of acquirer to confirm the report of valuer and changes in the office of manager to offer.
“With regard to the price mechanism prescribed in the Takeover Regulations, the participants were of the view that the price agreed between the acquirer and the major shareholder entering into
share purchase agreement includes a premium for the transfer of control as well; therefore discount factor may be introduced for the price to be offered to other shareholders,” the SECP said.
The SECP also stated that in order to increase the takeovers, for revival of sick units and keeping in view the present dismal financial conditions, the participants suggested that the offer size in the public offer may be revisited to a lower side. It was also suggested that the timing of public announcement of intention may be re-considered in order to discourage the speculative increase in the share price.
Further, the timings of appointment of manager to the offer and transfer of shares to the acquirer were also the concerns of the participants. It was greatly emphasized by the participants that the SECP, being expert in the specialized takeover law and the apex regulatory body, should be given power through statute regarding opinions / clarifications given by it on the subject and they be made part of law and observed in all future transactions.
The feedback would assist the Regulator in finalising the amendments to the Takeover Regulations, which are currently under progress.
Analysts commented on various suggestions put forth by the stakeholders.
They observed that the chief regulator’s initiative in holding open discussions would hopefully, clear the way for financially strong corporates to enter into takeover of weak and sick units.
That would be of benefit in times, such as these, when new ventures were scarce.
A shareholder commented that it was only fair to offer shares at discounted price to the small shareholder, to what was paid by the acquirer. Also the re-look at the timing of public announcement of intention of takeover would not only prevent sharp fluctuations in stock prices, but would also prevent ‘insider trading’, if any.
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