SECP proposes changes to takeover regulations to improve transparency

August 18, 2023 (MLN): The Securities and Exchange Commission of Pakistan (SECP), has notified draft amendments to the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations, 2017 soliciting public comments, said a press release issued today.

The proposed amendments are focused on creating a conducive environment for takeover transactions through the acquisition of shares of listed companies in a fair, transparent and competitive manner.

As part of SECP’s progressive review of regulatory requirements, the subject amendments also address key observations emanating from feedback provided by various stakeholders in relation to the prevalent takeover regulatory regime.

The subject amendments provide greater flexibility to the minority shareholders of the target company in exercising their rights, whereby an option is being inserted for consideration to such shareholders to be paid either wholly in cash; or if consideration is being offered in the form of securities, the same to be accompanied with a wholly cash alternative.

Criteria for securities that can be offered as consideration are being improved, whereby only shares of listed companies, listed debt instruments, and government securities with remaining maturity of a maximum of 364 days can be offered as consideration during the public offer.

The mechanism for valuing the securities to be offered as consideration is also being improved.

Moreover, only highly liquid securities would be admissible as security to be furnished to the manager to the offer by the acquirer for the performance of obligations under the public offer.

Efforts have also been made to ensure that terms already used in the regulations but not previously defined are properly codified in the definitions section for clarity and to enable consistent interpretation throughout the regulations.

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