HK takeover code overhaul a boost for small shareholders

Author: Karry Lai | Published: 5 Mar 2018

Hong Kong’s Securities and Futures Commission (SFC) has launched a  consultation on proposed amendments to the Codes on Takeovers and Mergers and Share Buybacks to boost investor protection. 

It's an important change for a jurisdiction that has so far had only a minimal level of shareholder protection, especially for independent and retail shareholders.

Key proposals include an increase in the voting approval threshold for whitewash transactions to 75% rather than a simple majority of independent votes; empowering the Takeovers Panel to require compensation to be paid to shareholders who have suffered as a result of a breach of certain provisions of the Codes; and introducing measures to protect minority shareholders of companies incorporated in jurisdictions with no compulsory acquisition rights such as mainland China to be delisted in Hong Kong through a general offer.

Other proposed changes include introducing provisions which clarify the obligations of parties...