The Philippine Securities and Exchange Commission (SEC) recently amended the rules implementing the Securities Regulation Code, including the rules on mandatory tender offers (MTOs).
In the amended rules, any person or group of persons acting in concert (acquirer), acquiring 15% of equity securities in a public company in one or more transactions within 12 months, must file a declaration to that effect with the SEC.
The threshold to trigger MTOs is still an acquisition of 35% but it now refers to an acquisition of '35% of the outstanding voting shares or such outstanding voting shares that are sufficient to gain control of the board in a public company' (threshold).
Presently, the acquirer must undertake a tender offer for acquisitions triggering the threshold:
- whether by a single acquisition or a creeping acquisition within 12 months: through a disclosure and tender offer for the percentage sought to all holders of such securities within such period; and
- if directly from one or more stockholders: through a tender offer for all outstanding voting shares.
If the acquisition leads to ownership above 50% of the total outstanding equity securities of a public company, there will be a tender offer for all the outstanding equity securities to all remaining stockholders at a price supported by a fairness opinion, issued according to the guidelines under the amended rules.
However, where the acquisition meeting the threshold is done through the Exchange trading system, no tender offer is required even if the acquirer gets the remainder through a block sale, if after acquisition through the Exchange trading system, the threshold is not met.
Considering that these amended rules on MTOs are just taking effect, it is likely that there will be clarifications on the rules in the coming months.
Maria Jennifer Z Barreto
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