On April 10 2001 the Securities and Futures Commission (SFC) published a consultation paper reviewing the Codes on Takeovers and Mergers and Share Repurchases relating to public companies.
One key proposal put forward for consultation concerns the takeover "trigger" (the shareholding level at which an acquiring shareholder of a company must make a mandatory offer to acquire the entire remaining equity share capital of that company) and the takeover "creeper" (within which a controlling shareholder may creep up his shareholding without triggering a mandatory offer). The consultation paper proposes lowering the trigger from 35% to 30% and cutting the creeper from the existing 5% in any 12-month period to 2%.
To avoid prejudicing anyone unfairly with the proposed changes, the SFC suggests certain transitional provisions to be put in place to regulate shareholders who already hold between 30% and 35% of the shares of a company on the implementation date of the new rules. It is suggested that these transitional provisions should apply for a fixed period of 10 years, after which all shareholders would be subject to the new trigger and creeper.
The SFC also proposes in the consultation paper to amend the voting requirements for privatizations and voluntary delistings of companies - approval of 75% in value of the disinterested shareholders in voting for a privatization or delisting, or a disapproval benchmark of 10% of the total shares is proposed as opposed to the present requirement of 90% in value voting for, and 2.5% in value voting against.
Consultation on the proposed amendments ended on May 31 and it is expected that the new rules will, with or without further changes, be implemented in January 2002.