Mergers and Acquisitions

The law and procedure relating to Takeovers and Mergers is contained in the Securities (Takeovers and Mergers) Rules, Statutory Instrument No. 170 of 1993.  The main objective of the rules is to afford protection to the minority shareholders of a company which is the subject of a takeover.

The role of SEC is to monitor if the proper procedure as laid down in the Rules (Offer Timetable) is followed and also to ensure that all relevant disclosures which are necessary for a shareholder to make a well informed decision on the merits and demerits of the offer are included in the offer document.  The information must also be made available to shareholders early to give them sufficient time to make a proper decision.

There are two types of takeover offers namely, voluntary and mandatory.  A voluntary takeover offer may be made by any person to the shareholders of the company.  A mandatory offer is required to be made by any person who acquires more than 35% of the voting rights of a company or by any person or persons who holds between 35% and 50% of the voting rights of a company and acquires more than 5% of the rights of the company in any twelve month period.  The principle here is that if the major shareholder who is in control of the company changes then other shareholders should be given the option of existing at a fair price.

The fees payable for authorization of takeover and merger transactions are contained in Statutory Instrument No. 82 of 2013.