PSE set to issue rules on takeovers

The Philippine Stock Exchange has drafted rules governing takeovers or mergers and acquisitions to safeguard the interests of minority shareholders who are often left in the dark as to the plans of the controlling shareholders of a listed company.

Aiming to provide fair treatment to all investors who will be affected by takeovers and M&As, the PSE intends to require listed firms to disclose information on proposed transactions to enable shareholders to make a decision on the merits of a tender offer.

Any acquisition involving at least 35 percent of a listed company, whether directly or indirectly, through a single or creeping transactions within a period of 12 months, would trigger a mandatory tender offer. The purchasor shall offer to buy the remaining shares held by minority shareholders at the same terms given to the majority stakeholders.

Under the proposed rules, the PSE will require the issuer to submit within five trading days from initial disclosure the details of the proposed transaction.

The PSE will halt the trading of the shares of the concerned issuer for one hour upon announcement or disclosure of its proposed acquisitions. Another one hour trading halt shall be implemented upon filing of a more detailed disclosure.

Aside from the general tender offer, the PSE said the purchasers could also make a voluntary offer to exchange shares held by the existing shareholders with other securities or instruments provided that the consideration is fair and reasonable and such plan has been approved by a majority vote.

Prior to the actual listing of the shares subscribed, the issuer will be required to comply with the suitability criteria and the continuing listing requirements within one year from the date of the transaction.

The PSE may waive the requirement of a general offer in special circumstances such as when an issuer is the subject of rehabilitation, bankruptcy or any other similar proceedings without prejudice to the provisions of the delisting rules of the exchange.

The tender offer rules were drawn up by the Securities and Exchange Commission to protect minority shareholders from corporate raiders or hostile takeovers and to provide for an opportunity to the minority shareholders to exit the company under reasonable terms. – Zinnia de la Peña