Entire Section

  • TKO 4 TKO 4 Mandatory Bids

    • TKO 4.1 TKO 4.1 Requirement for a mandatory bid

      • TKO 4.1.1 TKO 4.1.1

        Subject to TKO Rule 4.1.2, when:

        (a) any Person acquires, whether by a series of transactions over a period of time or not, Shares which carry 30% or more of the voting rights of a Reporting Entity;
        (b) two or more Persons are acting in concert, and they collectively hold Shares which carry less than 30% of the voting rights of a Reporting Entity, and any one or more of them acquires Shares and such acquisition has the effect of increasing to 30% or more their collective holding of Shares carrying voting rights of the Reporting Entity;
        (c) any Person holds not less than 30% of Shares carrying voting rights of a Reporting Entity and such Person acquires additional Shares and such acquisition has the effect of increasing that person's holding of Shares carrying voting rights by more than 3% from the lowest percentage holding of that Person in the 12 month period ending on and inclusive of the date of the relevant acquisition; or
        (d) two or more Persons are acting in concert, and they collectively hold not less than 30% of Shares carrying voting rights of a Reporting Entity, and any one or more of them acquires additional Shares and such acquisition has the effect of increasing their collective holding of Shares carrying voting rights by more than 3% from the lowest percentage holding of such Persons in the 12 month period ending on and inclusive of the date of the relevant acquisition;

        such Person must extend Bids under these Rules to the holders of any class of equity Share capital, whether voting or non-voting, and also to the holders of any class of voting non-equity Share capital of which such Person, or Persons acting in concert with him, hold Shares.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.1 Guidance

          1. Under Article 9 of the Markets Law 2012 the DFSA may waive or modify the application of the Markets Law 2012 or of the Rules.
          2. Where an obligation to make a Mandatory Bid arises as a consequence of Persons acting in concert, the DFSA should be consulted at the earliest opportunity to determine, where appropriate, which Person or Persons should mount the Bid and consequently whether any waiver or modification from this Rule is appropriate. The DFSA may, for example, require the Bid to be made by the Person who acquired the shares which triggered the obligation under TKO Rule 4.1.1 to make the Mandatory Bid.
          3. A definition of "acting in concert" is provided in TKO Rule 1.4.1. As a consequence of that definition, TKO Rule 4.1.1 may require a Bid to be made even when no single Person in a group acting in concert holds 30% or more of the voting rights.
          4. Where a Person acquires shares independently from other shareholders, and subsequently groups together with other shareholders to co-operate or to consolidate control of a Reporting Entity, and their existing shareholdings amount to 30% or more of the voting rights in the Reporting Entity, the DFSA would not normally require a Bid to be made under TKO Rule 4.1.1. However, having once joined together, TKO Rule 4.1.1 may apply. For example, a Mandatory Bid may be required when a member of the group acquires further shares carrying voting rights such that the total of the groups holdings reach 30% or more.
          5. The DFSA will entertain an application for waiver or modification relating to the amount of permissible creep under TKO Rule 4.1.1(c) or (d) only in exceptional circumstances. Without in any way limiting the DFSA's discretion, such a circumstance may include where there is a dilution of voting rights by the issue of new shares or otherwise and it is appropriate to net off the dilution against acquisitions.

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]
          [Amended] DFSA RM87/2012 (Made 14th June 2012). [VER5/06-12]

      • TKO 4.1.2 TKO 4.1.2

        TKO Rule 4.1.1 does not apply in relation to an acquisition of Shares of a Reporting Entity which is the result of:

        (a) exercise of a right conferred by law of a minority shareholder to have his shareholding compulsorily acquired by a Bidder; or
        (b) exercise of a right conferred by law of a Bidder to compulsorily acquire the shareholding of a minority shareholder.

        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.2 Guidance

          1. An example of a right described in TKO Rule 4.1.2(a) appears in Article 100 of the Companies Law.
          2. Provisions described in TKO Rule 4.1.2(b) are commonly referred to as "squeeze-out" or "mopping-up" provisions. See for example Article 98 of the Companies Law.

           

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]
          [Amended] from DFSA RMI276/2020 (Made 26th February 2020). [VER08/04-20]

           

      • TKO 4.1.3 TKO 4.1.3

        Bids for different classes of equity Share capital must be fair and appropriate, having regard to current circumstances, and the DFSA must be consulted in advance in such cases.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.1.3 Guidance

          1. The DFSA may waive or modify the application of the Rules if it is satisfied that circumstances are appropriate. See TKO Chapter 16 of these Rules.
          2. When the issue of new Shares as consideration for an acquisition or a cash subscription would otherwise result in an obligation to make a Mandatory Bid under the Rules in this TKO Chapter 4, the DFSA will normally dispense with such obligation if there is a waiver thereof by a majority of independent votes at a meeting of the shareholders. The requirement for a Mandatory Bid will also be dispensed with, provided there has been a majority of independent votes at a properly constituted meeting of shareholders, in cases involving the underwriting of an issue of Shares. The DFSA may in its discretion grant a dispensation in cases where an underwriter incurs an obligation under these Rules unexpectedly, for example as a result of an inability to obtain sub-underwriters for all or part of his liability. Where a waiver or modification is granted as per this Guidance, consideration should also be given as to whether the definition of "voting rights" in TKO Section 1.4 will require consequential modification.
          3. Notwithstanding the fact that, at a general meeting of the Reporting Entity, the issue of new Shares is made conditional upon the prior approval of a majority of votes of shareholders independent of the transaction:
          a. the DFSA will not normally dispense with an obligation under this Section if the Person to whom the new Shares are to be issued or any Persons acting in concert with him have acquired relevant Shares in the Target in the 12 months prior to the posting of the Bid Document but subsequent to negotiations, discussions or the reaching of understandings or agreements with the Directors of the Target in relation to the proposed issue of new Shares;
          b. a waiver by independent votes shall be invalidated if any acquisitions are made in the period between the posting of the Bid Document to the shareholders and the meeting.
          4. The DFSA may dispense with the requirement of a Mandatory Bid where the approval of independent votes to the transfer of existing Shares from one holder to another is obtained.

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.2 TKO 4.2 Conditions and consents

      • TKO 4.2.1

        A Mandatory Bid made under these Rules must be conditional only upon the Bidder having received acceptances in respect of Shares which, together with Shares acquired or agreed to be acquired before or during the Bid, will result in the Bidder and any Person acting in concert with it holding Shares carrying more than 50% of the voting rights.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.2.2 TKO 4.2.2

        No acquisition of Shares which would give rise to a requirement for a Mandatory Bid under these Rules may be made if the making or implementation of such Bid would or might be dependent on the passing of a resolution at any meeting of shareholders of the Bidder or upon any other conditions, consents or arrangements.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.2.2 Guidance

          The DFSA may waive or modify the application of TKO Rule 4.2.1 or TKO Rule 4.2.2 if it is satisfied that circumstances are appropriate. See TKO Chapter 16 of these Rules.


          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.3 TKO 4.3 Consideration to be offered

      • TKO 4.3.1 TKO 4.3.1

        Mandatory Bids made under these Rules must, in respect of each class of Shares involved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the Bidder or any Person acting in concert with it for Shares of that class during the Bid Period and within the preceding six months.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.3.1 Guidance

          1. If the Bidder considers that the highest price should not apply in a particular case, the Bidder should consult the DFSA. The DFSA may waive or modify the application of TKO Rule 4.3.1 if it is satisfied that circumstances are appropriate to provide a dispensation from this Rule. See TKO Chapter 16 of these Rules. Factors that the DFSA may take into account include the size or timing of the relevant acquisitions, the attitude of the Governing Board of the Target, whether Shares had been purchased at high prices from Directors or other Persons closely connected with the Bidder or Target, and the number of Shares purchased in the preceding six months.
          2. The DFSA should be consulted where there is more than one class of Shares involved.
          3. Also note related provisions, TKO Rule 3.1.1 (acquisitions before a Bid Period) and TKO Rule 5.2.1 (requirement for a Bid in cash).

          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.3.2 TKO 4.3.2

        The cash Bid or any cash alternative must remain open after the Bid has become or is declared unconditional as to acceptances for not less than 14 days after the date on which it would otherwise have expired.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

        • TKO 4.3.2 Guidance

          See also TKO Rule 11.2.2.


          Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.4 TKO 4.4 Obligations of directors selling shares

      • TKO 4.4.1

        When a Director of a Reporting Entity sells Shares owned or controlled by him in that Reporting Entity to an identifiable purchaser as a result of which the purchaser is required to make a Bid under the Rules in this Chapter, such Director must stipulate as a condition of the sale that the purchaser undertakes to fulfil his obligations under the Rules.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

      • TKO 4.4.2

        In addition, such Director must not resign from the Governing Body until the first closing date of the Bid or the date upon which the Bid becomes or is declared unconditional, whichever is the later.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]

    • TKO 4.5 TKO 4.5 Restrictions on exercise of control by a bidder

      • TKO 4.5.1

        No nominee of a Bidder or Persons acting in concert with it may be appointed to the Governing Body of the Target, nor may a Bidder and Persons acting in concert with it exercise the votes attaching to any Shares held in the Target, until the Bid Document has been posted.


        Derived from DFSA RM23/2005 (Made 26th September 2005). [VER1/09-05]