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
Personacquires, whether by a series of transactions over a period of time or not, Shareswhich carry 30% or more of the voting rights of a Reporting Entity;(b) two or more Personsare acting in concert, and they collectively hold Shareswhich carry less than 30% of the voting rights of a Reporting Entity, and any one or more of them acquires Sharesand such acquisition has the effect of increasing to 30% or more their collective holding of Sharescarrying voting rights of the Reporting Entity;(c) any Personholds not less than 30% of Sharescarrying voting rights of a Reporting Entityand such Personacquires additional Sharesand such acquisition has the effect of increasing that person's holding of Sharescarrying voting rights by more than 3% from the lowest percentage holding of that Personin the 12 month period ending on and inclusive of the date of the relevant acquisition; or(d) two or more Personsare acting in concert, and they collectively hold not less than 30% of Sharescarrying voting rights of a Reporting Entity, and any one or more of them acquires additional Sharesand such acquisition has the effect of increasing their collective holding of Sharescarrying voting rights by more than 3% from the lowest percentage holding of such Personsin the 12 month period ending on and inclusive of the date of the relevant acquisition;
Personmust extend Bidsunder these Rulesto the holders of any class of equity Sharecapital, whether voting or non-voting, and also to the holders of any class of voting non-equity Sharecapital of which such Person, or Personsacting in concert with him, hold Shares.
TKO 4.1.1 Guidance1. Under Article 9 of the Markets Law 2012 the
DFSAmay waive or modify the application of the Markets Law 2012 or of the Rules.2. Where an obligation to make a Mandatory Bidarises as a consequence of Personsacting in concert, the DFSAshould be consulted at the earliest opportunity to determine, where appropriate, which Personor Personsshould mount the Bidand consequently whether any waiver or modification from this Ruleis appropriate. The DFSAmay, for example, require the Bidto be made by the Personwho 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 Bidto be made even when no single Personin a group acting in concert holds 30% or more of the voting rights.4. Where a Personacquires 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 DFSAwould not normally require a Bidto be made under TKO Rule 4.1.1. However, having once joined together, TKO Rule 4.1.1 may apply. For example, a Mandatory Bidmay 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 DFSAwill 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'sdiscretion, 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.
TKO 4.1.2 TKO 4.1.2
TKO Rule 4.1.1 does not apply in relation to an acquisition of
Sharesof a Reporting Entitywhich 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 Bidderto compulsorily acquire the shareholding of a minority shareholder.
TKO 4.1.2 Guidance1. 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
Bidsfor different classes of equity Sharecapital must be fair and appropriate, having regard to current circumstances, and the DFSAmust be consulted in advance in such cases.
TKO 4.1.3 Guidance1. The
DFSAmay waive or modify the application of the Rulesif it is satisfied that circumstances are appropriate. See TKO Chapter 16 of these Rules.2. When the issue of new Sharesas consideration for an acquisition or a cash subscription would otherwise result in an obligation to make a Mandatory Bidunder the Rulesin this TKO Chapter 4, the DFSAwill 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 Bidwill 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 DFSAmay in its discretion grant a dispensation in cases where an underwriter incurs an obligation under these Rulesunexpectedly, 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 Sharesis made conditional upon the prior approval of a majority of votes of shareholders independent of the transaction:a. the DFSAwill not normally dispense with an obligation under this Section if the Personto whom the new Sharesare to be issued or any Personsacting in concert with him have acquired relevant Sharesin the Targetin the 12 months prior to the posting of the Bid Documentbut subsequent to negotiations, discussions or the reaching of understandings or agreements with the Directorsof the Targetin 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 Documentto the shareholders and the meeting.4. The DFSAmay dispense with the requirement of a Mandatory Bidwhere the approval of independent votes to the transfer of existing Sharesfrom one holder to another is obtained.
TKO 4.2 TKO 4.2 Conditions and consents
Mandatory Bidmade under these Rulesmust be conditional only upon the Bidderhaving received acceptances in respect of Shareswhich, together with Sharesacquired or agreed to be acquired before or during the Bid, will result in the Bidderand any Personacting in concert with it holding Sharescarrying more than 50% of the voting rights.
TKO 4.2.2 TKO 4.2.2
No acquisition of
Shareswhich would give rise to a requirement for a Mandatory Bidunder these Rulesmay be made if the making or implementation of such Bidwould or might be dependent on the passing of a resolution at any meeting of shareholders of the Bidderor upon any other conditions, consents or arrangements.
TKO 4.3 TKO 4.3 Consideration to be offered
TKO 4.3.1 TKO 4.3.1
Mandatory Bidsmade under these Rulesmust, in respect of each class of Sharesinvolved, be in cash or be accompanied by a cash alternative at not less than the highest price paid by the Bidderor any Personacting in concert with it for Sharesof that class during the Bid Periodand within the preceding six months.
TKO 4.3.1 Guidance1. If the
Bidderconsiders that the highest price should not apply in a particular case, the Biddershould consult the DFSA. The DFSAmay 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 DFSAmay take into account include the size or timing of the relevant acquisitions, the attitude of the Governing Boardof the Target, whether Shareshad been purchased at high prices from Directorsor other Personsclosely connected with the Bidderor Target, and the number of Sharespurchased in the preceding six months.2. The DFSAshould be consulted where there is more than one class of Sharesinvolved.3. Also note related provisions, TKO Rule 3.1.1 (acquisitions before a Bid Period) and TKO Rule 5.2.1 (requirement for a Bidin cash).
TKO 4.3.2 TKO 4.3.2
Bidor any cash alternative must remain open after the Bidhas become or is declared unconditional as to acceptances for not less than 14 days after the date on which it would otherwise have expired.
TKO 4.3.2 Guidance
See also TKO Rule 11.2.2.
TKO 4.4 TKO 4.4 Obligations of directors selling shares
Directorof a Reporting Entitysells Sharesowned or controlled by him in that Reporting Entityto an identifiable purchaser as a result of which the purchaser is required to make a Bidunder the Rulesin this Chapter, such Directormust stipulate as a condition of the sale that the purchaser undertakes to fulfil his obligations under the Rules.
In addition, such
Directormust not resign from the Governing Bodyuntil the first closing date of the Bidor the date upon which the Bidbecomes or is declared unconditional, whichever is the later.
TKO 4.5 TKO 4.5 Restrictions on exercise of control by a bidder
No nominee of a
Bidderor Personsacting in concert with it may be appointed to the Governing Bodyof the Target, nor may a Bidderand Personsacting in concert with it exercise the votes attaching to any Sharesheld in the Target, until the Bid Documenthas been posted.