Al Salmi: The Take Over and Acquisition Regulation Provides Equal Opportunities for all shareholders and enables supply and demand forces to play their role is specifying the prices

HE Yahya Said Al Jabri, Chairman of the Board of Directors of the Capital Market Authority has issued an administrative decision issuing the Take over and Acquisition Regulation for  the public joint stock companies listed on the Muscat Securities Market (MSM) which was published in the Official Gazette on 19 May 2019 pursuant to  Article 7 of the Capital Market Law.

The regulation aims to regulate take over and  acquisition processes at not more than 25% of the shares of pubic joint stock companies  and controlling percentage in the company to provide protection for  shareholders and for fair, transparent and equitable treatment of all the parties and to provide exit in cases of acquisition. The Regulation is a government initiative in the economic diversification process “Tanfeeth” supervised by the Unit of Implementation and Follow Up.

HE Sheikh Abdullah Salim Al Salmi, Executive President of the CMA said “The regulation was prepared to provide a framework containing the provisions regulating acquisitions at more than 25% of the shares of public joint stock companies listed on the MSM and acquiring a controlling percentage or even the take over of the company on the bases of transparency and integrity that guarantees the protection of all the participants and allows the market forces to interact with such offers to determine the fair prices.

Al Salmi pointed out that the  regulation stipulated the parties it  applies to  such as offeror and offeree, processes of acquisition and take over, timings and terms and conditions for take over and acquisition offers and  percentages of take over offers.

Al Salmi said the regulation  ensures equal opportunities for all the shareholders to benefit from the take over and acquisition offers including the allowance paid for take over beside the  fair and equitable treatment of all shareholders specifically minority shareholders with regard to compulsory take over and acquisition offer.

Al Salmi explained that such procedures are necessary for the stock markets and applicable in most advanced markets. He  added the regulation was prepared after reviewing the experiences of such market and consideration of the realities of the local market and recognized practices and adapting  them with the requirements of the local market. The draft was offered for consultation by the public and all the public joint stock companies, law firms, audit firms and interested persons for their views, opinions and proposals which is a policy adopted by CMA in drafting all the laws and regulations regulating the capital market and insurance sector.

HE concluded that the regulation would be a constructive addition to the market and allows best opportunities to the participants to avail the opportunities availed by implementation of the regulation and the transparency and fairness further to   enabling the supply and demand forces to play  their role in determining the prices to protect the rights in a transparent, fair and professional environment.

Article two of the regulation  provides it apply to three cases:  

The first: any person who  acquires jointly or severally not less than 25% of the voting shares in the company and intends to acquire 25% or more of its shares.

The second : Any person acquiring jointly or severally 25% of the voting shares in the company and intends to acquire voting shares at more than (2%) every six months from the date of first purchase transaction.

The third : Any person acquiring  jointly or severally 25% of the voting shares in any company controlling the company and intends to acquire voting shares in the company at more than 2% every six months from the date of first purchase transaction.

The regulation contains the terms and conditions for the persons involved in the take over and acquisition process which provides for  robust standards of integrity, transparency and fairness for all the participants.