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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

CMA issues Takeover and Acquisition Regulations

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Yahya Said al Jabri, Chairman of the Board of Directors of the Capital Market Authority, has issued an Administrative Decision enshrining Takeover and Acquisition Regulations for public joint stock companies listed on the Muscat Securities Market (MSM). The decision is was published in the Official Gazette on May 19, 2019 pursuant to Article 7 of the Capital Market Law.


The regulation aims to regulate takeover and acquisition processes limited to no more than 25 per cent of the shares of pubic joint stock companies and controlling percentages in the company. The guidelines are aimed at providing protection for shareholders and in the interest of fair, transparent and equitable treatment of all the parties. It also provides for an exit in cases of acquisition. The Regulation is a government initiative recommended during the Tanfeedh Labs (The National Programme for Enhancing Economic Diversification) supervised by the Implementation Support and Follow Up Unit (ISFU).


Shaikh 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 per cent of the shares of public joint stock companies listed on the MSM and acquiring a controlling percentage or even the takeover 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 the offering party and the recipient, processes of acquisition and take over, timings and terms and conditions for take over and acquisition offers and percentages of takeover 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 forced takeover 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 recognised 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.


The Executive President 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 2 of the regulation applies to three cases:


First: Any person who acquires jointly or severally not less than 25 per cent of the voting shares in the company and intends to acquire 25 per cent or more of its shares.


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


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


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