The Mergers and Acquisitions Regulations apply in any situation where there is restricted purchase of, or a restricted offer for, the shares of any listed company, or where there is a takeover offer or a reverse takeover relating to any listed company. The Regulations ensure that offerors and offerees act in the best interests of their shareholders, and grant them sufficient information and advice in order to reach a properly informed decision.
A restricted purchase of shares comprises the purchase of voting shares listed on the Exchange when as a result, 10% or more of such class of the relevant company shares is owned by, or under the control of, the purchaser. A restricted offer for shares is achieved through a public announcement where the announcer offers to purchase voting shares of a particular class listed on the Exchange if the amount of shares to be acquired by the offering party would increase its ownership or the shares under its control to 10% or more of the shares of the relevant company.
A takeover offer is that which is made to the holders of the securities of the offeree company which aims to acquire control of the offeree company. A reverse takeover comprises an arrangement where a listed company makes an offer for an unlisted company on terms that (a) the listed company will offer new shares in itself to the shareholders of the unlisted company in exchange for their shares and (b) the number of shares to be issued by the listed company under this arrangement is so large that the shareholders of the unlisted company acquire between them more than 50%. The Regulations apply to Exchange participants including issuers, shareholders and the directors of the companies which are subject thereto.
The Mergers and Acquisitions Regulations set out detailed provisions concerning the situations in which a public announcement is required to be made including where a company is considering a potential takeover and an approach to a potential offeree company has been made and the parties have reached an understanding that an offer will be made or where there have been stipulated minimum price movements, above the lowest share price since the time of approach, of the shares of the relevant company following a bid approach. Following certain announcements, the offeror must submit to the CMA, for its approval, a takeover timetable including shareholders’ approval of the takeover, the delivery of the final offer document to it, the publication of the offer document and making it available to the board of directors of the offeree company, the earliest permitted first closing date of the offer and the last date on which it is no longer unconditional as to acceptances.
The offer document must include:
01. a heading stating that an independent financial adviser authorised by the CMA must be consulted if there is any doubt about the offer;
02. the date when the document is published, the name and address of the offeror and of any person making the offer on behalf of the offeror;
03. details of the securities for which the offer is made, including whether they will be transferred with dividends;
04. the total payment proffered;
05. the closing market price for the securities to be acquired and securities offered, for the first day in each of the six months immediately before the date of the publication of the offer document, for the last day before the commencement of the offer period and for the latest available date before the publication of the offer document (quotations stated in respect of securities listed on the Exchange should be taken from the official list and, if any of the securities are not so listed, any information available as to the number and price of transactions which have taken place during the preceding six months should be stated together with the source, or an appropriate negative statement);
06. in the case of a securities exchange offer, particulars of the first dividend or interest payment in which the new securities will participate and how the securities will rank for dividends or interest, capital and redemption and a statement indicating the effect of acceptance on the capital and income position of the offeree company’s shareholders; and
07. in the case of a securities exchange offer, the effect of full acceptance of the offer upon the offeror’s assets, profits and business which may be significant for a proper appraisal of the offer.
The offer document must be submitted by the offeror to the CMA for its approval prior to publication; the time frame for the granting of approval by the CMA is thirty days from receiving the requisite information and documents. The CMA has the discretion to accept the offer document and grant its approval to the offer if it is satisfied that the offer is in the interests of investors and that it does not breach the Capital Market Regulation or the Implementing Rules.
*This Saudi Arabian Law Overview is not intended to be legal advice, and cannot be relied on as a substitute for legal advice. We make no representation that the contents of this Saudi Arabian Law Overview are or will remain accurate or current.
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