SFC amends takeovers and share buy-backs codes

Following a corresponding consultation in May this year (EventID 21316), the Securities and Futures Commission of Hong Kong, SFC, has published a consultation conclusion paper on proposed revisions to the Codes on Takeovers and Mergers and Share Buy-backs.
#### Background
In its consultation, the SFC proposed several revisions aimed at enhancing transparency and fairness in takeover and merger transactions and ensuring that shareholders are adequately protected throughout the process. In brief, the Commission suggested
– to grant itself new powers to restrict the time period during which intentions for a takeover are announced and intention statements are disclosed;
– to establish criteria for the determination of such time period;
– to remove the requirement that an offeror consults with the regulator prior to approaching a shareholder of the firm to be taken over (offeree) provided that certain restrictions are observed;
– to clarify that at least 75% of all shareholders must vote for scheme of arrangements (restructuring) or delisting in shareholder meetings;
– to clarify that shareholder meetings are subject to the rules and regulations of the jurisdiction of incorporation of the firm;
– to define „significant“ in purchase offers involving indirect purchases of third companies (chain principle); and
– to no longer exclude any dividends or other income that has accrued from an offer price.
The SFC also proposed several minor modifications for clarity and consistency purposes (primarily changes in wording).
#### Feedback and way forward
According to the Commission, the vast majority of respondents were highly supportive of the proposed modifications which is why the Commission is moving ahead with the modifications as proposed. Minor changes to the drafted version were only made again for clarity purposes as regards the following:
– the application of the „chain principles“;
– the consideration of dividends in an offer;
– the consideration of the appointment of a broker to effect share-buybacks; and
– the disclosure or filing of consent to acquire another firm.
The final amendments to the existing Code can be viewed in Annex II; blue bold text thereby represents changes to the draft version. The changes will come into force upon gazettal on September 29, 2023.