Money Markets
CMA tightens takeover rules for listed firms to curb insider trading
CMA has also revised the unconditional clause that was behind the drawn-out dispute between it and BOC over the Carbacid takeover bid. Photo/FILE
Posted Friday, November 13 2009 at 00:00
The boards of the targeted company will be required to advise shareholders of actual or likely offers.
The new rules also require the boards of directors not resist any takeover bids before evaluating the merits with its shareholders in terms of better equity value and share price performance.
To avoid creating a false market for the shares of companies that are subject to takeover bids, a formal announcement will have to be made by the takeover target once a firm intention from the suitor is made, irrespective of the bid’s merits.
Similar announcement will also be made when there is market speculation over an impending acquisition, wild movement in share or huge volume trades.
Private company
Were the rules in force, ARM would have been required to make an announcement three weeks ago when Bamburi sold 12 per cent of its shares in the company.
Kenya Power and Lighting Company would also have been required to make similar announcement four years ago when the NSSF sold its four per cent shareholding in the company, momentarily changing the status of the power distributor from a parastatal to a private company.
In the two events the transactions were stumbled upon by the media as shareholders sought answers on their import.
The rules also protect listed companies against speculative bids meant to influence the target’s share price.
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