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The regulation of takeovers and mergers in Malaysia

Ambaras Khan, Mushera Bibi (2015) The regulation of takeovers and mergers in Malaysia. In: Conference on Comparative Takeover Regulation, 23rd-24th July 2015, Singapore. (Unpublished)

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The Code on Take-overs and Mergers 1998 was the first codified law on takeover and merger in Malaysia. The 1998 Code was heavily influenced by the English takeover law. Due to the tremendous development on takeovers and mergers exercise, the 1998 Code was revised and later replaced by the Malaysian Code on Take-overs and Mergers 2010, deriving its power from section 217 of the Capital Market and Services Act 2007 (CMSA). The key objectives of the Code are to strengthen investor protection, institute higher standards of governance in takeovers and mergers activities, enhance transparency and improve efficiency. Takeovers and mergers in Malaysia have largely been friendly in nature. Takeover offer is widely defined and it covers scheme of arrangement, selective capital reduction, amalgamation and consolidation. The current Code thus provides a wider range of protection for shareholders as compared to the previous Code. Malaysia has opted for mandatory offer. The rationale for mandatory offer is to ensure that all shareholders are given the opportunity to sell their investment in the target company and they all get the opportunity to do so at the same price. The Code also provides for certain exemptions from a mandatory offer. The exemptions resemble those which are provided in the City Code of Takeovers and Mergers (UK); there are however certain exemptions which are unique to Malaysia. Malaysia also allows a bidder the right to compulsorily acquire the shares of dissenting shareholders of the target after fulfilling certain conditions as provided in the CMSA. The law also imposes upon the directors of the target the duty to act in good faith when making recommendations with respect to any takeover. The directors are also required to appoint an independent adviser to advise the shareholders of the target on whether the takeover offer is fair and reasonable. The terms "fair" and "reasonable" are not treated as a composite term. This approach has been criticized by a number of parties. The board of the target is not allowed to frustrate a takeover offer; the Code makes it clear that the shareholders of the target must be given the opportunity to decide on the merits of a takeover offer. The Securities Commission plays an important role in overseeing takeovers and mergers activities. The Commission is conferred with the power to approve offers and other documents issued in connection of takeovers, issue rulings and grant exemptions from a mandatory offer. Parties involved in takeovers and mergers must comply with the law. The sanctions for a breach of the Code involve not only criminal and civil actions but also administrative sanctions. The Commission has come up with guidelines, practice notes and from time to time, consultation papers, in order to provide better law for governing takeovers and mergers.

Item Type: Conference or Workshop Item (Slide Presentation)
Additional Information: 1652/47800
Uncontrolled Keywords: takeover, mergers, Malaysia
Subjects: K Law > K Law (General)
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Ahmad Ibrahim Kulliyyah of Laws > Department of Civil Law
Depositing User: Ms Maznah Abdul aziz
Date Deposited: 28 Jan 2016 15:58
Last Modified: 20 Jun 2019 16:04
URI: http://irep.iium.edu.my/id/eprint/47800

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