The Board of SEC has given approval to the management of the commission to come out with new rules that would make the nation’s capital market more attractive.
The new rules will shorten approval timelines for M&A deals and reduce related transaction costs. Under its provisions, the approval process shall now be in two stages instead of the present three-stage process.
Approval in principle
“Applicants will now be required to file a merger notification along with a draft scheme document to the Commission as part of the first stage. Once the Commission conveys its approval-in-principle, the applicant can then file for a court ordered meeting at a Federal High Court.
This implies that the current requirement, where the applicant must first obtain a letter of ‘No Objection’ before proceeding with any of the processes, will no longer hold,” the source said.
Also, the fees charged for such transactions have been reviewed in the expected framework. Typically, SEC fees on M&A transactions were charged based on the nominal value of the company’s issued and paid-up capital. However, the regulatory fees will now be calculated based on the total consideration offered for the deal.
In the area of protecting minority shareholders, the new framework will make it mandatory for Directors of a company to issue a ‘Directors’ Circular’ to all shareholders notifying them of a take-over bid intention at least seven days before the date on which the take-over bid takes effect.
Notification to other stakeholders
“Additionally, court ordered meetings must now be adequately disseminated while a copy of notice to employee unions shall be forwarded to the Commission as part of necessary filings,” the source said.
Similarly, post-bid requirements have been clearly spelt out in the new rules including the treatment of the shares of dissenting shareholders and the deposition of complaints by aggrieved shareholders. It was gathered that to avoid a situation in which rumours of an M&A deal fuel irrational share price movements, the new framework requires an offeror in an M&A transaction to make a public announcement of take-over on the floor of the securities exchange on which it is listed, in addition to the traditional newspaper publication.