Shareholders’ role in a takeover situation

The shareholder of the target company is expected to read and understand thoroughly the terms of the offer document and recommendations in the independent advice circular before deciding whether to accept or reject the offer. They should weigh all aspects of the take-over exercise in their decisions.

Shareholders who wish to accept the offer will need to fill up the acceptance form and mail it within the stipulated time. If they are unsure of the next cause of action, they should consult a licensed investment adviser or a remisier. The investment adviser or remisier should be able to assist them in understanding the offer document and the independent advice circular.

What is the consideration for the offer?

Shareholders will either be offered cash or shares in another company in exchange for their shares in the target company. Sometime they will be offered a combination of shares and cash. This will be stipulated in the offer documents. In a share exchange situation, shareholders should find out more about the company whose shares are being offered as consideration.

In any take-over, shareholders of a target company must ensure that they get the best possible deals.

Basis of Consideration

Regulations on take-overs
The Malaysian Code On Take-overs and Mergers 1998 governs all take-over activities in Malaysia. In essence, the Code’s principles are to ensure that—

• fair dealing and equity between all shareholders involved in a take-over offer;
• adequate information, sufficient time and advice are given to all shareholders, especially the minority, of a target company to make decision on the merits of the offer;
• minority shareholders can make decision that will benefit them.

Since a take-over exercise can be a difficult and an unsettling experience for a company, especially its minority shareholders, it is wise for shareholders to keep abreast with the latest development of their company by reading the reports sent by the company and business sections of the newspaper.

For minority shareholders, you are as important as the majority shareholders, and if you are unhappy with the take-over exercise, don’t keep quiet, make yourself heard!