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Companies Act, 1973 (Act No. 61 of 1973)

The Securities Regulation Code on Takeovers and Mergers

The Code

Section C. General Principles

2. General Principles

 

 

1) All holders of the same class of securities of an offeree company shall be treated similarly by an offeror.

 

2) During the course of an offer, or when an offer is in contemplation, neither the offeror or would be offeror, nor the offeree company, nor any of their respective advisers, shall furnish information to some holders of relevant securities which is not made available to all holders of such securities except with the consent of the Panel.

 

3) An offeror shall only announce an offer or its intention to make one after the most careful and responsible consideration. Such an announcement shall be made only when the offeror has proper grounds for believing that it can and will continue to be able to implement the offer. Responsibility in this connection also rests on the financial adviser to the offeror.

 

4) Holders of relevant securities shall be given sufficient information and advice to enable them to reach a properly informed decision and shall have sufficient time to do so. No relevant information shall be withheld from them.

 

5) Any document or advertisement addressed to holders of relevant securities containing information or advice from an offeror or the board of the offeree company or their respective advisers shall, as in the case of a prospectus, be prepared with the highest standards of care and accuracy.

 

6) All parties to an offer shall take all reasonable steps to prevent the creation of a false market in the securities of an offeror or the offeree company. Parties involved in offers shall take care that statements are not made which may mislead holders of relevant securities or the market.

 

7) After a bona fide offer has been communicated to the board of the offeree company, or after the board of the offeree company has reason to believe that a bona fide offer might be imminent, such board may not take any action without the approval of the holders of the relevant securities in general meeting, in relation to the affairs of the company, which could effectively result in any bona fide offer being frustrated or in the holders of relevant securities being denied an opportunity to decide on its merits.

 

8) Rights of control shall be exercised in good faith and the oppression of a minority is unacceptable.

 

9) The directors of an offeror and the offeree company shall at all times, in advising the holders of relevant securities, act only in their capacity as directors and not have regard to their personal or family shareholdings or to their personal relationships with the companies. It is the interests of holders of relevant securities taken as a whole which shall be considered when the directors are giving advice to such holders.

 

10) An affected transaction normally gives rise to an obligation to make a general offer to all other holders of the relevant securities. Where an acquisition is contemplated as a result of which a person may incur such an obligation, he shall, before making the acquisition, ensure that he is and will continue to be able to implement such an offer.

 

11) The underlying principle is that persons holding an equity interest in an offeree company through shares or other securities in that company (whether or not such carry voting rights) shall be entitled to dispose of their said interest on terms comparable to those of any affected transaction in the relevant securities.