Takeovers and compulsory acquisitions

 Takeover = someone or some organization wants to take over a company.

 The bidder = party who offer to takeover the company
 The target = the company where the shareholders will be offered money in place of their
shares.
 A company in financial trouble it can do certain thing under the CA 2016 such entering
into certain arrangement such as scheme of arrangement. Scheme of arrangement is an
internal arrangement.
 If company A or a particular person who need to take control of a company, we use the
work takeover of the company.
 Reconstruction on the other hand may involve more than one company. For example,
transfer the assets of this company and offer money to the shareholders of the other
company.

Reasons to takeover

a) Synergy gain
 Join forces to combine the effect of two companies so the outcomes will be better.

b) Diversification
 Example an agriculture business that want to go into education and set up a university.
So the company find another company that carry out such business and takeover the
company.

c) Replacing inefficient management

 Taking over the company to replace the management that is bad

d) Expropriation
 By taking over the company hi can get value from the takeover.
 e) Empire building
 To control every single ventures to build an empire

f) Monopoly
 If there are two different companies in the same ventures, consumer will get better deal
because companies are fighting. With takeovers, the company may charge consumer
more as there is no other competition.

Purpose of regulating takeovers

 To ensure fairness to shareholders

 Section 217(5) CMSA 2007
 When shareholders are reluctant to move the takeovers but bidder still want to move
and make arrangement with BOD, this is called hostile takeover.
 When there is takeover, there must be equal opportunity to all shareholders.
 There must be fair and equal treatment to all shareholders especially minority
shareholders.

Main Offences

 S.218: must comply with rules and regulations

 S.221:false of misleading documents.
 S.221(2): defence to prosecution in respect of the takeovers
 S.221(3): contravention will be fine not exceeding 3 mil and prison 10 years

Type of offers (mandatory offers):

 S.222: