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

The Securities Regulation Code on Takeovers and Mergers

The Code

Section D. The Approach, Announcements and Independent Advice

Rule 2. Secrecy Before Announcements: The Timing and Contents of Announcements

 

 

2.1) Secrecy

 

Secrecy shall be observed before the announcement of a firm intention to make an offer. All persons privy to confidential information, price-sensitive or otherwise, concerning an offer or contemplated offer shall treat that information as secret.

 

All persons concerned in an offer or contemplated offer shall conduct themselves so as to minimise the chances of an accidental leak of information. Accordingly the issue of news releases under embargo until a future time may only take place with the prior approval of the Panel.

 

2.2) The cautionary announcement

 

2.2.1) Definition and contents of a cautionary announcement

 

A cautionary announcement is a brief announcement to be published in the press and is intended to preserve the integrity of trading in a company's securities on The Stock Exchange preceding or during negotiations which may lead to an announcement of a firm intention to make an offer.

 

It may be couched in general terms and would normally state that talks are taking place or that a potential offeror is considering making an offer or that an announcement is pending which could have a material effect on the price of the offeror or the offeree company's securities. It shall state that the holders of the securities concerned are advised to exercise caution in dealing in their securities. The potential offeror must be named in the cautionary announcement unless the Panel rules otherwise.

 

2.2.2) When a cautionary announcement shall be made

 

A cautionary announcement shall be made when an offer is under discussion and -

a) the offeree company is the subject of rumour and speculation or there is an abnormal movement in the price of the offeree company's securities or in the volume of such securities traded on The Stock Exchange; or
b) negotiations or discussions are about to be extended to include more than a very restricted number of persons (outside those in the companies concerned who need to know and their immediate advisers).

 

2.3) The Announcement of a Firm Intention to make an Offer

 

An Announcement of a firm intention to make an offer is an announcement published in the press in the circumstances and containing the information set out in this Rule.

 

An offeror shall not take any action which would give rise to the requirement to make an announcement of a firm intention to make an offer unless the offeror and its financial adviser have proper grounds for believing that the offeror is and will continue to be able to implement the offer.

 

2.3.1) When an announcement of a firm intention to make an offer shall be made

 

An announcement of a firm intention to make an offer shall be made-

a) when the board of the offeree company has been notified in writing of a firm intention to make an offer from a serious source, irrespective of the attitude of the board to the offer;
b) immediately upon an acquisition of securities which gives rise to an obligation to make an offer under Rule 8.

 

The announcement shall not be delayed while full information is being obtained. Additional information can be the subject of the later supplementary announcement

 

2.3.2) Contents of the announcement of a firm intention to make an offer

 

a) The announcement of a firm intention to make an offer shall contain-
i) the terms of the offer;
ii) the identity of the offeror;
iii) details of any existing holding of securities in the offeree company.
aa) which the offeror owns or over which it has control;
bb) which is owned or controlled by any person acting in concert with the offeror or in respect of which the offeror has received an irrevocable commitment to accept the offer;
cc) in respect of which the offeror holds an option to purchase; and
dd) in respect of which any person acting in concert with the offeror holds an option to purchase;
iv) all material conditions (including normal conditions relating to acceptances, listing an increase of capital) to which the offer or the posting of it is to be subject; and
v) details any arrangement which exists with any offeror, with the offeree company or with any person acting in concert with the offeror or with the offeree company in relation to relevant securities, whether or not any dealings have taken place.
b) The announcement of a firm intention to make an offer containing a wholly or partial cash consideration shall include confirmation by the financial adviser or by another appropriate third party that resources are available to the offeror sufficient to satisfy full acceptance of the offer. Except with the consent of the Panel, the confirming party shall be expected to produce the cash itself if, in giving the confirmation, it acted irresponsibly or failed to take all reasonable steps to assure itself that the cash was available.

 

2.3.3) Consequences of the announcement of a firm intention to make an offer

 

When there has been an announcement of a firm intention to make an offer, the offeror shall, except with the consent of the Panel, proceed with the offer unless the posting of the offer is subject to the prior fulfillment of a previously disclosed specific condition and that condition has not been fulfilled.

 

2.4) Responsibility for making Announcements and Medium of Publication

 

2.4.1) The responsibility for making an announcement under-
a) Rule 2.2 rests with the offeror and the offeree company depending on the circumstances;
b) Rule 2.3.1(a) rests with the offeree company; and
c) Rule 2.3.1(b) rests with the offeror.

 

2.4.2) Announcements shall be published in an English and Afrikaans daily newspaper circulating in Johannesburg and, if the registered office of any party to the announcement is not in Johannesburg also in an English and Afrikaans daily newspaper circulating in the region where the registered office is situated if there are such newspapers circulating in such region. Prior to such publication, the text of the announcement shall be released to Reuters, the South African Press Association and to The Stock Exchange.