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CorporateDivision Chan SuLi discusses the proposed amendments to the Listing Requirements on Privatisation of
EVENTS Legal Insights 3/2015, September
ListedCompaniesviatheDisposalofAssets
PUBLICATIONS 2015 is now available. To access the
Acquisitions,Mergers&
CAREERS newsletter,pleaseclickhere.
Takeovers
CONTACTUS
AssetBasedFinancing&

Securitisation
Automotive Managing Intellectual Property
On 19 March 2010, the Securities Commission ("SC") and Bursa Malaysia Securities Berhad ("Bursa
GlobalAwards
Banking Malaysia")issuedajointconsultationpaperinrespectoftheproposedamendmentstoBursaMalaysia's
Malaysian Intellectual Property Firm
CapitalMarkets Listing Requirements ("Listing Requirements") on privatisation of listed companies via a disposal of
oftheYear2015
assets("CC3/2010").
CompetitionLaw
CorporateRestructuring The Firm has been named the

MalaysianIntellectualPropertyFirmof
Derivatives&Structured
Currently,thereisadisparityintheshareholderapprovalthresholdsinrespectoftheroutesavailablefor the Year 2015 in the Managing
Products
the privatisation of a listed company. The SC and Bursa Malaysia observed in CC3/2010 that this Intellectual Properties (Managing IP)
Energy&Utilities GlobalAwards.TheFirmhaswonthis
situationgivesrisetotheconcernthatpotentialacquirersmayprivatisealistedcompanyviatheleast
EnvironmentalLaw stringentmodewhich,inturn,providesalesserlevelofprotectiontoshareholders. Award multiple times, including
ForeignInvestment winningthisAwardin2014.

HealthCare
Hospitality&Tourism TheproposedamendmentstotheListingRequirementsinCC3/2010areaimedatclosinga"loophole"
Insurance inthelawwhere,underSection132CoftheCompaniesAct1965("CA"),acompanymaydisposeofall ChambersAsiaPacific
or substantially all of its assets with the approval of a simple majority (i.e. more than 50%) of its MalaysiaLawFirmoftheYear2015
IslamicFinance
shareholders present and voting at the company's general meeting. This is commonly known as the
JointVentures SKRINEispleasedtoannouncethatit
"AssetDisposal"route.
Mining&MineralResources hasbeenawardedMalaysiaLawFirm
Development of the Year 2015 by Chambers Asia
Oil&Gas&NaturalResources Pacific. This award is particularly
The "Asset Disposal" route has been used to privatise and indirectly, takeover a listed company meaningful to us as it recognises the
Privatisation
wherebytheacquirer,withtheapprovaloftheholdersofasimplemajorityofthevotingsharesofalisted workoflawfirmsacrosstheglobeand
ProjectFinancing company,acquirestheassetsofthelatter.Thisisfollowedbythedelistingofthelistedcompanyasitno reflects their notable achievements
RealEstate longerhasthelevelofoperationstomaintainitslistingstatusonBursaMalaysia. overthepasttwelvemonthsincluding
Securities outstandingwork,impressivestrategic
growth and excellence in client
Shipping&ShipFinance
service. We would like to thank our
Sports Examplesoftakeoversandacquisitionsthathaveusedthe"AssetDisposal"routesince2005areCIMB valued clients for their continuing
Trusts,Wills,Probate,Charities GroupHoldingsBhd'sacquisitionofSouthernBankBhd,MMCCorpBhd'sacquisitionofMalakoffBhd's supportandtrustinus.
assetsandtheSimeDarbymerger.ThecurrenttakeoverproposalofEONCapitalBhdbyHongLeong
VentureCapital
BankBhdalsousesthe"AssetDisposal"route.

DisputeResolutionDivision
IntellectualPropertyDivision
AsianLegalBusiness(ALB)
MalaysiaLawAwards2015
Incontrast,undertheMalaysianCodeonTakeOversandMergers1998("Code"),thethresholdtotake
overacompanyanddelistitishigherat90%acceptanceofsharesoutstandingwhicharenotheldby TheFirmclinchedthreeawardsatthe
the acquirer, in order for the acquirer to undertake a compulsory acquisition for the remaining voting recent Asian Legal Business (ALB)
sharesofthetargetcompany. Malaysia Law Awards 2015 held on
27March2015.TheFirmwasnamed
theKLRCAArbitrationLawFirmofthe
Year, the Intellectual Property Firm of
Thisarticlediscussestheimpactoftheproposedamendmentsonthetakeoverofalistedcompanyvia
the Year, and received the M&A Deal
the"AssetDisposal"route.
oftheYearforPTPertaminaMalaysia
EksplorasiProduksi'sacquisitionof30
percent of Murphy Oil Corporation's
Malaysianoilandgasassets.Toread
more,pleaseclickhere.
THEPROPOSEDAMENDMENTS

Inordertoaddressthedisparityintheshareholderapprovalthresholdsdiscussedabove,theSCand
BursaMalaysiahaveproposedinCC3/2010that: PDPANotice

>>VIEW

(a)adisposalofassetsviathe"AssetDisposal"routemustbeapprovedbymorethan50%innumber >>VIEWBMversion
and at least 75% in value of the shareholders present and voting either in person or by proxy at the
generalmeetingand

(b) the shareholders who object to the disposal must not be more than 10% of the value of the Stepstodeactivatecookiesoninternet
shareholderspresentandvotingeitherinpersonorbyproxyatthegeneralmeeting. browsers

>>STEPS

Inaddition,thelistedcompanymustappointanindependentadvisertoadvisewhetherthedisposalis
fairandreasonableandwhethertheshareholdersshouldvoteinfavourofthetransaction.

The proposed amendments also require a company that is planning to dispose of its assets to
concurrently acquire another asset which complies with the relevant SC guidelines and Listing JanetLooiLaiHeng
Requirements.Ifthecompanydoesnotintendtoacquireanewasset,theacquirerisrequiredtomake Partner,CorporateDivision
an"exitoffer"toacquireallthevotingsharesinthelistedcompanyinaccordancewiththeCode.This SKRINE
exitoffermustbemadeconcurrentlywiththeacquirer'soffertoacquirethelistedcompany'sassets.
CONTACTDETAILS:
 Tel:60320813999ext
812
Fax:60320943211
Email:llh@skrine.com
PROTECTIONOFMINORITYRIGHTS

Thetakeoveroflistedcompaniesviathe"AssetDisposal"routehaveraisedconcernsthattheminority QuayChewSoon
shareholdersmaybeforcedtoselloutbyasmallnumberofsubstantialshareholderswhoholdsufficient Partner,CorporateDivision
shares to attain the simple majority required under Section 132C of the CA even though the prices SKRINE
offeredmaynotbefairorreasonable.Therefore,placingahigherthresholdofshareholderapprovalin
respectofanassetdisposalmayplugthe"loophole"inthelawandcompeltheacquirertoofferaprice CONTACTDETAILS:
thatwillbesufficientlyattractivetopersuadealargernumberofshareholderstosupportthedisposal. Tel:60320813999ext
721
Fax:60320943211
Email:qcs@skrine.com
TheproposedamendmentshavebeenlaudedbytheMinorityShareholderWatchdogGroupandother
playersintheMalaysiancapitalmarketastheinterestsofminorityshareholderswillbebetterprotected.
ChengKeeCheck
Partner,CorporateDivision
SKRINE
Theproposedamendmentsareinlinewithseveralotherjurisdictionswhichhavetightenedtheirrules
on the "Asset Disposal" route. Thailand and New Zealand have increased the approval threshold for CONTACTDETAILS:
such a transaction to at least 75% of the shareholders present and voting. In addition to the 75%
Tel:60320813999ext819
threshold,HongKongalsorequiresthatvotescastagainstthedisposalmustnotexceed10%.Itistobe
Fax:60320943211
noted that none of these jurisdictions have included the requirement for approval of at least 50% in
Email:ckc@skrine.com
numberofshareholderspresentandvoting,asproposedinCC3/2010.

ARGUMENTSAGAINSTTHEPROPOSEDAMENDMENTS

There are several arguments against the proposed amendments, one of which is that value creating
mergersandacquisitionswillbeprevented,tothedetrimentoftheMalaysiancapitalmarket.Takeovers
viathe"AssetDisposal"routeissaidtobeinlinewiththeprincipleofshareholderdemocracy,andhas
resultedinthecreationofbigger(andarguably,better)companies.

Itisalsoarguedthatprovidingminoritieswiththerighttovetoanassetdisposalwillallowincumbentsor
thosewhocanacquireavetoblockofsharestoholdtherestoftheshareholderstoransom.Thiswould
resultintheoppositeofshareholderdemocracy,withtheminoritycontrollingthemajority.

Inaddition,variouscommonlawjurisdictionssuchasSingapore,LondonandAustralia,stillpermitthe
disposalofassetsviathe"AssetDisposal"routetobeeffectedbyasimplemajorityvote.Therefore,itis
arguedthatthereshouldnotbeanimpetustostreamlineMalaysia'srulestobeinlinewithjurisdictions
thathavechosentotightentheirrules.

CONCLUSION

Theproposedamendmentsaimedatclosingoffthe"loophole"inthelawcreatedbySection132Cofthe
CAisastepintherightdirectionbytheSCandBursaMalaysiatowardspromotingahealthiercapital
market. While these amendments may require some further modifications to ensure that it is not too
onerousforvaluecreatingdealstobecarriedout,thechangeshouldbewelcomedbymanyasitaffords
betterprotectionofminorityinterests.

CHANSULI(sli@skrine.com)

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