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Friday May 16, 10:23 PMFACTBOX-Regulatory obstacles to any bid for S.Africa's MTNJOHANNESBURG, May 16 (Reuters) - Indian mobile operator Bharti Airtel is in exploratory talks with its biggest rival in sub-Saharan Africa, MTN .The UAE's Emirates Telecommunications Corp (Etisalat) also has said it is evaluating a possible bid for MTN. Below are details of the regulatory obstacles facing any foreign company aiming to take a stake in MTN. SHAREHOLDER APPROVAL Any company planning to buy a stake in a listed South African company must do so via a "scheme of arrangement" or general offer to shareholders. The scheme of arrangement process is court sanctioned, needs the support of the company targeted and approval by three-quarters of scheme members present and voting at a special meeting. Only after the approval of the requisite number of shareholders, and provided no shareholder lodges an objection with the High Court, will the High Court approve the scheme of arrangement. If a deal is done through a general offer to shareholders, company support is not required nor is a shareholders' meeting. If shareholders holding more than 90 percent of the shares accept the offer, the buyer may invoke the provisions of section 90 of the Companies Act and force the remaining shareholders to sell. SECURITIES REGULATION CODE The Securities Regulation Code on Takeovers and Mergers governs any transaction which results in a change of control, meaning a stake of 35 percent or more. Both schemes of arrangement and general offers to shareholders are governed by the code, which contains strict rules on disclosure covering cautionary announcements, firm intention to make an offer announcements, and the offer document. It sets out the conduct required of the bidder, target company and its board of directors, for example, requiring the board of the target company to obtain appropriate advice on the offer's terms and conditions and to make this known to shareholders. Any listed company involved in a transaction is required to comply with the Listings Requirements of the JSE Securities Exchange which aim to ensure shareholders are given full information and treated equally. A general offer is between the shareholders of the listed company and the bidder and does not directly involve the listed company. COMPETITION AUTHORITIES Any merger is subject to investigation by the Competition Authorities which must be notified of all mergers where the combined annual turnover or assets are more than 200 million rand and the annual turnover or assets of the target firm are more than 30 million. The authorities need to be notified of a merger before implementation of the proposed transaction. The Competition Commission has 20 business days to adjudicate the intermediate merger and the Competition Tribunal has a further 40 to adjudicate a larger merger. Source: Nedbank Capital (Reporting by Marius Bosch; Editing by Guy Dresser and Jason Neely) |
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