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Oman’s Capital Market Authority (CMA) issued a draft regulation on take-overs and acquisitions of publicly-listed companies (the Regulation) for comment in May. As with take-over codes in other jurisdictions, the Regulation is designed to provide an orderly framework within which a take-over offer for a listed company or fund is conducted, as well as to ensure that all shareholders in a target company are treated fairly and given the opportunity to decide on the merits or otherwise of a take-over.

The Regulation applies to shareholdings in any company or investment fund, whether Omani or foreign, listed on the Muscat Securities Market or any stock exchange in Oman. Under the Regulation, a person (including persons acting in concert) who acquires 25% or more of the voting rights of a listed company would be obliged to make an offer to acquire all remaining shareholders of the target company. The mandatory offer requirement is also triggered when a person (alone or in concert) holding between 25%-50% of the voting shares or voting right increases its stake by acquiring additional shares carrying more than 2% of the voting shares of the target company in any 6 month period. The offer price must be at least equal to the highest price paid by the bidder (alone or in concert) for the shares during the six months prior to the bid.

The CMA has power to grant written exemptions from the mandatory offer obligation or the application of the Regulation in the national interest or the interests of investors at large or for any reason it sees fit. Application for exemption must be made before the mandatory offer obligation is triggered A person intending to launch a take-over bid is required to appoint an issue manager licensed by the CMA (or other CMA-approved person) as adviser to represent him throughout the take-over and would need to do so at an early stage as only an issue manager may file a proposal or exemption application.

Another key principle of the Regulation requires the offeror to afford all shareholders, minority shareholders in particular, with fair and equal treatment and the opportunity to consider the merits and demerits of a take-over offer. The target company board of directors may not perform any action (such as selling material assets or issuing new shares) to frustrate a take-over which they view as hostile or unwelcome without the approval of the shareholders’ general meeting.

The Regulation includes stringent disclosure requirements and detailed provisions on terms of an offer, timelines and respective obligations of persons involved in the take-over as well as any competing offer. This Regulation is a significant development in Oman’s corporate and capitals markets sector and is the latest in a series of CMA initiatives to strengthen and stimulate activity in this key sector.

For more information on the Regulation and its implications for shareholders and boards of publicly-listed companies, contact Mansoor Malik or Asad Qayyum.