A consultation paper posted on the PSE website showed the new requirements that aim to strengthen the bourse’s regulation of reverse takeovers or backdoor listing of unlisted companies that do not go through the initial listing process and are not subjected to the same level of scrutiny applied to companies conducting initial public offerings.
Among the salient amendments to the backdoor listing rules are the need for corporate approvals on backdoor listing that involves issuance of primary shares of the listed company and/or acquisition of assets and the conduct of a public offering of at least 10 percent of the issued and outstanding shares within a year from the completion of the backdoor listing.
The PSE said it would also charge a backdoor listing fee of P5 million.
Backdoor listing will be deemed to occur if the listed company, directly or indirectly, acquires the shares or assets of an unlisted company or person or group of persons or vice versa. The transactions that will result in change in control or de facto control of the listed company, or change in composition of the board of directors of the listed company or substantial change in the business of the listed company, will also be considered backdoor listing.
The transaction may also be deemed a backdoor listing if the acquisition of assets takes place within 24 months of such unlisted company, person or group of persons gaining control or acquiring a seat in the board of the listed company, which was then not regarded as backdoor listing.
The change in control takes place when the acquirer purchases more than 50 percent of the voting power of the listed company, while de facto control is obtained if the acquirer becomes the single largest substantial shareholder of the listed company after the transaction leading to the backdoor listing.
It said the proposed amendments were benchmarked against the rules of Bursa Malaysia, Stock Exchange of Thailand, Singapore Exchange and Stock Exchange of Hong Kong, where an acquisition of assets by the listed company resulting in a change in control of the listed company or certain percentage ratios being breached is deemed to be a backdoor listing.
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