Establishing a business in a foreign market is typically done through opening a representative office, a branch, or a subsidiary, depending on the strategic policy, financial resources, or business plan of each investor. Besides these options, there are other methods like merging with or acquiring a local partner. This can provide a more direct and effective entry compared to the previously mentioned approaches.
One key requirement for successful mergers and acquisitions in Malaysia is compliance with the current regulations in the respective market. Therefore, understanding and applying these regulations are crucial. Recently, Malaysia’s Securities Commission has approved a new version of regulations on takeovers, mergers, and mandatory acquisitions in Malaysia, replacing or complementing those from 2016 and 2017. The amendments, seemingly minor but substantively significant, mainly affect offer announcements, pre-offer agreements, or potential favorable dealings.
Regarding offer announcements, the amendments differentiate between possible offers and voluntary offers related to mergers and acquisitions in Malaysia. In cases where possible offers include preconditions for their realization, it is necessary to consult the Securities Commission. The announcement must clearly state whether the preconditions must be met before making an offer or if they are waivable. It should also include a disclaimer that it does not signify a firm intention to make an offer and therefore there is no certainty that an offer will be made, regardless of meeting the preconditions.
As for pre-offer dealings related to mergers and acquisitions in Malaysia, the new Rule 19.01 introduces certain restrictions to increase the level of restrictions on insider information. It clarifies which types of dealings are acceptable and which are not. Individuals with sensitive confidential information about the price of a real, planned, or completed offer related to mergers and acquisitions in Malaysia, who are not bidders, cannot participate in transactions related to the affected company. However, this rule does not apply to those acting in concert with a bidder when the values involved in the transactions are not part of the offer or when the agreements do not aim for profit.
Finally, these amendments introduce another new Rule, 18.02, which imposes limitations on dealings that, while favorable, impact money laundering procedures related to mergers and acquisitions in Malaysia. In such cases, according to this Rule, the bidder or those acting in concert with them cannot acquire shares within six months after the shareholders’ general meeting from a person who was a director or majority shareholder of the company at the time of the money laundering proposal. However, the Securities Commission can grant an exemption if the acquisition is de minimis or insignificant.
In a market like Malaysia, one of the most important in Southeast Asia due to its level of openness and liberalization post-Singapore, understanding these rules related to mergers and acquisitions in Malaysia is essential, especially for Spanish companies aiming to merge with or acquire a local company. When making an offer related to mergers and acquisitions in Malaysia, consulting the Securities Commission beforehand on the scope and content of its preconditions can be not only useful but also -at times- mandatory to reduce the risks of non-compliance. This can be crucial ultimately, along with appropriate advice related to mergers and acquisitions in Malaysia, for the successful completion of the operation.
Antonio Viñal
Abogado
AVCO Legal
madrid@avco.legal
