The Capital Markets (Take-Overs and Mergers) Regulations

The Regulations are cited as the Capital Markets (Take-overs and Mergers) Regulations and are deemed to have come into operation on 24th July, 2002.

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Jurisdiction: Kenya
Instrument: Notice
Citation: Legal Notice 126 of 2002
Version: Undated source snapshot
Language: en

Source attribution: Source: Kenya Law

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About this statute

The Regulations are cited as the Capital Markets (Take-overs and Mergers) Regulations and are deemed to have come into operation on 24th July, 2002. Defines the phrase "the first closing date of the take-over-offer." Requires appointment of independent advisers in specified takeover situations and sets disclosure and circulation duties for those advisers and boards. Section 11 lists specific relationships or interests (for example: ten percent or more shareholding, substantial business relationships, director overlap, financing involvement, substantial creditor status, financial interests, prior advisory or restructuring roles) that are identified in relation to the requirements for an independent adviser. If a takeover results in the offeror acquiring ninety percent of the offeree's voting shares, the offeror must offer the remaining shareholders a consideration equal to the prevailing market price of the voting shares or the price offered to the other holders, whichever is higher.

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Provisions of The Capital Markets (Take-Overs and Mergers) Regulations

Showing 34 of 34

Part I

PRELIMINARY

1
PRELIMINARY - 1. Citation

AI-assisted research summary: The Regulations are cited as the Capital Markets (Take-overs and Mergers) Regulations and are deemed to have come into operation on 24th July, 2002.

Section 1. Citation Section These Regulations may be cited as the Capital Markets (Take-overs and Mergers) Regulations and shall be deemed to have come into operation on the 24th July, 2002.
2
PRELIMINARY - 2. Interpretation

AI-assisted research summary: Defines the phrase "the first closing date of the take-over-offer."

Section 2. Interpretation Section the first closing date of the take-over-offer; or

Part II

TAKE-OVER PROCEDURE

10
TAKE-OVER PROCEDURE - 10. Independent adviser

AI-assisted research summary: Requires appointment of independent advisers in specified takeover situations and sets disclosure and circulation duties for those advisers and boards.

Section 10. Independent adviser Section 10(1) The board of directors of the offeree shall appoint an independent adviser, on receipt of the offeror's statement under regulation 4 (4) in relation to the take-over offer. Section 10(2) The independent adviser appointed under paragraph (1) shall be an investment bank or a stockbroker licensed by the Authority. Section 10(3) The substance of the independent adviser's advice must be made known to the holders of the class of the voting shares to which the take-over offer relates, in a circular by the offeree to its shareholders. Section 10(4) The board of directors of the offeror shall appoint an independent adviser, where the take-over offer being made is a reverse take-over or where the board of directors of the offeror is faced with a conflict of interest situation. Section 10(5) The substance of any advice given to the board of directors of the offeror under paragraph (4) shall be made known to all the holders of voting shares of the offeror. Section 10(6) In the case of a reverse take-over, the board of directors of the offeror shall obtain approval of the holders of voting shares of the offeror to which the reverse take-over relates prior to serving the take-over offer document to the offeree under regulation 7(4). Section 10(7) Where the offeror has convertible securities outstanding, the appointed independent adviser shall make known its advice to the holders of such securities, together with the views of the board of directors of the offeror or of the offeree, as the case may be, on the take-over offer or proposal. Section 10(8) The independent adviser appointed by the Board of directors of the offeree shall send a circular to the board of directors of the offeree and the Authority prior to the circular being served on the offeree's holders of voting shares to which the take-over offer relates. Section 10(9) The circular required to be sent by the board of directors of the offeree to the offeree shareholders under regulation 9 and the independent adviser's circular shall be posted to the relevant holders of voting shares within fourteen days from the date of the take-over offer document being served in accordance to regulation 7. Section 10(10) The independent adviser shall disclose all such information in the independent adviser's circular as the holders of the voting shares of the offeror, the board of directors of the offeree and all holders of voting shares to which the take-over offer relates and their professional advisers would reasonably require or expect to be informed about, in an independent advice or for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer and the extent of the risks involved in such action. Section 10(11)(a) is within the knowledge of the Board of directors and of the independent adviser; and Section 10(11)(b) the independent adviser would be able to obtain by making such enquiries as were reasonable in the circumstances. Section 10(12) For the purposes of paragraph (11), a person shall, unless the contrary is proved, be presumed to have been aware at a particular time of a fact or occurrence of which, an employee or agent of the person having duties or acting on behalf of the employer or principal was aware of at the time. Section 10(13) Without prejudice to the generality of paragraph (11), an independent adviser shall include in the circular to the board of directors of the offeree and the offeree shareholders all the information and statements specified in the Fourth Schedule.
11
TAKE-OVER PROCEDURE - 11. Requirements for independent adviser

AI-assisted research summary: Section 11 lists specific relationships or interests (for example: ten percent or more shareholding, substantial business relationships, director overlap, financing involvement, substantial creditor status, financial interests, prior advisory or restructuring roles) that are identified in relation to the requirements for an independent adviser.

Section 11. Requirements for independent adviser Section 11(1)(a) has an interest in ten percent or more of the voting shares of an offeror or offeree at the present time or at any time during the twelve months preceding the date of announcement of the offeror's intention of the take-over scheme; Section 11(1)(b) has a substantial business relationship with the offeror or offeree at the material time or at any time during the twelve months preceding the date of announcement of the offeror's intention of the take-over scheme. Section 11(1)(c) being a company, has a director on its board of directors who is also a director on the board of directors of the offeror if the offeror is a company or on the board of directors of the offeree, as the case may be; Section 11(1)(d) is involved in financing the offer by the offeror; Section 11(1)(e) is a substantial creditor of either the offeror or the offeree. Section 11(1)(f) has a financial interest in the outcome of the take-over offer than that specified in paragraphs (a) to (d); or Section 11(1)(g) has been an adviser in planning or restructuring of the offeror or offeree including acquisitions, at any time during the period of twelve months preceding the date of announcement of the offeror's intention of the take-over scheme. Section 11(2)(i) the loan extended represents more than ten percent of the loan outstanding in the offeror or the offeree; or Section 11(2)(ii) the loan extended to either the offeror or the offeree represents more than ten percent of the shareholders' funds of the person based on the latest audited accounts; or Section 11(2)(iii) the person is a lead banker in a syndicated loan extended to either the offeror or the offeree in the preceeding three years;
12
TAKE-OVER PROCEDURE - 12. Offer to dissenting shareholders

AI-assisted research summary: If a takeover results in the offeror acquiring ninety percent of the offeree's voting shares, the offeror must offer the remaining shareholders a consideration equal to the prevailing market price of the voting shares or the price offered to the other holders, whichever is higher.

Section 12. Offer to dissenting shareholders Section Where a take-over results in the offeror acquiring ninety percent of the offeree's voting shares, the offeror shall offer the remaining shareholders a consideration that is equal to the prevailing market price of the voting shares or the price offered to the other holders, whichever is higher and the provisions of the Companies Act ( Cap. 486 ) shall apply.
13
TAKE-OVER PROCEDURE - 13. Competing take-over offer

AI-assisted research summary: A competing offeror must serve the competing take-over offer document required under regulation 7(4) at least ten days before the offer period closes; the same ten-day period also applies to any revisions.

Section 13. Competing take-over offer Section 13(1) Where a decision has been reached to make a competing take-over offer, all provisions in these Regulations relating to the take-over procedures shall apply mutatis mutandis except the notice period to the competing offer. Section 13(2) The competing offeror shall serve a competing take-over offer document required under regulation 7(4) at least ten days prior to the closure of the offer period and this period shall also apply to revisions that may be made to the competing offer.
14
TAKE-OVER PROCEDURE - 14. Offer period

AI-assisted research summary: An offeror must keep a take-over offer open for acceptances for thirty days from when the take-over offer document is first served, or for a different period if the Authority determines one.

Section 14. Offer period Section An offeror must keep a take-over offer open for acceptances for a period of thirty days from the date the take-over offer document is first served in accordance with regulation 7(4) or such period as may be determined by the Authority.
15
TAKE-OVER PROCEDURE - 15. Conditional offer

AI-assisted research summary: If an offer is conditional on receiving acceptances for a minimum percentage of shares, the offer must specify a latest date (no later than 30 days from service) and the Authority may allow a later date in competitive or special circumstances; the offeror may declare the offer free from the condition on that latest date.

Section 15. Conditional offer Section Where the offer is conditional upon acceptances in respect of a minimum percentage of shares being received, the offer shall specify a date not being a date later than thirty days from the date of service of the take-over offer or such later date as the Authority may in a competitive situation or in special circumstances allow as the latest date on which the offeror can declare the offer to have become free from that condition.
16
TAKE-OVER PROCEDURE - 16. Variation of take-over offer

AI-assisted research summary: An offeror may vary a take-over offer (including increasing consideration) provided the variation is made at least five days before the offer period closes; if varied, the offeror must serve the varied document on the offeree, the Authority and the securities exchange within 24 hours and make a simultaneous public announcement in at least two national English dailies.

Section 16. Variation of take-over offer Section 16(1) An offeror may vary the terms and conditions of a take-over offer including increasing the consideration offered in relation to the whole or part thereof provided such variation shall be made at least five days prior to the closure of the offer period. Section 16(2) The varied take-over offer document shall set out in an appropriate form particulars of such modification of the offeror's statements and information required under the Second Schedule as are necessary having regard to the variations. Section 16(3) The offeror shall serve the varied take-over offer document on the offeree, the Authority and the securities exchange within twenty-four hours of making the decision to vary the take-over offer, and simultaneously make a public announcement by press notice in at least two English language dailies of national circulation disclosing material variations to the offer.
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TAKE-OVER PROCEDURE - 17. Withdrawal of take-over offer

AI-assisted research summary: An offeror may not withdraw a take-over offer without the Authority's prior written approval; the offeror and related parties must report any acquisitions of the offeree's shares monthly for twelve months after withdrawal. Exceptions include specific listed circumstances.

Section 17. Withdrawal of take-over offer Section 17(1) An offeror shall not withdraw a take-over offer without the prior written approval of the Authority. Section 17(2)(a) make a take-over offer for the voting shares that had been the subject of the take-over offer that has been withdrawn; or Section 17(2)(b) acquire any additional voting shares of the offeree other than as provided under regulation 3. Section 17(3) The offeror and all related companies or persons acting in concert or associated with the offeror shall furnish the Authority with details of any acquisition by the offeror and related companies or persons acting in concert or associated with the offeror of any share of the offeree including any option to acquire any share in the offeree each month for a period of twelve months from the date on which the take-over offer was withdrawn. Section 17(4)(a) the offeree shareholders have rejected the take-over offer; Section 17(4)(b) the offeror has not obtained an approval under the Restrictive Trade Practices, Monopolies and Price Control Act ( Cap. 504 ) or any other regulatory approval as may be required; Section 17(4)(c) events, satisfactory to the Authority occur, rendering either the offeror or offeree or both incapable of fulfilling their obligations under the take-over offer; or Section 17(4)(d) a counter offer is accepted by the offeror.
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TAKE-OVER PROCEDURE - 18. Closing of take-over offer

AI-assisted research summary: A holder of the voting shares in the offeree may withdraw acceptance at any time before the closing of the offer.

Section 18. Closing of take-over offer Section 18(1) A take-over offer shall be deemed to close on the last day of the offer period. Section 18(2) A holder of the voting shares in the offeree may withdraw acceptance out of his own volition at any time before the closing of the offer.
19
TAKE-OVER PROCEDURE - 19.Pro-rataacceptances

AI-assisted research summary: If acceptances by shareholders exceed the shares covered by a take-over offer, the offeror must allocate acceptances on a pro-rata basis.

Section 19.Pro-rataacceptances Section 19(1) Where an offeror receives acceptance by the offeree shareholders in excess of the total number of shares to which the take-over offer relates, the offeror shall undertake pro-rata acceptance. Section 19(2) For the purposes of this regulation, "pro-rata acceptance" means an allocation of acceptance by the offeror in the proportion of the total number of shares accepted by each offeree shareholder in relation to the percentage upon which the offer was conditional.
20
TAKE-OVER PROCEDURE - 20. Announcement of acceptances

AI-assisted research summary: Announcement of acceptances where acceptances of the take-over offer have been received after the offeror has served the take-over offer document on offeree shareholders in accordance with regulation 7(4).

Section 20. Announcement of acceptances Section for which acceptances of the take-over offer have been received after having been served with the take-over offer document by the offeror to offeree shareholders in accordance with regulation 7(4);
3
TAKE-OVER PROCEDURE - 3. Acquiring effective control

AI-assisted research summary: Persons must not make an offer to acquire shares or voting rights that would give them effective control of a listed company without complying with the take-over procedure in regulation 4.

Section 3. Acquiring effective control Section 3(1) No person shall make an offer to acquire shares or voting rights of a listed company which together with shares or voting rights if any held by such person or by persons acting in concert or by associated person or related company entitle such person to exercise effective control in the listed company without complying with the take-over procedure provided for under regulation 4. Section 3(2)(a) holds more than twenty five percent but less than fifty percent of the voting shares of a listed company, and who acquires in any one year more than five percent of the voting shares of such company; or Section 3(2)(b) holds fifty percent or more of the voting shares of the listed company and who acquires additional voting shares in the listed company; or Section 3(2)(c) acquires a company that holds effective control in the listed company or together with the shares already held by associated persons or related company or persons acting in concert with such person, will result in acquiring effective control of the listed company; or Section 3(2)(d) acquires any shareholding of twenty five percent or more in a subsidiary of a listed company that has contributed fifty percent or more to the average annual turnover in the latest three financial years of the listed company preceding the acquisition,
4
TAKE-OVER PROCEDURE - 4. Take-over notice and statement

AI-assisted research summary: Sets who must be served with a take-over notice and what must be included; requires offerors to serve an approved offeror's statement within ten days and restricts amendment or withdrawal without the Authority's written consent.

Section 4. Take-over notice and statement Section 4(1)(a) proposed offeree at its registered office; Section 4(1)(b) securities exchange at which the offeree's voting shares are listed; Section 4(1)(c) Authority; and Section 4(1)(d) the Commissioner of Monopolies and Prices appointed under the Restrictive Trade, Practices, Monopolies and Price Control Act ( Cap. 504 ) where the offeror is engaged in the same business as the offeree. Section 4(2)(a) be made in at least two English language dailies of national circulation; Section 4(2)(b) be made after the notice of intention has been served on the proposed offeree; Section 4(2)(c) state that the person intends to acquire or has acquired effective control in the company and has at a stated date served a notice of intention to make a take-over offer to the company or has made an application to the Authority for exemption from the take-over requirements, in compliance with these Regulations; and Section 4(2)(d) the identity of the proposed offeror and all companies related to or persons associated or acting in concert with the proposed offeror; Section 4(2)(d)(i) the identity of the proposed offeror and all companies related to or persons associated or acting in concert with the proposed offeror; Section 4(2)(d)(ii) the identity of the proposed offeree and the exchange at which its shares are listed; Section 4(2)(d)(iii) whether the proposed offeror intends to make a take-over offer or apply to the Authority, for exemption from making a take-over offer; Section 4(2)(d)(iv) which have been acquired, held or controlled directly or indirectly by the proposed offeror or any related companies or any person associated or acting in concert with the proposed offeror; Section 4(2)(d)(v) where applicable, the details of any existing or proposed agreement, arrangement or understanding relating to voting shares referred to in paragraph (iv) between the proposed offeror or any related company or person associated or acting in concert with the proposed offeror and the holders of the voting shares to which the take-over relates; and Section 4(2)(d)(vi) the conditions of the take-over offer, including conditions relating to acceptances, listing and increase of capital. Section 4(3) Where a person has acquired effective control in a listed company and has no intention of making a take-over offer, that person shall make a public announcement containing information that is specified in paragraph (2) including the broad reasons for exemption, immediately after having served the notice in writing to the parties specified in paragraph (1) and shall apply to the Authority for exemption from the take-over requirements under regulation 5. Section 4(4) The offeror shall serve on the offeree within ten days from the date of the notice of intention, an offeror's statement of the take-over scheme containing the information specified in the First Schedule to these Regulations and such statement shall be approved by the Authority. Section 4(5) Where a notice of an intention to make a take-over offer under paragraph (1) or an offeror's statement under paragraph (4) have been served upon the offeree, the proposed offeror shall not amend or withdraw the intention or the statement without the prior written consent of the Authority. Section 4(6)(a) amend in writing any notice or statement lodged by the offeror pursuant to paragraphs (1) and (4); or Section 4(6)(b) substitute in writing a fresh notice or statement for an earlier notice or statement lodged with the offeree pursuant to paragraphs (1) or (4) in such manner and subject to such terms as the offeror may consider as justified by the circumstances of the case and such notice or statement shall be approved by the Authority; Section 4(7) For the purpose of paragraph (6), the computation of time shall be as from the date when the first written notice or offeror's statement is lodged by the proposed offeror.
5
TAKE-OVER PROCEDURE - 5. Exemptions

AI-assisted research summary: The Authority may grant written exemptions from regulation 4 to particular persons or offers subject to conditions, and must publicly announce exemptions it grants.

Section 5. Exemptions Section 5(1) Subject to this regulation, the Authority may in writing grant an exemption from complying with the provisions of regulation 4 to any particular person or take-over offer or to any particular class, category, description of persons or take-over offers subject to such conditions as may be imposed by the Authority. Section 5(2)(a) an acquisition for the purpose of a strategic investment in a listed company that is tied up with management or any other technical support relevant to the business of such company; Section 5(2)(b) a management buy-out involving a majority of the employees of the offeree; Section 5(2)(c) a restructuring of the listed company's share capital including acquisition, amalgamation and any other scheme approved by the Authority; Section 5(2)(d) an acquisition of a listed company in financial distress; Section 5(2)(e) an acquisition of effective control arising out of disposal of pledged securities; Section 5(2)(f) the maintenance of domestic shareholding for strategic reason(s); and Section 5(2)(g) any other circumstances which in the opinion of the Authority serves public interest. Section 5(3)(a) twenty five percent or more of the voting shares of a listed company; or Section 5(3)(b) twenty five percent or more of the voting shares in an issuer applying for listing, at the date of listing whichever is later. Section 5(4) The Authority shall make a public announcement, through the print and electronic media of its decisions on the exemptions granted pursuant to this regulation.
6
TAKE-OVER PROCEDURE - 6. Offeree's obligation

AI-assisted research summary: The offeree must inform the securities exchange and the Authority and publish a press notice of the proposed take-over offer within twenty-four hours of receiving the offeror's statement; the press notice must appear in at least two English-language national dailies and include all material information from the offeror's statement.

Section 6. Offeree's obligation Section 6(1) Upon receiving the offeror's statement in accordance with regulation 4(4) the offeree shall inform the relevant securities exchange and the Authority and make an announcement by a press notice of the proposed take-over offer within twenty four hours of receipt of the offeror's statement. Section 6(2) The press notice referred to in paragraph (1) shall be made in at least two English language dailies of national circulation and shall include all material information contained in the offeror's statement.
7
TAKE-OVER PROCEDURE - 7. Take-over offer

AI-assisted research summary: The offeror must submit the take-over offer document to the Authority within 14 days of serving its statement; the Authority must approve within 30 days (or other time it determines) and must advise the offeror if approval cannot be granted within 30 days; the approved document must be served on the offeree within 5 days and the offeree must circulate it to shareholders within 14 days together with the independent adviser's circular.

Section 7. Take-over offer Section 7(1) The offeror shall within fourteen days from the date of serving the offeror's statement pursuant to regulation 4(4) submit to the Authority, for approval, the take-over offer document in relation to the take-over offer which shall include the information contained in the Second Schedule and such other information that the Authority may require. Section 7(2) The Authority shall approve the take-over offer document within thirty days where the document is in compliance with the requirements of these Regulations or within such other time as may be determined by the Authority provided that where the Authority has determined it is not possible to grant approval within thirty days, it shall advice the offeror of this fact. Section 7(3) The take-over offer document approved by the Authority shall include a statement in the following words— "Approval has been obtained from the Capital Markets Authority for the compliance with the requirements relating to the take-over offer document under the Capital Markets (Take-overs and Mergers) Regulations, 2002. As a matter of policy, the Capital Markets Authority assumes no responsibility for the correctness of any statements or opinions made in this take-over offer document. Approval of this take-over offer is not to be taken as an indication of the merits of this offer or recommendation by the Authority to the offeree's shareholders". Section 7(4) The take-over offer document shall be served by the offeror on the offeree within five days from the date of approval of the take-over offer document by the Authority. Section 7(5) The offeree shall within fourteen days from the date of receipt of the approved take-over document circulate it to its shareholders to whom the take-over offer relates, together with the independent adviser's circular referred to in regulation 10.
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TAKE-OVER PROCEDURE - 8. Requirements for take-over offer

AI-assisted research summary: Section 8 lists requirements for the content of a take-over offer document, including that the offer be dated, remain open for acceptance for thirty days from service by the offeror (unless varied under regulation 16), and must include specified information about conditions (such as minimum acceptance thresholds, payment period and method, share-swap proportions and timing, business-line and regulatory approvals, maintenance of public shareholding) and a prescribed advisory sentence on the first page.

Section 8. Requirements for take-over offer Section 8(1) The take-over offer shall be dated and shall unless varied under regulation 16, state that it will remain open for acceptance by the offeree for thirty days from the date of service of the take-over offer document by the offeror. Section 8(2) The offer shall not be conditional upon the offeree approving or consenting to any payment or other benefit being made or being given to any director of the offeree or to any other person that is deemed to be related to the offeree, as compensation for loss of office or as consideration for, or in connection with, his retirement from the office. Section 8(3)(a) whether the offer is conditional upon acceptance of the offer under the take-over scheme, being received in respect of a minimum number of issued voting shares of the offeree and if so, the percentage; Section 8(3)(b) where the shares are to be acquired in whole or in part for cash, the period within which payment will be made and the method of such payment; Section 8(3)(c) where the shares are to be acquired through a share swap, the proportion of the share swap and the period within which the offeree's shareholders shall receive the new shares; Section 8(3)(d) whether the offeror is engaged in the same line of business as the offeree, and whether the offer is conditional upon receiving approval under the Restrictive Trade Practices, Monopolies and Price Control Act ( Cap. 504 ) or other regulatory approval outside Kenya where the transaction involves companies incorporated outside Kenya; Section 8(3)(e) whether the offer is conditional upon maintenance of a minimum percentage of share holding by the general public to satisfy the continuing eligibility requirements for listing; and Section 8(3)(f) the circumstances that shall apply in the event the conditions in subparagraphs (a) to (e) are not fulfilled. Section 8(4) Every take-over offer document shall contain the following words which shall be prominently displayed on the first page of the take-over offer document; "If you are in any doubt about this offer, you should consult the independent adviser appointed by your board of directors, or your stockbroker, investment bank or other professional investment adviser".
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TAKE-OVER PROCEDURE - 9. Offeree comments on the statement and take-over offer

AI-assisted research summary: The offeree's board must, subject to independent advice under regulation 10, within 14 days of receiving the take-over offer document under regulation 7 issue a circular to voting-share holders stating whether the board recommends acceptance, include the information in the Third Schedule, and disclose all information holders and their advisers would reasonably require to assess the offer.

Section 9. Offeree comments on the statement and take-over offer Section 9(1) Subject to the independent advice required under regulation 10 the Board of directors of the offeree shall within fourteen days after the receipt of the take-over offer document under regulation 7 issue a circular to the holders of voting shares in the offeree to which the take-over offer relates, indicating whether or not the board of directors of the offeree recommend to holders of the voting shares the acceptance of the take-over offer(s) made by the offeror under the take-over scheme. Section 9(2) The circular referred to in paragraph (1) shall include the information contained in the Third Schedule. Section 9(3) The board of directors of the offeree shall disclose in the circular referred to in paragraph (1) to every holder of the voting rights to which the take-over offer relates all such information as the holders of such voting shares and their professional advisers would reasonably require or expect to find in such a circular or for the purpose of making an informed assessment as to the merits of accepting or rejecting the take-over offer and the extent of the risks involved in such action. Section 9(4)(a) the offeror's stated intentions regarding the continuation of the business of the offeree; Section 9(4)(b) the offeror's stated intentions regarding major changes to be introduced in the business, including plans to liquidate the offeree, sell its assets, re-deploy the fixed assets of the offeree or make any other major change in the structure of the offeree; Section 9(4)(c) the offeror's stated long term commercial justification for the proposed take-over offer; Section 9(4)(d) the offeror's stated intentions with regard to the continued employment of the board of directors, management and employees of the offeree and of its subsidiaries; Section 9(4)(e) the reasonableness of the take-over offer, including, the reasonableness and accuracy of profit forecasts for the offeree, if such forecast is included by the offeror in the offer document; and Section 9(4)(f) any other information relevant for the informed assessment of the holders of voting shares and their professional advisers.

Part III

OBLIGATIONS OF OFFEROR IN RELATION TO OFFER

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OBLIGATIONS OF OFFEROR IN RELATION TO OFFER - 21. Identity of offeror

AI-assisted research summary: Defines the identity of the offeror as the proposed offeror and all related companies or persons acting in concert or associated with the proposed offeror.

Section 21. Identity of offeror Section proposed offeror and all related companies or persons acting in concert or associated with the proposed offeror;
22
OBLIGATIONS OF OFFEROR IN RELATION TO OFFER - 22. Evidence of ability to implement the take-over offer

AI-assisted research summary: Section 22 requires that offerors demonstrate the ability to implement a take-over offer (sufficient financial capability), ensures offeree shareholders who accept will be paid in full, prohibits false announcements by persons not intending to make an offer, and prohibits making an offer when the person lacks reasonable grounds to believe they can perform if accepted.

Section 22. Evidence of ability to implement the take-over offer Section 22(1)(a) the take-over offer would not fail due to insufficient financial capability of the offeror; and Section 22(1)(b) every offeree shareholder who wishes to accept the take-over offer will be paid in full. Section 22(2) A person who has no intention of making an offer in the nature of a take-over offer shall not give notice or publicly announce the intention to make a take-over offer. Section 22(3) A person shall not make a take-over offer or give notice or publicly announce that it intends to make such an offer it has no reasonable or probable grounds for believing that it will be able to perform its obligations if the offer is accepted.
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OBLIGATIONS OF OFFEROR IN RELATION TO OFFER - 23. Favourable deals

AI-assisted research summary: The offeror must not make deals or buy/sell voting shares of the offeree on favourable terms not extended to all offeree shareholders.

Section 23. Favourable deals Section The offeror shall not enter into any agreement, arrangement or understanding to deal in or make purchases or sales of voting shares of the offeree, either during a take-over offer or when such a take-over offer is reasonably in contemplation by the offeror where the agreement, arrangement or understanding contain favourable conditions which are not being extended to all offeree shareholders.
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OBLIGATIONS OF OFFEROR IN RELATION TO OFFER - 24. Convertible securities

AI-assisted research summary: If a take-over offer is made for an offeree that has issued convertible securities, the offeror must make a take-over offer to buy those securities, must arrange to safeguard holders' interests, and must serve the offer document to holders at the same time it is served to offeree shareholders (per regulation 7(4)).

Section 24. Convertible securities Section 24(1) Where a take-over offer is made for the voting shares of an offeree and the offeree has issued convertible securities, the offeror shall make a take-over offer to purchase the securities and shall make appropriate arrangements to ensure that the interests of holders of convertible securities are safeguarded. Section 24(2) The offeror shall serve the take-over offer document to purchase the securities referred to in paragraph (1) to the holders of the convertible securities at the same time as when the take-over offer document is served on the offeree shareholders in accordance with regulation 7(4). Section 24(3) The take-over offer to holders of convertible securities referred to in paragraph (1) may be affected by way of take-over scheme approved at a meeting of the holders of the convertible securities. Section 24(4) For the purposes of these Regulations, "convertible securities" of the offeree means securities that are convertible to ordinary shares of the offeree".
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OBLIGATIONS OF OFFEROR IN RELATION TO OFFER - 25. Sales and disclosure by the offeror during the offer period

AI-assisted research summary: The offeror and certain related persons are prohibited from selling voting shares subject to a take-over offer during the offer period; related persons may only sell such shares to the offeror.

Section 25. Sales and disclosure by the offeror during the offer period Section 25(1) The offeror shall not sell any voting shares to which the take-over offer relates during an offer period. Section 25(2) A related company or a person associated or acting in concert with the offeror shall not sell any voting shares to which the take-over offer relates other than to the offeror. Section 25(3)(a) the offeror and all related companies or persons associated to or acting in concert with the offeror; Section 25(3)(b) the chief executive, a director or an officer of the offeror who occupies or acts in a senior managerial position in the offeror, by whichever name called; Section 25(3)(c) a person who is an associated person in relation to persons referred to in paragraphs (a) and (b); and Section 25(3)(d) a person who is accustomed to act in accordance with directions or instructions of the persons referred to in paragraphs (a), (b) or (c). Section 25(4) The disclosure under paragraph (3) shall be made to the relevant securities exchange where the securities of the offeror are listed and to the Authority, within twenty four hours of the transaction. Section 25(5) All dealings in voting shares of the offeror and offeree made by an associated person for the account of investment clients who are not themselves associated persons shall be disclosed to the relevant securities exchange and the Authority, at such time and in such manner as is specified in paragraphs (3) and (4).

Part IV

OBLIGATIONS OF OFFEREE IN RELATION TO OFFER

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OBLIGATIONS OF OFFEREE IN RELATION TO OFFER - 26. Information by offeree

AI-assisted research summary: The offeree must provide a list and the addresses of its holders of voting shares to which the take-over offer relates.

Section 26. Information by offeree Section a list and addresses of the offeree's holders of voting shares in the offeree to which the take-over offer relates;
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OBLIGATIONS OF OFFEREE IN RELATION TO OFFER - 27. Frustrations of offers by the offeree

AI-assisted research summary: The offeree is prohibited from taking various actions (issuing shares or options, creating shares, disposing of or acquiring assets, or entering non-ordinary contracts) that would frustrate a takeover offer.

Section 27. Frustrations of offers by the offeree Section 27(1)(a) issue any authorized but un-issued shares of the offeree; Section 27(1)(b) issue or grant options in respect of any un-issued shares of the offeree; Section 27(1)(c) create or issue or permit the creation or subscription of any shares of the offeree; Section 27(1)(d) sell, dispose of or acquire or agree to sell, dispose of or acquire assets of the offeree or of any of its subsidiary; or Section 27(1)(e) enter into or allow contracts for or on behalf of the offeree to be entered into otherwise than in the ordinary course of business of the offeree. Section 27(2) Paragraph (1) shall not apply where a bona fide contract has been entered into prior to contact with the offeror or its agent or on receipt of the notice of intention of the take-over notice under regulation 4(1) which is not designed to frustrate a take-over offer or change the activity of the offeree.
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OBLIGATIONS OF OFFEREE IN RELATION TO OFFER - 28. Disclosure of dealings by offeree

AI-assisted research summary: Specified persons connected to an offeree must disclose their dealings to the relevant securities exchange and the Authority within twenty four hours of the transaction, outside trading hours; associated persons must disclose certain voting-share dealings for clients as provided in (1) and (2).

Section 28. Disclosure of dealings by offeree Section 28(1)(a) the offeree; Section 28(1)(b) substantial shareholders of the offeree; Section 28(1)(c) any chief executive, a director of the offeree; Section 28(1)(d) any officer of the offeree who occupies or acts in a senior managerial position in the offeree, by whatever name called; Section 28(1)(e) a person who is an associated person in relation to persons referred to in paragraphs (a), (b), (c) and (d); and Section 28(1)(f) a person who is accustomed to act in accordance with directions or instructions of the persons referred to in paragraph (a), (b), (c), (d) or (e). Section 28(2) The disclosure under paragraph (1) shall be made to the relevant securities exchange, and the Authority within twenty four hours of the transaction, outside trading hours. Section 28(3) All dealings of voting shares of the offeror or the offeree made by an associated person for the account of investment clients who are not themselves associated persons shall be disclosed to the relevant securities exchange and the Authority, as provided in paragraphs (1) and (2).
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OBLIGATIONS OF OFFEREE IN RELATION TO OFFER - 29. Transfer to the offeror

AI-assisted research summary: When a take-over offer is completed, the offeree must promptly transfer the accepted voting shares to the offeror in the register of members (including electronic transfer and registration).

Section 29. Transfer to the offeror Section On completion of the take-over offer, the offeree shall ensure prompt transfer of the accepted voting shares to the offeror in the register of members maintained as required under the rules of the securities exchange or the Central Depositories Act (Cap. 485C) in the case of electronic transfer and registration.

Part V

GENERAL

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GENERAL - 30. False or misleading information

AI-assisted research summary: If a person who provided or circulated information or a document in a take-over offer becomes aware that it was false, misleading or materially omitted information, that person must immediately disclose this to the Authority and the relevant securities exchange and publish press notices in at least two national English dailies to correct it.

Section 30. False or misleading information Section 30(1)(a) provide or cause to be provided to the holders of voting shares or their professional advisers any document or information in a take-over offer that is false or misleading; Section 30(1)(b) provide, or cause to be provided to holders of voting shares or their professional advisers any document or information in a take-over offer in which there is a material omission; or Section 30(1)(c) engage in conduct relating to a take-over offer that is misleading or deceptive or is likely to mislead or deceive holders of voting shares or their professional advisers. Section 30(2) Where information or a document has been circulated or provided to holders of voting shares or their professional advisers and the person who provided the information or document, or engaged in the conduct becomes aware that the document or information was false or misleading or contains a material omission or the conduct in question was misleading or deceptive, the person shall immediately disclose the fact to the Authority and the relevant securities exchange and make an announcement by way of press notice in at least two English language dailies of national circulation containing such matters as are necessary to correct the false or misleading information omission, or conduct, as the case may be.
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GENERAL - 31. Submission of information to the Authority

AI-assisted research summary: People involved in a take-over scheme, merger or compulsory acquisition must submit information requested by the Authority.

Section 31. Submission of information to the Authority Section A person involved in a take-over scheme, merger or compulsory acquisition, shall submit such information to the Authority as it may from time to time require.
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GENERAL - 32. Suspension of trading during take-over

AI-assisted research summary: Trading of an offeree's securities must not be suspended except to allow the offeree to disclose information about the takeover, or when directed by the Authority to obtain material information on the offer.

Section 32. Suspension of trading during take-over Section In the event of a take-over the trading of shares of the security of the offeree shall not be suspended unless for the purpose of enabling the offeree to disclose information on the takeover offer or as may be directed by the Authority for the purpose of obtaining material information on the offer.
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GENERAL - 33. Issuance of shares in a subsidiary

AI-assisted research summary: The information circular referred to in paragraph (1) must obtain prior approval by the Authority and comply with the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations; Section 33 also specifies share-capital thresholds (twenty-five percent or more; or ten percent or more where the subsidiary contributed twenty-five percent or more of average turnover over the latest three financial years).

Section 33. Issuance of shares in a subsidiary Section 33(1)(a) twenty-five percent or more of the share capital of that subsidiary; or Section 33(1)(b) ten percent or more of the share capital of the subsidiary, that has contributed to twenty five percent or more to the average turnover in the latest three financial years of the listed company (preceding the proposed issuance of shares), Section 33(2) The information circular referred to in paragraph (1) shall be subject to prior approval by the Authority and shall comply with the requirements under the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations (sub. leg).
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GENERAL - 34. Establishment of take-over committee

AI-assisted research summary: The Authority may establish a sub-committee of the Board; the sub-committee may invite parties and advisers to facilitate a take-over; the Board must ratify the sub-committee's decision.

Section 34. Establishment of take-over committee Section 34(1) The Authority may establish a sub-committee of the Board that shall consist of the Board members and such other qualified persons as shall be appointed by the Authority, for the purpose of advising on the take-over on a case by case basis. Section 34(2) Where a sub committee has been established under paragraph (1), the chief executive of the Nairobi Stock Exchange and the Commissioner of Monopolies and Prices appointed under the Restrictive Trade Practices, Monopolies and Price Control Act ( Cap. 504 ) shall be invited to the sub committee meetings. Section 34(3) The sub committee in exercise of its delegated responsibility may invite the offeror, the offeree, the independent adviser or any other person whose input is deemed necessary for the purposes of facilitating the take-over. Section 34(4) The decision of the sub committee shall be subject to ratification by the Board.

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