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New CMA regulations to boost transparency in acquisitions
May 20, 2019 | 8:29 PM
by Times News Service
The regulation offers equal opportunities for all shareholders to take part in the benefits that come from the acquisition’s initial offer. -File photo
 
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Muscat: New regulations by Oman’s Capital Market Authority will stop companies and owners from abusing the market to take over more than 25 per cent of any company in Oman, according to the authority.

The regulation aims to limit take over and acquisition processes at not more than 25 per cent of the shares of pubic joint stock companies and controlling percentage in the company to provide protection for shareholders and for fair, transparent and equitable treatment of all the parties and to provide exit in cases of acquisition.

The regulation is a government initiative in the economic diversification process “Tanfeedh” supervised by the Unit of Implementation and Follow Up.

Sheikh Abdullah bin Salim Al Salmi, the Executive President of the authority, said, “The regulatory list has been prepared in order to create a framework which includes the laws and regulations for acquisition of more than 25 per cent of the shares of SAOGs in the market, where someone aims to control a significant amount or even all of a company.



“The frameworks provide an appropriate foundation of integrity and transparency, which guarantees the rights of everyone involved and give the market the ability to interact with these offers, leading to fair prices for everyone.”

He added that the regulation offers equal opportunities for all shareholders to take part in the benefits that come from the acquisition’s initial offer, where those hoping to acquire the company could offer a bonus amount of money to in exchange for controlling the company.



Under this new regulation, this amount will be distributed equally. The regulation also insures a fair and equal treatment for all shareholders, especially smaller shareholders, when it comes to acquisitions.

According to a statement by the Capital Market Authority, “the regulation’s second article states that the regulations affect transactions in three cases: In the first case, a person or group of people own less than 25 per cent of a company and want to acquire more than 25 per cent of the company. In the second case, if the person or group of people own 25 per cent of the voting shares in the company and want to acquire more than two percent of the company less than 6 months after the last transaction. Lastly, if the person or group of people own more than 25 percent of a company which controls another, and they want to acquire two percent more of voting shares every six months.”

The statement added, “The Executive President of the authority also said that such procedures are necessary for stock markets, and are applied in most developed markets. When the project of the regulation was prepared, the experiences of these markets were reviewed and used. The regulations also came after a full study of the local market. The preliminary document was shown to the public and all SAOGs and legal consultancies, as well as audit offices in order to make use of their inputs and exchange suggestions.

“This is a policy that the authority makes sure to use when drafting regulations for the insurance and stock markets in order to create projects with a shared vision among all stakeholders,” the statement added.

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