Delisting

[setan]

Hi All,

Recently, there are quite a stocks get delisted. However, there is a few nature of offers. They are :

1) Voluntary delisting
2) Mandatory conditional
3) Voluntary unconditional
4) Mandatory unconditional

Do anyone help me to understand what is the difference nature as stated above?

Thanks in advance.

[lonewolf]

My brief understanding:

1) Voluntary delisting - offered by a substantial shareholder to take the company private
2) Mandatory conditional - takeover offer from a 3rd party, usually on crossing the 30% treshold that trigger the GO. However, the offer is conditional on a certain level being obtained by the offeror by the closing date. If the level is not obtained, all shares tendered will be void and returned to the original owner.
3) Volunrtary unconditional - offered by a substantial shareholder, usually just to increase his stake in the company.
4) Mandatory unconditional - related to #2. Once the conditional level is reached, the offer is declared unconditional.

[Curiousparty]

What about the delisting of debt-ridden S-chips (e.g. Ferrochina)?

How to capitalize from this type of delisting of companies?

My brief understanding:

1) Voluntary delisting - offered by a substantial shareholder to take the company private
2) Mandatory conditional - takeover offer from a 3rd party, usually on crossing the 30% treshold that trigger the GO. However, the offer is conditional on a certain level being obtained by the offeror by the closing date. If the level is not obtained, all shares tendered will be void and returned to the original owner.
3) Volunrtary unconditional - offered by a substantial shareholder, usually just to increase his stake in the company.
4) Mandatory unconditional - related to #2. Once the conditional level is reached, the offer is declared unconditional.

[propertyinvestor]

What about the delisting of debt-ridden S-chips (e.g. Ferrochina)?

How to capitalize from this type of delisting of companies?

My brief understanding:

1) Voluntary delisting - offered by a substantial shareholder to take the company private
2) Mandatory conditional - takeover offer from a 3rd party, usually on crossing the 30% treshold that trigger the GO. However, the offer is conditional on a certain level being obtained by the offeror by the closing date. If the level is not obtained, all shares tendered will be void and returned to the original owner.
3) Volunrtary unconditional - offered by a substantial shareholder, usually just to increase his stake in the company.
4) Mandatory unconditional - related to #2. Once the conditional level is reached, the offer is declared unconditional.

those are compulsory delisting pursuant to exchange rules

[mrEngineer]

There is another delisting that is mandatory if majority shareholder has above 90%. What is it called?

[yeokiwi]

There is another delisting that is mandatory if majority shareholder has above 90%. What is it called?

Compulsory acquisition of share?

[dreamybear]

I think a specific definition of "prolonged period" would be helpful to OPMIs.

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Potential scenarios when general offers lead to loss of public float
https://www.businesstimes.com.sg/compani...blic-float
"THE SGX Listing Rules provides for certain requirements to safeguard the interests of shareholders in the event of a delisting of an issuer....

SGX RegCo will not permit trading in an issuer’s securities to be suspended for a prolonged period....."

[weijian]

I think a specific definition of "prolonged period" would be helpful to OPMIs.

--------------

Potential scenarios when general offers lead to loss of public float
https://www.businesstimes.com.sg/compani...blic-float
"THE SGX Listing Rules provides for certain requirements to safeguard the interests of shareholders in the event of a delisting of an issuer....

SGX RegCo will not permit trading in an issuer’s securities to be suspended for a prolonged period....."

Regulator Tan is in his usual "vague" mode, probably because the rules themselves are often vague. Do vague rules actually allow the Regulator some flexibility? The article talks about an exit offer if a voluntary offer fails to privatise the company and I will reproduce them below:

SGX listing rule 1307

The Exchange may agree to an application by an issuer to delist from the Exchange if:—

(1) the issuer convenes a general meeting to obtain shareholder approval for the delisting; and
(2) the resolution to delist the issuer has been approved by a majority of at least 75% of the total number of issued shares excluding treasury shares and subsidiary holdings held by the shareholders present and voting, on a poll, either in person or by proxy at the meeting. The Offeror Concert Party Group must abstain from voting on the resolution.

SGX listing rule 1309
If an issuer is seeking to delist from the Exchange:—
(1) an exit offer must be made to the issuer's shareholders and holders of any other classes of listed securities to be delisted. The exit offer must:
(a) be fair and reasonable; and
(b) include a cash alternative as the default alternative; and
(2) the issuer must appoint an independent financial adviser to advise on the exit offer and the independent financial adviser must opine that the exit offer is fair and reasonable.

Suspension is generally not good for OPMIs, but IMHO it can be advantageous too. I believe the current listing rules provide sufficient safeguards in terms of protection against "unfair offers". Let's not forget that a listed but suspended entity still needs to comply with all the listing rules - interested party transactions reporting, financial statement reporting etc. Many VBs have held listed companies for decades without selling and so, there is no difference between been suspended or not. The only difference is the availability of an open market that prices and buys from you.

End of the day, OPMIs should be looking for assurance over guarantees. Everyone can make guarantees but not everyone can give assurance. The last point made by Regulator Tan in the article below is assuring:

Should the issuer (and the controlling shareholder, where applicable) fail to comply with the requirements in the listing rules, including the requirement to restore free float, SGX RegCo may utilise the range of enforcement powers available to it under the listing rules.

[dreamybear]

It may be useful to reference the rules/framework in other exchanges, e.g.

Guidance on long suspension and delisting
https://en-rules.hkex.com.hk/sites/defau...L95-18.pdf
https://en-rules.hkex.com.hk/rulebook/601a

https://www.finra.org/investors/investin...uspensions

[ghchua]

Dear all,

Yes, the rules are vague and even more so with so many of them, sometimes overlapping one another. We can only use previous case studies as a guide but unfortunately, some of these rules are new and I do not have much history to reference.

Taking the case of BP and Great Eastern. It is already a bit different.

For BP, the first takeover offer garnered more than 75% acceptance from independent shareholders, although it was deemed "Not fair" by the IFA. Second offer few months down the road with a higher offer that was deemed "Fair and Reasonable" by the IFA would have satisfied the delisting requirements.

For Great Eastern, the first takeover offer did not garner more than 75% acceptance from independent shareholders. Which means, even with another offer few months down the road that is deemed "Fair and Reasonable", it might not be enough to delist unless they satisfy the first condition on acceptance level. But of course, the regulator can direct a delisting, which would not have required the 75% acceptance condition. I know this is a bit confusing, but it is a fact based on the listing rules.

Then the question on suspension for a prolonged period. How to define prolonged? China Fishery and Pacific Andes had been suspended for almost 9 years now. Is 9 years considered "prolonged" in the eyes of the regulator? No? Then what about more than 10 years? There is no specific guidelines on the timeline for suspension.