Pre-Merger Notification Guide. MALAYSIA Skrine

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Malaysia Copyright Lex Mundi Ltd. 2012 Pre-Merger Notification Guide MALAYSIA Skrine CONTACT INFORMATION LIM Koon Huan Skrine Unit No.

1 Malaysia Copyright Lex Mundi Ltd Pre-Merger Notification Guide MALAYSIA Skrine CONTACT INFORMATION LIM Koon Huan Skrine Unit No , 8 th Floor Wisma UOA Damaansara 50 Jalan Dungun Damansara Heights Kuala Lumpur, Malaysia lkh@skrine.com 1. Is there a regulatory regime applicable to mergers and similar transactions? Yes. Mergers and similar transactions are governed by Part VI Division 2 of the Capital Markets and Services Act 2007 ( the CMSA ) and the Malaysian Code on Take- Overs and Mergers 2010 ( the Code ). The Code is supplemented by the following documents, each of which is issued by the Securities Commission of Malaysia: 1) Practice Notes; 2) Guidelines on Contents of Applications Relating to Take-Overs and Mergers; and 3) Rulings issued pursuant to Section 217(4) of the CMSA. The Code applies to: 1) public companies, whether listed or unlisted, including a public company that is incorporated outside Malaysia but is listed on Bursa Malaysia Securities; and 2) real estate investment trusts which are listed on Bursa Malaysia Securities West Loop South, Ste Houston, Texas USA Tel:

2 2. Identify Applicable National Regulatory Agency/Agencies. The Securities Commission ( SC ). 3. Is there a supranational regulatory agency (e. g., the European Commission) that has, or may have exclusive competence? If so, indicate. No. 4. Are there pre-merger filing requirements; if so, where are they published? No. However, there are several pre-merger steps which must be complied with. These steps include submitting documents to the SC for approval. 1) Under Section 11 of the Code, where there is untoward movement or increase in the volume of share turnover of an offeree, the potential offeror is required to make an announcement as to whether there is a take-over or possible take-over offer before approaching the board of directors of the offeree. The announcement must be made by way of a press notice, that is, a notice given to at least 3 daily newspapers circulating throughout Malaysia, one of which shall be in the national language, and one in English. 2) After being approached by the potential offeror, the board of directors of the offeree is required to make an announcement by a press notice as to whether there is a take-over offer or possible take-over offer and to keep a close watch on its share price and volume of share turnover. 3) Subsequent to the aforesaid announcements, the potential offeror or the offeree is required to make a monthly announcement setting out the progress of negotiations. 4) Pursuant to Section 11(7) of the Code, an offeror who makes a take-over offer or proposes a possible take-over offer shall immediately announce to the public by way of a press notice. 5) After this announcement to the public, the offeror shall send a written notice ( take-over notice ) that contains prescribed information to: i) the board of directors of the offeree or financial advisers designated by the board; ii) where the securities of the company are listed on the stock exchange, the relevant stock exchange; and iii) the SC. 6) The press notice and take-over notice shall include the following information: i) the identity of the offeror and all persons acting in concert; ii) the basis of the offer price;

3 iii) iv) the basis of consideration, if other than by way of cash; the type and total number of voting shares or voting rights of the offeree: (a) which have been acquired, held or controlled directly or indirectly by the offeror or any person acting in concert with the offeror; (b) in respect of which the offeror or any person acting in concert with the offeror has received an irrevocable undertaking from other shareholders of the offeree to accept the take-over offer; and (c) in respect of which the offeror or any person acting in concert with the offeror has an option to acquire; v) the details of any existing or proposed agreement, arrangement or understanding relating to voting shares or voting rights referred to in paragraph (iv) above between the the offeror or any person acting in concert with the offeror and the offeree s shareholders; and vi) the terms and conditions of the take-over offer, including conditions relating to acceptances, listing and increase of capital. 7) Upon receiving the take-over notice, the board of directors of the offeree is required to make an announcement within 24 hours by way of a press notice. The announcement will then be dispatched to all the shareholders of the offeree within 7 days of receipt of the take-over notice. 8) Where an announcement for a take-over offer has been made, the offeror shall not withdraw the take-over offer without the prior written consent of SC. 9) The offeror is required to submit the offer document to the SC within 4 days of the issue of the take-over notice for its consent. 10) Upon consent being granted by the SC, the offer document is to be dispatched by the offeror to the board of directors of the offeree and the offeree s shareholders within 21 days from the date of issue of the take-over notice. 11) The board of directors of the offeree is required to appoint an independent adviser to provide comments and recommendations to the offeree s shareholders in relation to the take-over offer and procure the issue of an independent advice circular to the offeree s shareholders within 10 days from the date of dispatch of the offer document to the offeree s shareholders. The independent advice circular must also contain the views and advice of the board of directors of the offeree. The consent of the SC must be obtained before the circular to the shareholders and the independent advice circular are issued to the offeree s shareholders. 5. What kinds of transactions are "caught" by the national rules? (Identify any notable exceptions) The Code provides for 3 types of take-over offers: 1) mandatory offers; 2) partial offers; and 3) voluntary offers.

4 An acquirer is required to make a madatory offer under the Code where: (a) the acquirer has obtained control in a company; or (b) the acquirer has obtained more than 2% of the voting shares or rights of a company in any period of 6 months and that acquirer s holding was more than 33% but not more than 50% of the voting shares or voting rights of the company during that 6 months period. Control has been defined as the acquisition or holding of, or entitlement to exercise or control the exercise of, voting shares or voting rights of more than thirtythree per centum, or such other amount as may be prescribed in the Code in a company, howsoever effected. The obligation to make a mandatory offer under the Code applies to a downstream company where a person intends to obtain, or has obtained, control of an upstream entity (e.g. a holding company) which holds or is entitled to exercise or control the exercise of more than 33% of the voting shares or voting rights of the downstream entity and the upstream entity has a significant degree of influence on the downstream entity. Voluntary offers and partial offers are not mandatory but the requirements of the Code must be complied with if such offers are to be made. Practice Note 9 permits the SC to exempt an offeror from the obligation to make a mandatory offer in certain circumstances. These circumstances include where: 1) the obligation to make a mandatory offer arises from an issue of new securities by the offeree; 2) the proposal is to rescue the financial position of an offeree; 3) the acquisition has been approved based on national policy; or 4) the obligation to make a mandatory offer arises from the implementation of a share buy-back scheme by the offeree. 6. Is there a "size of transaction" threshold? No. 7. Is there a "size or turnover of the parties" test; if so, what is it and how are size and turnover to be calculated? No. 8. Is geographic scope/national market effect of transaction an issue with respect to filing or approval requirements? If so, specify. No.

5 9. Is the filing voluntary or mandatory? What are the penalties for noncompliance? There are no filing requirements. However, the pre-merger steps discussed in Question 4 above are mandatory. The penalties for non-compliance are as follows: 1) Section 218 of the CMSA provides that contravention of the Code and the rulings made under section 217(4) of the CMSA is an offence punishable with a fine of not more than RM1,000,000 or imprisonment of up to 10 years, or both. 2) Section 220 of the CMSA provides that the SC may take one or more of the following actions where any person fails to comply with, observe or give effect to any provision of the Code or rulings: a) direct the defaulting person to comply with or give effect to any such provisions of the Code or ruling; b) impose a penalty not exceeding RM1,000,000 on the defaulting person; c) reprimand the defaulting person; d) direct the stock exchange to deprive the defaulting person access to the facilities of the stock exchange; e) where the defaulting person is a listed corporation, direct the stock exchange to: i) suspend trading in securities of the corporation; ii) iii) suspend the listing of the corporation; or remove from the official list the corporation or the class of securities of the corporation. f) where the defaulting person is a corporation that is not listed, direct any stock exchange to prohibit the listing of any of its securities; g) direct the stock exchange to prohibit the defaulting person from engaging in transactions to be executed through the use of facilities of the stock exchange; or h) require the defaulting person to take such steps as the SC may direct to remedy the breach, or mitigate the effect of such breach, including making restitution to any person aggrieved by such breach. 10. Time in which a filing must be made. As discussed in Question 4, there are no filing requirements. The timeline for premerger steps have been set out in Question Form and Content of Initial Filing. A non-exhaustive list of the information to be included in the offer document and the independent advice circular are set out in the First Schedule and the Second Schedule respectively of the Code.

6 The information to be included in an offer document includes: a) the identity of the ultimate offeror, shareholders and name of persons acting in concert with the offeror; b) information regarding the offeror, including the names of its directors and shareholders who hold more than 5% of its voting shares; c) the offeror s intentions with regard to the continuation of the business of the offeree in the next 12 months after the close of the take-over offer; d) the offeror s intentions with regard to the continued employment of the employees of the offeree and of its subsidiaries; e) the meeting of the public shareholding spread requirement of the offeree after the take-over offer; f) the offeror s intention in relation to maintaining the listing status of the offeree after the take-over offer and the invoking of the compulsory acquisition provisions in the CMSA; g) the offeror s objective and rationale of the take-over offer, including the longterm commercial justification; h) a statement by the offeror and the offeror s financial advisers that the offeror has the financial capability to complete the take-over and to pay every shareholder in full; and i) such other information as the offeree shareholders would reasonably require and would reasonably expect to find, in an offer document for the purposes of making an informed assessment as to the merits of accepting the take-over and the extent of risks involved in doing so. The independent advice circular must contain the adviser s recommendations whether to accept or reject the take-over offer and include comments on: a) the offeror s intentions with regard to the continuation of the business of the offeree in the next 12 months after the close of the take-over offer; b) the major changes to be introduced in the business of the offeree in the next 12 months after the close of the take-over offer; c) the continued employment of the employees of the offeree and its subsidiaries in the next 12 months after the close of the take-over offer; d) the offeror s intentions on the meeting of the public shareholding spread requirement of the offeree after the take-over offer; e) the offeror s intentions in relation to maintaining the listing status of the offeree after the take-over offer and the invoking of the compulsory acquisition provisions in the CMSA; f) the offeror s objective and rationale of the take-over offer, including the longterm commercial justification; g) the reasonableness of the offer price; and h) the outlook and prospects for the next 12 months of the industry in which the offeree has its core business activities and the offeree s financial performance and position in its industry.

7 12. Are filing fees required? Schedule 2 of the Capital Markets and Services (Fees) Regulations 2011 provides that the fees and charges are are as follows: 1) Clearance of the offer document for an offer with a value of RM1.00 to RM2.98billion is RM10, % of the offer value and for any remaining sum above RM2.98billion of the offer value, 0.025% of the remaining sum; 2) Clearance of the independent advice circular is RM5,000; 3) Application for exemption from mandatory take-over offer obligation is RM15,000; 4) Application for exemption from provisions of the Code, other than for item 3 above is RM7,000; 5) Application for a ruling is RM7,000; 6) Procedure for compulsory acquisition is RM2,000; and 7) Application for extension of time and others is RM2, Is There An Automatic Waiting Period? If so, specify. An offeror must keep a take-over offer open for acceptance for a period of not less than 21 days from the date the offer document is first posted. The offer cannot be revised after 46 days from the date of dispatch of the offer document. A revised offer must be kept open for at least 14 days. 14. Are There Time Limits Within Which The Regulatory Agency Must Act? Can they be shortened by the parties or be extended by the regulatory agency? The offeror is required to: 1) submit the offer document for the SC s consent within 4 days from the issue of the take-over notice (section 12(1) of the Code); and 2) to dispatch the offer document to the offeree and its shareholders within 21 days from the issue of the take-over notice (section 12(3) of the Code). The offeree is required to issue the independent advice circular within 10 days from the date of dispatch of the offer document to the offeree s shareholders (section 15(2) of the Code). From the foregoing, it is implicit that the SC must issue its consent to the offer document and the independent advice circular within the aforementioned timeframes. In practice it is not unusual for the time frames to be extended. 15. What is the substantive test for clearance? There is no substantive test for clearance. The First and Second Schedules of the Code provide a non-exhaustive list of the information to be included in the offer document and the independent advice circular respectively.

8 16. What are the common Post-Filing Procedures: Requests for further information, etc? There are no common post filing procedures prescribed by the Code or the Practice Notes. 17. Describe the sanctions for not filing or filing and incorrect/incomplete notification. The same sanctions/penalties apply as discussed in Question 9 above. 18. Describe the procedures if the agency wants to challenge the transaction? The Code does not prescribe any such procedures. 19. Describe the penalties applicable to the implementation of a merger before clearance or of a prohibited merger? The same penalties apply as discussed in Question 9 above. 20. Describe, briefly, your assessment of the regulatory agency's current attitudes/activities. The SC is not vested with powers under the CMSA to approve or reject a proposed take-over. Its role is to ensure compliance with disclosure requirements in relation to documents that are to be issued in relation to a take-over offer. 21. Other Important Information: 1) The Competition Act 2010 does not regulate take-over transactions. 2) The Labuan Companies Act 1990 includes provisions on a statutory amalgamation which must involve at least one Labuan company.

Pre-Merger Notification Survey. FINLAND Roschier, Attorneys Ltd.

Pre-Merger Notification Survey FINLAND Roschier, Attorneys Ltd. CONTACT INFORMATION Christian Wik Roschier, Attorneys Ltd. Finland Telephone: 358.20.506.6000 Email: christian.wik@roschier.com 1. Is there