Sunday 31 August 2014

What Happens When Your Shares Are Compulsorily Acquired?

Two months ago, I had blogged that I would not accept fully Capitaland's privatisation offer for CapitaMallsAsia (CMA). I wanted to have a taste of being a shareholder in an unlisted company. Unfortunately, Capitaland managed to acquire enough shares to compulsorily acquire all the shares, even from dissenting shareholders like myself. How was the compulsory acquisition carried out?

After the close of the privatisation offer on 9 Jun 2014 when Capitaland announced that it had acquired sufficient shares to exercise its rights to compulsorily acquire all the shares, Capitaland sent a letter on 16 Jun 2014 informing all remaining shareholders of its intention and the rights of minority shareholders. In an unlisted company, the minority shareholders can be categorised into 2 groups, namely, dissenting shareholders who refuse to sell their shares to the acquirer and non-assenting shareholders who want to sell their shares to the acquirer now that the company is no longer listed. The rights of both groups of shareholders are described respectively in Forms 57 and 58 that came with the letter of compulsory acquisition. For non-assenting shareholders (Form 58), they have the rights to require the acquirer to buy their shares in the target company at the same terms and conditions of the offer within 3 months of the notice. A copy of Form 58 is shown below.

Form 58 for Non-Assenting Shareholders

For dissenting shareholders (Form 57), the notice essentially informs shareholders that their shares will be compulsorily acquired at the same terms and conditions of the offer. However, dissenting shareholders may request for a list of all dissenting shareholders within 1 month of the notice. During this 1 month, the acquirer cannot take actions to compulsorily acquire all the shares. And in the event that a dissenting shareholder asks for the list of all dissenting shareholders, the acquirer will need to delay the compulsory acquisition until 14 days after releasing the list of dissenting shareholders. This is presumably to allow all dissenting shareholders to group together to discuss the next course of action in response to the compulsory acquisition. A copy of Form 57 is shown below.

Form 57 for Dissenting Shareholders

For CMA, no such post-delisting drama took place and the shares were compulsorily acquired on 16 Jul 2014, 1 month after the notice of Form 57. The sales proceeds were received on 21 Jul 2014. Thus, the story of Capitaland's privatisation of CMA has ended. This post is for the information of anybody who intends to reject a privatisation offer in future. 

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