AML, City Market cautioned to follow commission’s guidelines
Mum may be the word from both AML and City Markets following the suspension of trading in AML’s shares, with the companies cautioned about the information they release.
Chairman of the Securities Commission Phillip Stubbs confirmed toGuardian Businessyesterday that the companies were warned to be”circumspect”on City Market’s Majority shareholderTrans-Island Traders Limited’s(TITL)proposed takeover of AML. It came as the regulatory body moved to suspend trading of AML shares.
“We want the time period to be as short as possible,”he said.”We have done nothing other than trying to provide them with guidelines to not make communication that is inconsistent with the guidelines we’ve put out. To be circumspect.”
The announcement was made late on Tuesday thatTITL’s intended takeover of AML–through a tender offer of$1.50 to shareholders for 51 percent of the company’s outstanding common stock–would not be allowed to go through at this time. It’s something that sparked the Bahamas International Securities Exchange(BISX)to advise the public that although AML shares were no longer trading on the exchange as a result of the suspension, the company is still required to notify the public and continue its disclosure obligations pursuant to the BISX rules.
According to the commission, the suspension was a way of”ensuring the equal treatment of all investors and shareholders of AML,”effective as at the close of trading on February 22, 2011 until further notice. The commission said the suspension was applied to allow the parties engaged to provide the market with balanced and factual commentary, and to ensure that there is at all times a fair and balanced market in regards to AML’s shares.
Stubbs said the suspension would be lifted depending on the outcome of an investigationto assess publicized information, as well as other actions taken to date in relation to the current guideline that”no offer to the public to sell or purchase shares can be made unless a prospectus has been registered with the commission.”
The suspension would also be removed if the process moves along using guidelines that have been set. The commission has set out the following framework as a guide for this and any other offer bid:
1. Once a bid or intent to bid is publicly announced or an action has occurred that would trigger a bid, the clock for the time horizon during which the transaction should be completed commences. This is known as the commencement date.
2. It is expected that a formal bid circular or prospectus should be prepared and sent to all shareholders and the target company within a specific period after the announcement. This bid circular should clearly outline the terms of the bid and provide such information that would be required for the shareholder to make an informed decision. A brief summary of the bid circular/prospectus should also be published in an issue of a daily newspaper with circulation throughout the jurisdiction. This is seen as the deemed start date. It is the proposal that the bid circular be published within 10 business days after the commencement date(announcement).
3. The board of directors of the target company(offeree issuer), which in its fiduciary duty is required to act in the best interest of all shareholders, is required to provide a response to the bid via a directors’circular. This circular should provide full information to the shareholders and should contain a reasoned recommendation. If such a recommendation cannot be provided, the board should provide a reason why it is unable to provide such guidance. Individual directors may also submit a director’s circular. This ensures that where there is dissent on the board, the views of the director and the reasons for the dissent with respect to the recommendation, or any other matter, is known to the shareholders. This circular should be produced within 10 business days after the bid circular is sent to shareholders. A summary of this/these circulars should also be published in a daily newspaper.
4. Once the bid circular has been sent, the offeror must allow the securities to be deposited for a period before these securities may be taken up(transferred and paid for). During this open period, shareholders have the right to change their minds about tendering into the offer. The commission recommends an open period of 25 business days after the commencement date.
5. The bid circular/prospectus is only valid for a limited period of time. The end of this period is known as the drop dead date. The bid can close anytime after the expiration of the open period but must close before the drop dead date. Under the current securities legislation, a prospectus is only valid for 60 days.
6. The price paid for shares should be the same for all shareholders of the same class and should be at minimum the highest price paid by the offeror, or any persons acting in concert with it, for any shares of the offeree Issuer within the preceding six months.