Takeover Process Clarified By Bahamas

Mike Godfrey, Tax-News.com, Washington

21 February 2011

The Bahamas Securities Commission has issued a press release seeking to clarify "the process involved in connection with offer bids for a substantial acquisition of shares and takeovers for public companies".

At present, no rules govern company takeovers in the Bahamas, and it appears the Commission has taken this step in light of the confusion this absence has caused as a result of the controversial proposed takeover of AML Foods by Trans-Island Traders. The release, published on February 11, 2011, refers to public awareness of "a recent announcement by a potential shareholder offering to purchase the majority holdings in a public issuer".

The Commission has developed draft procedural rules, which it states "are based on the best practices for the governance of takeovers and similar transactions". These, the Commission announced, will be available for public consultation "within a few weeks".

The Commission clarified its existing capabilities in the matter by listing its current responsibilities as: "to create and promote conditions to ensure the orderly growth and development of the capital market, thereby creating an environment where the minority shareholders' interests are protected and all shareholders are treated equally".

Without specifically mentioning the names of the parties involved in the takeover referred to by the press release, the Commission did state that it had provided both sides in the dispute with "general guidance on the structure of any prospectus that may have been developed, filing requirements, as well as general best practices which should be used to assist with the understanding of the mechanics of the offer bid".

A Takeover Code was tabled in the Bahamian House of Commons in December, 2010, and is being introduced alongside a planned reform of the Securities Industries Act. Philip Stubbs, chairman of the Securities Commission, has said that the proposed changes respond "to the current provisions of IOSCO" and would help "bring our securities laws and regulations up to modern standards".

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