Asset Managers Warn Tender Offer Bill Could Deepen Shareholder Gap
Eighteen domestic and foreign asset management firms have joined forces to call for a re-examination of a proposed mandatory tender offer system set to be put to a plenary session vote in the National Assembly. Their concern is that the current bill drafted by the National Assembly’s Political Affai
Eighteen asset management firms, led by Life Asset Management, Align Partners Asset Management, and Timefolio Asset Management, have jointly expressed concerns over a proposed mandatory tender offer bill set to be debated in the National Assembly. These firms, collectively managing assets worth approximately $64.06 billion, argue that the bill could exacerbate the disparities between controlling and ordinary shareholders.
The firms have called for a postponement of the plenary session vote, scheduled for October 1, to allow for thorough public review of the legislation. The primary concern revolves around the "pre-purchase" structure, which permits an acquiring entity to purchase a controlling shareholder's stake at a reduced rate before initiating a tender offer for ordinary shareholders, usually only for the shares required to reach a 50%+1 shareholding.
This structure severely restricts the exit options for ordinary shareholders, as demonstrated by a scenario where a company with a 40% controlling stake would only require a tender offer for around 10% of the remaining shares. The asset managers also noted that such a system deviates from past practices and foreign regulatory frameworks, where similar stakes would typically be subjected to mandatory tender offers.
They suggest "proportional tender offers" as a remedial measure, which would ensure that both controlling and ordinary shareholders participate in the offer on equal terms, thereby maintaining fairness and upholding fiduciary obligations.
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