Capital Market

Take-Over Bids

The most recent machinations of a flamboyant (or perhaps bored) billionaire and significant volatility in the airline industry have stirred up once more a buzz around take-overs. With Elon Musk’s recent take-over bid for Twitter going on hold and Jet-Blue’s for Spirit Airlines going hostile, the outcomes of these bids are yet to be determined.

The Trinidad and Tobago capital market is no stranger to take-over bids. Active participants in the local capital market will no doubt recall bids in the recent past in relation to Guardian Holdings Limited, Trinidad Cement Limited and Readymix (W.I.) Limited. But what is a take-over bid and what procedure must be followed in making a bid? In this Article, we aim to provide a high-level overview of the Securities Industry (Take-Over) By-Laws, 1995, the regulations governing take-over and issuer bids in Trinidad and Tobago.

What is a take-over bid?

A take-over bid is an offer, made by any person (referred to as an ‘offeror’), to acquire shares or other securities of a public company (referred to in this Article as a ‘target’) where such shares are equal to (or more than) 30% of the target’s issued shares.

The primary objective of a take-over bid is generally to acquire control over a target. Predictably, such acquisition of and/or change of control would be a matter of concern for existing shareholders of the target.  To safeguard the interests of the target’s existing shareholders a proposed acquisition of dominance and control triggers certain obligations in the capital market.

Without regulation, it would be possible that the control of a target could be secured by the sale and purchase of shares by a few large shareholders without minority shareholders having any knowledge of the change of control or any opportunity to participate in the same offer price payable by an offeror seeking to acquire control. Some might say that regulation exists to keep the offeror ‘honest’.

The regulation of take-over bids

The general focus of regulations applicable to take-over bids is to establish a process for a take-over bid through which:

    • information relating to the offer is made available to all interested parties, including existing shareholders and the directors of the company;
    • interested parties have a reasonable opportunity to consider and assess the offer; and
    • existing shareholders have a reasonable and equal opportunity to participate in an offer.

Trinidad and Tobago’s Take-Over By-laws seek to achieve these objectives by:

    • requiring an offeror in a take-over bid to issue and circulate an information circular to the target’s board of directors and shareholders and prescribing the information to be contained in such information circular, including but not limited to:
      • the number and percentage of shares in the target which an offeror is seeking to acquire;
      • the price which the offeror is offering to pay for the target’s shares;
      • the period of time within which the target’s shareholders may accept the offer, which is subject to a minimum timeframe of 35 days as prescribed in the By-Laws;
      • information relating to the offeror and the target, including the offeror’s objective in making the offer and any plans or strategies which the offeror proposes to implement should the offer be successful;
      • any conditions applicable to the offer (such as regulatory approvals or a minimum threshold of shares being acquired by the offeror during the offer).
    • requiring the target’s board of directors to consider and assess an offer made by an offeror and make a recommendation to the target’s shareholders to accept or reject the offer, or in circumstances where a board determines that it is unable to make a recommendation one way or another, the reasons for not making a recommendation; and
    • regulating the manner in which an offeror may acquire shares from shareholders who accept the offer to ensure that shares are acquired on an equal basis among the shareholders (such that no shareholder is preferred over another), including requirements as to the minimum price of an offer where an offeror purchased shares in the target from any other person within a prescribed period of time prior to the launch of a take-over bid.

In addition to regulating take-over bids, the By-Laws also require offerors to make certain public disclosures outside of the occurrence of a take-over bid. For example, where a person acquires a minority position of 10% or more of a target’s shareholding (whether in one or more transactions), it is required to issue a press release giving notice to the public of such acquisition. The By-Laws establish certain requirements which must be included in such press release, including any intention to subsequently acquire control over the target.

In short…

The Take-Over By-Laws even the playing field and ensure that shareholders are well informed in deciding on whether to accept an offer and realise their investment in the target’s shares. It creates fairness in the market by reducing the circumstances in which only a few substantial shareholders reap the benefits of an offeror’s bid to secure control of a target.

However, a take-over bid involves careful preparation and extensive disclosures by an offeror in order to meet the requirements of the By-Laws. The By-Laws are designed in a manner to capture transactions in which a person seeks to achieve control in any manner, even if not through the direct purchase of the target’s shares. Unintentionally triggering a take-over bid can have very expensive and unintended consequences. Failure to meet the requirements of the By-Laws can result in hefty fines being imposed by the securities regulator under the Securities Act. Indeed, a take-over bid is not made on the whim of a purchaser or via tweets… usually.

Disclaimer: This Document Provides General Guidance Only And Nothing In This Document Constitutes Legal Advice. Should You Require Specific Assistance, Please Contact Your Attorney-At-Law.

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This Article was authored by Melissa Inglefield, Partner at M. Hamel-Smith & Co. She can be reached at

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