Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • Changi Airport Group
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • BCC Partners
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek International Pte. Ltd.
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • Kazakhstan Potash Corporation Limited
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V. (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • TMI Associates (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Jurie Advokat AB (Sweden)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

Monthly Archives: March 2012

SINGAPOREAN UPDATE – Proposed Changes to Singapore’s Guidelines for Merger Control

Editors’ Note:   This paper was contributed by Rachel Eng, Managing Partner of WongPartnership and a member of XBMA’s Legal Roundtable.  Ms. Eng is a leading expert in both domestic and cross-border M&A in Singapore and other jurisdictions in Southeast Asia.  The author is Ameera Ashraf, head of WongPartnership’s Competition & Regulatory Practice.


  • Changes have been proposed to the Competition Commission of Singapore’s Guidelines on Merger Procedures.
  • The changes give parties greater guidance on the self-assessment of mergers, obtaining a confidential opinion, and the treatment of confidential information.


On 20 February 2012, the Competition Commission of Singapore (“CCS”) issued a consultation paper (“Consultation Paper”) proposing various changes to its Guidelines on Merger Procedures (“Guidelines”). The Guidelines essentially set out the procedures that are followed by the CCS in its review of notified mergers. This set of proposed changes (“Proposed Guidelines”) are intended to update the Guidelines to reflect the experience in merger control gained by the CCS over the last four and a half years. The CCS is not proposing any changes to the Guidelines on the Substantive Assessment of Mergers at this juncture

The main changes to the Guidelines that have been proposed are as follows:

  • A new section provides parties with guidance when considering whether their merger is likely to be a prohibited merger under section 54 of the Competition Act and should therefore be notified to the CCS for approval;
  • The CCS’s approach to market intelligence and the role of complainants and third parties in the context of merger control is clarified;
  • A new procedure for obtaining a confidential opinion from the CSS on the parties’ proposed merger is set out; and
  • Guidance is provided on what constitutes confidential information for the purposes of providing information to the CCS for its assessment of the merger.

Guidance for the Self-Assessment of Mergers

By way of background, it should be noted that the Competition Act does not require the approval of the CCS before a merger may be undertaken. However, where a merger results in a substantial lessening of competition (“SLC”) within any market in Singapore for goods or services, that merger is prohibited. If the CCS has reasonable grounds for suspecting that a merger has infringed, or that an anticipated merger if carried into effect will infringe, this prohibition, it may open an investigation on its own initiative. Ultimately, if the CCS determines that there has indeed been a SLC, it can require parties to split up the merged entity and/or impose financial penalties on them.

Because notification of a merger is voluntary, parties have to assess for themselves whether the merger is likely to result in a SLC and would hence need to be notified to the CCS. To enable parties and their counsels to engage in this self-assessment, the Proposed Guidelines provide guidance on the types of mergers that would raise concerns.

On the one hand, a new minimum threshold is introduced. The Proposed Guidelines indicate that mergers involving small companies are unlikely to give rise to a SLC. Small companies, in turn, are defined as companies who, in the financial year preceding the transaction, had a turnover in Singapore below S$5 million, and a turnover worldwide below S$10 million.

On the other hand, merger parties are strongly encouraged to notify the CCS where the following two conditions are met:

  • The merger parties supply goods or services of the same description to customers in Singapore. In this regard, the Proposed Guidelines advise that the merger parties should have regard to the narrowest reasonable description of goods or services. Furthermore, there is no need for merger parties to consider the degree of supply and demand side substitution in order to define the relevant market.
  • In addition, the merger parties’ combined share of the supply of the overlapping goods or services in Singapore exceeds 40%. In relation to determining whether or not the 40% share is met, the parties can refer to sales by value, volume, number of (retail) outlets, number of bids won, etc.

It should be noted that the Proposed Guidelines refer to a test based on the parties’ share of the supply of goods or services and not the parties’ share of the market.

Market Intelligence and Role of Third Parties

Where a merger is not notified, the Consultation Paper reminds parties that the CCS may conduct an investigation if there are reasonable grounds for suspecting that a merger has infringed, or that an anticipated merger if carried into effect will infringe, the prohibition against mergers that result in a SLC. Such reasonable grounds may be provided from the CCS’s own market intelligence or as a result of complaints received.

The Proposed Guidelines also clarify the role of third parties and complainants. They explain that the CCS is under no obligation to follow-up or investigate all complaints relating to non-notified mergers. This is in line with the voluntary nature of the merger regime in Singapore, and also aims at discouraging speculative complaints. As regards third parties, the Proposed Guidelines reiterate the position that they can express their views on notified mergers and on commitments, and can also apply to the courts for review.

Confidential Opinion from the CCS

The Proposed Guidelines set out a new process whereby merger parties may obtain a confidential opinion from the CCS whether a merger is likely to raise anti-competition concerns. It is proposed that parties may approach the CCS for such an opinion in the following circumstances:

  • The merger must not be completed but there must be a good faith intention to proceed with the transaction, as evidenced to the satisfaction of the CCS by the party or parties requesting the confidential advice.
  • The merger must not be in the public domain. In exceptional circumstances, the CCS may consider giving confidential advice in relation to mergers that are no longer confidential, but the requesting party or parties must provide good reasons why they wish to receive confidential advice.

When confidential advice has been sought, the CCS reserves the right to investigate the merger situation where the statutory test for doing so is met. The Proposed Guidelines also clarify that the requesting party or parties are expected to keep the CCS informed of significant developments in relation to the merger situation in respect of which confidential advice was obtained, for example, the completion date or the abandonment of the merger.

Confidential Information

The Proposed Guidelines set out the CCS’s practice of requiring parties to provide two versions of their notification filings: a version with confidential information redacted, and another setting out the confidential information. The redacted version may be used by the CCS to approach third parties, while the unredacted version will be kept confidential by the CCS.

The Proposed Guidelines warn, however, that the CCS can stop the indicative timeframe of its review if it considers the confidentiality claims made by the parties to be excessive or unreasonable. They also clarify that the following types of information are not likely to be considered confidential by the CCS:

  • Information that relates to the business of any of the merger parties but is not commercially sensitive in the sense that disclosure would cause harm to the business;
  • Information that reflects the merger parties’ views of how the competitivity effects of the merger could be analysed—this type of information can be produced by any reasonably well-informed market participants, trade analysts, or legal/economic advisors; and
  • Information that is general knowledge within the industry, or is likely to be readily ascertainable by any reasonably diligent market participant or trade analyst.

Finally, the Proposed Guidelines state that while the CCS usually publishes only non-confidential merger decisions, it may disclose confidential information when necessary. This may occur, for example, in the context of third party enquiries or to explain the CCS’s reasoning in its final decisions.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

UAE UPDATE – Merger of Two Public Joint Stock Companies

Editors’ Note:  This paper was contributed by Sameer Huda, a partner at Hadef & Partners and a member of the XBMA Legal Roundtable.  A leader in M&A, private equity and restructuring, Sameer heads the corporate, M&A and private equity teams of Hadef & Partners in Dubai.


  • This article looks at the legal processes involved in amalgamating (merging) two public joint stock companies listed on either of the main stock exchanges in the UAE.
  • The Companies Law provides that an amalgamation can be implemented either by an “acquisition” or by a “merger”.
  • One of the two main stock exchanges, the ADX, has introduced its own secondary legislation regulating disclosure and transparency, although disclosure requirements for PJSCs on both the ADX and DFM have broadly the same effect.
  • There are no specific rules regarding the offer timetable and the process that must be adopted whilst negotiations on a potential amalgamation are ongoing.  This may be contrasted with western markets where this process is very tightly regulated.  However, disclosure and transparency obligations remain an important consideration for listed PJSC’s discussing amalgamation – a fact which has very recently been brought into focus in the recent news in the region.


This article looks at the legal processes involved in amalgamating (merging) two public joint stock companies (“PJSC’s”) incorporated under Federal Law No.8 of 1984 concerning commercial companies (“Companies Law”) and listed on either of the main stock exchanges in the United Arab Emirates (“UAE”).  It also looks at certain aspects of the requirements relating to disclosure of information which apply to such companies, and which can be, and have been, brought sharply into focus when potential amalgamations are under discussion.

As capital markets in the UAE are still in the early stages of their development, the relevant laws, rules and regulations reflect this and significant changes are expected over time. There are currently four stock exchanges in “onshore” UAE of which two are of relevance for the purposes of this article.  These two are the Dubai Financial Market (“DFM”) and the Abu Dhabi Investment Exchange (“ADX”) (together referred to as the “Exchanges”).  Both of these were established in 2000.

Excluded from the scope of this article are other minor exchanges and the exchange created in the Dubai International Financial Centre (“DIFC”), which is one of the “free zones” which exist within the UAE.  Free zones operate under separate laws and regulations and have no foreign ownership restrictions, although there is some degree of overlap with UAE federal law.  The DIFC securities market, being the Nasdaq-Dubai, is a smaller exchange than either the ADX or the DFM, and this article does not consider the application of its rules should a PJSC ever be re-domiciled to be listed on that exchange.

Whilst the listing of foreign companies on the DFM and the ADX is not precluded, and there are some public companies within the UAE which have been incorporated through other means, the vast majority of companies listed on the DFM and the ADX are PJSC’s.

This article considers some of the key issues and legal framework relevant to effecting an amalgamation between two PJSC’s in the UAE, as opposed to a straight acquisition of the share capital by one PJSC of the other.

Regulatory Environment

A PJSC listed on the ADX or DFM is generally regulated by the following laws, rules and regulations:

(a)        the Companies Law;

(b)        rules and regulations promulgated by the Emirates Securities and Commodities Authority (“ESCA”) pursuant to its obligations to regulate the markets, as set out in Federal Law No.4 of 2000 (“Federal Law No. 4”); and

(c)        the rules of the ADX (“ADX Rules”) or any equivalent rules which the DFM chooses to promulgate  (“DFM Rules”), as applicable (“Exchange Rules”).

Effect of Law and Regulations on Mergers

Companies Law

The Companies Law contains specific provisions regarding the amalgamation of companies generally (Articles 276 to 280). These provisions apply to any PJSC, regardless of whether it is listed on an Exchange.  They state than an amalgamation can be implemented by what is termed in translations of the legislation as a “merger” (but referred to here as an “acquisition”) or by what is often termed as a “consolidation” (but which we have referred to here as a “merger”) with the process for each described below.

1          Amalgamation by acquisition:

In an acquisition, one or more companies are dissolved and their assets and liabilities are transferred to an existing company. Assuming that Company A is the acquirer and Company B is the company whose assets will be acquired (and which company will be dissolved), the process to be implemented in respect of an amalgamation by acquisition is as follows (Article 277):

(a)           Company B, being the company to be acquired, must first adopt a resolution of its shareholders to decide upon its dissolution. The resolution to dissolve Company B must be approved unanimously by its shareholders unless Company B’s memorandum of association sets out another threshold for this vote and dissolving or amalgamating Company B must be resolved by calling an extraordinary general assembly (‘EGA”) (Article 137);

(b)           a valuation of the net assets of Company B must be carried out in accordance with the provisions for the valuation of shares as stipulated in the Companies Law (Article 87).  These provisions stipulate that the evaluation of the company’s assets is to be carried out by a committee formed upon a ministerial decree under the chairmanship of a judge nominated by the Minister of Justice or the Head of Justice (or whoever performs this function the relevant Emirate) and comprising also;

(i)         a member of the board of directors of the Chamber of Commerce Board in the relevant Emirate;

(ii)        a member of the Municipal Council or the Department of Municipality; and

(iii)       an expert or specialist.

The committee must submit its report within 30 days from the date of its mandate.

(c)           Company A, being the acquiring company, must pass a resolution of its shareholders by means of calling an EGA to pass a special resolution the holders of 75% of its shares to vote in its favour (“Special Resolution”) increasing its share capital (Article 199) by an amount that accords with the result of the valuation of the assets of Company B; and

(d)           new shares equal to the increase in the capital value of Company A shall be distributed amongst the shareholders of Company B proportionately to their shareholding in Company B.

2      Amalgamation by merger

In a merger, two or more separate companies are consolidated into a single, new company. A merger differs from an amalgamation by acquisition in that a new entity is created, the liabilities of each of the merged companies are transferred to the new company and the old consolidated companies are dissolved. Assuming that Company C and Company D are two companies being merged and that Company E is the new company, the process to be implemented in respect of an amalgamation by merger is as follows (Article 278):

(a)           each of the merging companies, being  Company C and Company D, must pass a  resolution of its shareholders by Special Resolution for its respective dissolution at an EGA;

(b)           a new company (Company E) will be incorporated in accordance with the formalities stipulated in the Companies Law;

(c)           a report of an expert concerning the valuation of  shares may be adopted without referring the matter to an EGA (Article 278 of the Companies Law).  (It is worth noting here that the requirements in respect of the valuation of the assets of two or more companies for a merger are less formal and onerous than those for the valuation of one company’s assets in the case of an acquisition);

(d)           upon a valuation being agreed by the shareholders in Company C and Company D, shares need to be issued in Company E according to the process for subscription for shares in a PJSC as set out in Articles 70-94 of the Companies Law;

(e)           the Companies Law requires that the first members (those who sign the memorandum and articles) of a PJSC (in this case, being each of the shareholders of Company C and Company D) are deemed to be the founders.  Those founders will require to comply with the requirements of Articles 70-94 (including, importantly that they must subscribe for not less than 20% and not more than 45% of its shares prior to public offering of the remainder of the proposed share capital);

(f)            following incorporation of Company E, it will be listed on whichever Exchange it has applied to join;

(g)           a number of stocks or shares shall be allocated to each amalgamating company, being Company C and Company D, equal to its share in the capital of the new company, being Company E. These shares in Company E shall be distributed amongst the shareholders in each of Company C and Company D proportionately to their shares therein; and

(h)           the resolution to amalgamate does not become effective until three months after the date of its registration in the commercial register, during which period, the creditors of either Company C or Company D may object to the amalgamation. If that happens, the amalgamation is suspended until either: i) the objecting creditor waives its objection; ii) the court decrees (in a final judgment) the rejection of the objection; or iii) the debt in question is settled or deferred (with satisfactory guarantees as to payment). At the end of the three month period, assuming no outstanding objection, Company E replaces Companies C and D.

ESCA Rules

Notice and Disclosure to ESCA and the relevant Exchanges


All companies whose securities are listed on one of the Exchanges must notify ESCA and the relevant Exchange, and provide them with information in respect of various company affairs from time to time.  The matters and information which require to be disclosed are set out in ESCA’s Regulation No 3/2000: Regulations as to Disclosure and Transparency (as amended) (“ESCA Rules”).  The obligations on a company whose securities have been listed on a particular Exchange which are of particular relevance in relation to a proposed amalgamation (of either type) are:

(a)           to notify ESCA and the management of the Exchange of any significant developments affecting the prices of such securities upon learning of the same, such as catastrophes, fires, mergers, the issue of new securities, the discontinuance of a production line, voluntary liquidation or lawsuits filed by or against the company affecting its financial position (ESCA Rules, Article 35);

(b)           supply to ESCA and/ or the management of the Exchange “all information and statistics requested by the Authority or the Exchange” (ESCA Rules, Article 36(1));

(c)           additionally, to supply to ESCA and/ or the management of the Exchange copies of all printed materials prepared for the company’s shareholders, as soon as they are issued (ESCA Rules, Article 36(8));

(d)           to notify ESCA and management of the Exchange of the dates and times of the meetings of the board of directors of the company in which that board is to deliberate on resolutions having an effect on the price and movement of the shares in the securities market, such as cash distributions, bonus shares, increase or reduction of the capital of the company, subdividing the nominal value of shares, and purchase by the company of its own shares, such notification to be effected at least two days before the date of the convening of the meeting (and to provide ESCA and the management of the Exchange with the resolutions passed in this regard after they have been approved by the board of directors forthwith upon issue of such approval and regardless as to whether the day following the meeting is a working day or an official holiday). If the holding of the meeting coincides with trading hours, trading in the shares of the company shall be suspended until the Exchange has been notified of the results of the meeting (ESCA Rules, Article 36(11));

(e)           when so requested, to publish any explanatory information which relates to its circumstances and activities and is such as to secure the integrity of transactions and the confidence of investors (ESCA Rules, Article 34); and

(f)            if any change occurs in a significant matter contained in a previously published press announcement, the company must issue a press announcement reflecting the actual situation after the change, the subsequent press announcement to be issued in the same newspaper or newspapers as contained the earlier announcement (ESCA Rules, Article 34).

The obligations to disclose information to ESCA and the management of the Exchange mentioned in (a) to (d) above are wide enough so as to include nearly all information relevant to a potential amalgamation of either type.

In relation to obligations (e) and (f), it may be permissible for the entity or company not to issue a press announcement regarding any given information or matters which are under negotiation, if its senior management has reasonable grounds to believe that the revealing of such information will inflict serious damage upon its interests, and there has not been, nor will be, any dealing in its shares by members of its board of directors and executive managers and their relatives on the basis of the information not announced to the public, provided that the company furnishes to the management of the Exchange such information and data specifying the persons aware of such information, and, requesting them to consider it confidential until the grounds which gave rise to that no longer subsist.  The management of the Exchange may, in coordination with the Authority, accede to such request or compel the company to announce the information and data if the Exchange and ESCA consider that the revealing of such information will not affect the interests of the company or feel that there is a leakage of the related information and data which the company considers confidential (ESCA Rules, Article 54).

However, in making this kind of decision, the management of the Exchanges and ESCA will have to balance the legitimate confidentiality interests of the Company with their own obligations, and in particular:


The Exchanges have obligations in relation to disclosure and transparency under the ESCA Rules which include:

(a)   an obligation (ESCA Rules, Article 18) to issue any press notices necessary to ensure transparency and disclosure;

(b)   an obligation to monitor listed companies’ obligations to make disclosure of significant matters and information and financial statements, the publication of the same, and the timing of such publication, and to ascertain that the same are clear and disclose the facts which they express; and

(c)   after having taken the necessary action, to refer the violations of listed companies to ESCA for determination.

In addition, Federal Law No. 4 imposes an obligation on each Exchange to publish any statement given to it by companies in respect of significant developments, in the local press and other local media which it deems appropriate.


The ESCA Rules reaffirm ESCA’s obligation to ensure that disclosure and transparency subsist according to relevant law (ESCA Rules, Article 8 ) and set out its right (in co-ordination with the Exchanges) to inspect the records of a company, and (on its own), to compel any person “having a connection with activities in securities”, to make public or private disclosure of information related to its activity (ESCA Rules, Article 16).

Federal Law No. 4 sets out ESCA’s remit in broader terms, including its obligation to ensure appropriate disclosure and transparency, and to require the Exchanges themselves to take all necessary measures for that purpose.

3.5.2       Exchange Rules

The ADX has introduced its own secondary legislation covering matters such as disclosure and transparency.  Pursuant to the ‘ADX Obligations of Listed Companies under Disclosure of Significant Issues’, listed companies are required to commit to disclosing important information and significant developments, including but not limited to the following, (which are relevant for the purposes of this article):

(a)           resolutions of the board related to mergers or ceasing of activities or launching new activities or products;

(b)           large deals concluded or cancelled by the company;

(c)           changes to the structure of the company’s capital; and

(d)           any other significant issues.

The ADX Rules provide little detail on the point in time when such information and developments must be disclosed, except to say that it must be before the relevant trading session. This would suggest that the obligation is to disclose information immediately it becomes certain.

To date, the DFM has not produced a comparable set of substantive rules on such matters although there are some provisions relating to continuing obligations of companies after listing on the DFM, which, given the DFM’s regulatory remit, should be considered binding.  In essence, these provisions effectively re-confirm certain obligations already stated in the ESCA Rules, including those relating to submission of quarterly accounts and immediately disclosing and reporting to the DFM any material information likely to affect the price of securities.

In all cases, disclosure of information on discussions or negotiations regarding potential amalgamations would require to be considered carefully in order to avoid transgressing the rules on not disclosing information which is misleading to the markets (see below under Insider Trading).  A PJSC listed on the DFM considering an amalgamation with a PJSC listed on the ADX should be aware of the slightly different approach of the ADX Rules to the DFM’s requirements, although in reality the two regimes are broadly similar in effect, and arguably, neither imposes any duty to disclose information which would not otherwise be required to be disclosed under the ESCA Rules in any case.

Announcements, Information and Affecting the Market


There are no specific rules regarding the offer timetable and the process that must be adopted whilst negotiations on a potential amalgamation are ongoing.  This may be contrasted with western markets where this process is very tightly regulated.

However, PJSC’s must continue to comply with the general ESCA Rules and applicable Exchange Rules, (including in particular in respect of disclosure of information, and therefore the process of the bid and timetable will need to be built into these requirements, particularly at a time when transparency in the UAE’s securities markets is a prominent issue).

One sanction available to the Exchanges in the event of any contravention of their rules, is to suspend trading in a particular stock.  In 2008, the DFM exercised its powers to suspend trading of the shares of Islamic mortgage giant, Tamweel, for, inter alia, reportedly failing to disclose enough information at a time when talks were generally understood to be ongoing between it and its largest competitor regarding a potential amalgamation.

Misuse of Information

Regulation also exists in relation to the conduct of individuals and their roles in the disclosure, misuse (or otherwise) of information pertaining to amalgamations, or potential amalgamations.

The ESCA Rules and Exchange Rules contain rules regarding insider trading, the most relevant of which are as follows:

(a)           the provision of false information, statements or data that could affect the value of securities on the relevant Exchange and an investor’s decision on whether to invest or not, is not permitted, nor is the spreading of false market rumours which relate to the buying and selling of shares (ESCA Rules, Article 37); and

(b)           the use of undisclosed information to achieve personal benefits that could affect prices of securities is not permitted (ESCA Rules, Article 37).

Since nearly any information pertaining to a potential amalgamation of any type will be capable of affecting the value of securities, particular care must be taken i) as to accuracy of any such information officially or deliberately disseminated, and ii) in having any dealing in listed securities whilst in possession of any such information which is not in the public domain.

Sanctions which may be imposed against individuals convicted of contravention of these regulations include substantial fines and jail sentences, much like you would expect to see under equivalent regulatory provisions in western jurisdictions.

In the News

Only this month, it emerged that the ADX had launched an investigation into “unusual” movements in the share prices of two of the region’s largest real estate concerns, Aldar Properties and Sorouh Real Estate (both PJSCs listed on the ADX) which started in tandem across both company’s securities during trading on the day on which the two companies later released a joint statement, after the Exchanges had closed, announcing that they were in talks over an amalgamation.

At the time of writing of this article, the focus of any such investigation is not known, but observers will watch with interest to see whether, for example, it will be determined that disclosure rules were not properly followed with regard to the timing of the joint announcement and the possible sanctions imposed as a result.


The amalgamation of listed PJSC’s in the UAE is a process which should work, in principle, in a similar way to comparable or equivalent transactions in many western jurisdictions.  The concerns of the regulatory authorities in relation to managing such transactions (the principles of transparency, orderly markets and fairness to the investors) are the same even if the extent and complexity of the legislation seeking to address those concerns is not yet at the level of western jurisdictions with more mature markets and related legal frameworks.  This may be seen as both an advantage (room for manoeuvre) and a disadvantage (uncertainty), but proper planning and good advice should ensure that the process can be effected smoothly and without breaching those principles or relevant law.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

UK UPDATE – Overview of the Process for Making Legislation in the EU

Editors’ Note:  Contributed by Nigel Boardman, a partner at Slaughter and May and a founding director of XBMA.  Mr. Boardman is one of the leading M&A lawyers in the UK with broad experience in a wide range of cross-border transactions.  The paper was authored by Philip Bennett, a senior partner in Slaughter and May’s Pensions and Employment group and associates Tolek Petch and Samay Shahn.

Executive summary:

The attached memorandum provides an overview of the process for making legislation in the European Union which, once made, will either apply directly to the UK or which the UK government is required to transpose into UK domestic law.

Click here to read the Memorandum

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

GLOBAL INFRASTRUCTURE REPORT – Setting Strategic Priorities

Editors’ Note:  Franny Yao (Yao Fang), who contributed this article, is a Partner & Leader at Ernst & Young in Beijing, responsible for Key Accounts and Government Relations in China.  She is a founding director of XBMA and has broad expertise in cross-border M&A, representing major Chinese companies in their global expansion and other strategic drives.  This summary was produced by Ernst & Young’s Global Real Estate Center, whose leaders include Howard Roth, Global Real Estate Leader (U.S.), Malcolm Bairstow, Global Construction and Infrastructure Leader (UK), and Rick Sinkuler, Global Real Estate Markets Leader (U.S.).


China’s unprecedented infrastructure building spree is stampeding ahead. The country is able to fund projects totaling trillions of dollars because it was largely unaffected by the recent global economic downturn.

Infrastructure growth plans on a large scale

Beijing, Shanghai and Guangzhou have some of the most sophisticated and integrated transport systems in the world.

  • World’s largest high speed train network: China is almost finished with a 10,000-mile honeycomb train network linking major cities across an area about the size of the United States.
  • National infrastructure plans: Other Chinese infrastructure plans include a nationwide toll highway system, comparable to the US interstate highway system; 1,900 miles of new urban transit systems and streamlined harbor port terminals and new airports.
  • International infrastructure plans: China also has ambitions to build high-speed rail lines across Asia and India, ultimately connecting to Europe’s systems. In exchange for constructing the transcontinental lines, China would receive natural resources needed to support its various burgeoning industries. The government has already made deals with Myanmar for lithium and with Russia on a trans-Siberian link.

Infrastructure growing pains

China’s rapid transformation from a largely rural and agrarian country into an urban-oriented industrial giant is causing growing pains that even spending nine percent of GD P on infrastructure annually cannot surmount.

  • Traffic congestion: Major cities are struggling to handle traffic congestion as China’s expanding middle class keeps buying cars in volumes the new road systems cannot handle. A 2010 IBM survey ranks Beijing’s “commuter pain” as tied for the world’s worst with Mexico City.
  • Pollution: Vehicle emissions also contribute to the familiar opaque, yellow-gray pollution haze that afflicts most urban areas.
  • Quality concerns: The recent ouster of the lead official overseeing its high-speed rail development raises questions about the construction quality of the expansive system.


Can India possibly build the necessary infrastructure — for power, water, transportation—fast enough to sustain growth and meet its economic potential? Or will the nation hurtle into a rut, unable to support its vast population and business engine with basic services?

Success will help transform India into one of the world’s 21st-century economic powerhouses. Failure condemns the country to further poverty.

Infrastructure challenges

  • The World Economic Forum rates India’s infrastructure 89th of 133 survey countries.
  • India’s transport minister admits 16,000 of nation’s 70,000 kilometers of highways “aren’t worth driving on.”
  • More than 600 million Indians live without electricity, 40 percent of the country’s water is wasted in inefficient farming, and 11 percent of urban residents and 65 percent of rural villagers have no access to toilets.

Solutions for a growing India

The national government recognizes its challenges and is committed to doubling infrastructure spending to $1 trillion between 2010-2017. Officials hope the private sector will raise half the budget.

However, not every infrastructure project remains on track. The government’s “Power for All” mission continues to fall short of its goal: experts estimate that India will need 160,000 megawatts of additional capacity by 2017, alone costing $405 billion.

Foreign companies see opportunities in operating ports, airports and highway toll concessions, but become frustrated dealing with India’s famously inefficient bureaucracy.


Brazil’s growth prospects hinge on how fast it can upgrade its infrastructure.

Broad infrastructure challenges

  • A 2009–2010 World Economic Forum survey rated the country’s transport /electric/water systems among the world’s worst.
  • Only about one-seventh of Brazil’s roads are paved; much of the highway between its two largest cities, Rio de Janeiro and São Paulo, is only two lanes; and a bus trip between Rio and Brasilia, the country’s capital, can take 17 hours.
  • Port access remains limited because of poor roads and inadequate freight rail, hobbling the country’s significant export potential, and current power production cannot support its rapid industrialization.

Infrastructure projects kicking into high gear

Winning host rights to the 2014 World Cup and the 2016 Summer Olympic Games is helping kick the country into gear to capitalize on the fast-approaching global sporting events.

  • In 2010, the government committed to a $900 billion infrastructure plan. It includes construction of a $19 billion high-speed rail line from Rio de Janeiro to São Paulo, and new power plants, hydroelectric dams and ports.
  • Rio plans to upgrade three major highways and create rapid bus transit lines linking game venues, downtown, the suburbs and its International Airport, which will add new runways and terminals.
  • Rio also plans to revamp its port district — Porto Maravilha — by selling development rights and using an expected $1.7 billion in proceeds to help overhaul lighting, streets, sewers and water lines.

Click here to read the full report by Ernst & Young and the Urban Land Institute:  Infrastructure 2011:  A Strategic Priority

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

CHINESE UPDATE – China Publishes New Industry Catalogue for Foreign Investment

Editors’ Note:  Contributed by Adam Li (Li Qi), a partner at Jun He and a member of XBMA’s Legal Roundtable.  Mr. Li is a leading expert in international M&A, capital market and international financial transactions involving Chinese companies.  He has broad experience with VIEs and other structures for foreign investment in China.  Authored by Ms. Huiqing Qu of Jun He Law Offices.  Ms. Qu has more than 10 years of experience practicing PRC law, specialized in FDI, M&A and IPOs.  Ms. Zhou Tian, an associate at Jun He, helped translate this document.


  1. The new Foreign Investment Industrial Guidance Catalogue encourages foreign investment in more areas by removing several restrictions and adding several encouraged industries.  Caps on foreign equity are lifted in some industries.
  2. The New Catalogue promotes investment in energy-saving, environmental protection, new-generation information technology, biology, high-end equipment manufacturing, new energy, new materials, and new energy vehicles.  It removes whole vehicle manufacturing, polysilicon and coal chemical products from the encouraged category.
  3. Western and Central China may be taking over the industries otherwise not encouraged in this Catalogue.


On December 24, 2011, the National Development and Reform Commission and Ministry of Commerce promulgated the new Foreign Investment Industrial Guidance Catalogue (the Catalogue).  The Catalogue is the key industrial policy for guiding the foreign direct investment in China.  It was amended as a result of change in the political and social environment.  This is the Fifth Amendment to the Catalogue since it was initially introduced in 1995.

A. The key adjustments and changes in the new Catalogue are summarized below:

  1. The new Catalogue has 473 sectors. Foreign investment is encouraged in 354 sectors, restricted in 80 sectors and prohibited in 39 sectors. Compared with the 2007 Catalogue, in the new Catalogue, three sectors have been added to the encouraged category, seven sectors have been removed from the restricted category, and one sector has been removed from the prohibited category.  Additionally, restrictions on foreign investment equity percentage are removed in certain sectors, and number of sectors with the equity ratio restrictions in the encouraged and restricted categories is reduced by 11.
  2. The high-end manufacturing industry is one of the key sectors in which foreign investment is encouraged, aiming to upgrade the traditional industry with new technologies, new crafts, new materials, and new facilities.  Various new products and technologies in textile, chemical and mechanical manufacturing have been added to the encouraged category in the new Catalogue.  A number of sectors, such as, whole vehicle manufacturing, polysilicon and coal chemical products have been removed from the encouraged category.
  3. Foreign investment is encouraged in strategic industries such as energy-saving and environmental protection, new-generation information technology, biology, high-end equipment manufacturing, new energy, new materials, and new energy vehicles.  A number of sectors, such as, key component parts for new energy vehicles and next-generation internet system equipment based on IPv6, terminal equipment, inspection equipment, software and development and manufacturing of core plate have been added to the encouraged category.
  4. Foreign investment is encouraged in “modern” services industry.  Nine services industries have been added to the encouraged category in the new Catalogue, including motor vehicle charging stations, venture capital enterprises, intellectual property services, marine oil pollution clean-up technical services, vocational skills training, etc. Meanwhile, foreign-investments in medical institutions and finance lease companies have been moved from the restricted to the permitted category.

B. The transition between the new Catalogue and the 2007 Catalogue

In accordance with the official website of the National Development and Reform Commission, the new Catalogue will take effect from January 30, 2012.  The new Catalogue will apply to the foreign investment projects approved after January 30, 2012.  As for foreign invested enterprises whose projects are restricted or prohibited by the new Catalogue, but not by the old one, the new Catalogue would not retroactively apply, unless the old projects are now seeking capital increase, sales of equity, or for domestic enterprises seeking overseas listing, etc., in which case the new Catalogue would apply.

C. Others

The National Development and Reform Commission indicates on its website that certain sectors that have been removed from the encouraged category are under consideration to be included when the Central and Western Region Foreign Investment Preferred Industries Catalogue is revised and updated.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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