Acquisition and Merger Rules for PJSCs

Sets the rules, conditions and procedures for acquisitions of public joint stock companies, including types of acquisition, executive procedures and disclosure, and the procedures for mergers of public shareholding companies.

Summary

Decision No. 18/Chairman of 2017 is the UAE takeover and merger code for public joint stock companies (PJSCs). It applies to acquisitions of voting shares in a PJSC incorporated in the State that has offered shares to the public or listed them on a UAE market, and to any merger to which a PJSC is a party (Articles 2 and 46). It was issued on 8 June 2017 and took effect the day after publication (Article 61). It is in force and has not been amended; it predates the current Commercial Companies Law and refers to Federal Law No. 2 of 2015.

The central rule is the 30% threshold in Article 8. A person or associated group reaching 30% plus one share must stop buying, notify the Authority immediately, and either make an offer (shares above 30% carry no votes until it succeeds) or sell down to 30% within three months. Holders already between 30% and 50% plus one share must bid if they add 1% within six months. An offer succeeds only if acceptances bring the bidder to 50% plus one share. Voluntary and partial offers follow the same thresholds (Articles 9 and 10). At 90% plus one share, minority holders of at least 3% can require the bidder to buy them out, and the bidder can seek Authority approval to squeeze out the minority where the articles allow it (Article 11).

The offer price may not be lower than the highest of the market price on the first offer day, the previous close, the three-month average and the highest price the bidder paid in the past 12 months (Article 6). A cash offer is required where the bidder bought 10% or more for cash during the offer or in the prior six months (Article 16). Break fees are capped at 2% of the offer value and need prior approval (Article 21). The timetable runs from written notice to the target (Article 22): an application within 21 days, an Authority decision within 7 days, board circular within 14 days, first closing date by day 28 and second by day 60, competing bids by day 53, amendments by day 46, and settlement within three days of conditions being met (Articles 28 to 40). Failed or withdrawn bidders are barred for six months (Article 34).

Chapter II governs mergers by amalgamation or combination: board approval, a merger committee, Authority approval in principle within 20 business days, independent asset valuation, special resolutions of the general assemblies, a 30-day court challenge for holders of 20% who oppose, and a 30-day creditor objection process (Articles 47 to 51).

Who it applies to

Any person or associated group acquiring voting shares in a UAE public joint stock company that has offered shares publicly or is listed on a UAE market; target and bidder boards, advisers and insiders; and PJSCs merging with other companies, together with their shareholders and creditors.

Contents

English official text in 61 articles. Open the full text or jump to a provision:

1. Article 1 — Definitions
2. Article 2
3. Article 3
4. Article 4 — Exemptions and Exclusions
5. Article 5
6. Article 6
7. Article 7
8. Article 8 — Mandatory Acquisition
9. Article 9 — Voluntary Acquisition
10. Article 10 — Partial Acquisition
11. Article 11 — Mandatory Acquisition
12. Article 12
13. Article 13 — Term of the Competing offer
14. Article 14
15. Article 15 — Submitting offers for all categories of Securities
16. Article 16
17. Article 17
18. Article 18 — Material Interest
19. Article 19 — Obligations of the Concerned Persons
20. Article 20 — Prohibited Acts
21. Article 21 — Termination Fees
22. Article 22 — Delivering the Intent of Acquisition to the Target
23. Article 23 — Publishing the Declaration of Intent to Make an Offer
24. Article 24 — Announcing the Intent of Making an Offer
25. Article 25 — The Acquirer’s Responsibility for the Offer
26. Article 26 — Failure to Announce the Intent of Merger
27. Article 27 — Required Approvals for the Acquisitions
28. Article 28 — Request to Approve the Offer
29. Article 29 — Deciding on the Offer
30. Article 30
31. Article 31
32. Article 32 — The Offer Validity Term
33. Article 33 — Announcement of the Second Closing Date
34. Article 34 — Cases of Banning the Submission of a New Offer
35. Article 35 — Withdrawal of the Offer
36. Article 36 — Amendment of the Offer
37. Article 37 — Withdrawing the Acceptance of the Offer
38. Article 38 — Satisfying the Other Conditions
39. Article 39 — Announcing the Result of the Offer Acceptance
40. Article 40 — Settlement of the Applications for Acceptance
41. Article 41 — Profit Forecasts
42. Article 42 — Asset Valuation
43. Article 43 — Disclosure by the Acquirer
44. Article 44 — Disclosure by the Insiders
45. Article 45 — General Provisions of Disclosure
46. Article 46 — Scope of Application
47. Article 47 — General Conditions
48. Article 48 — Preparation and Arrangement of the Merger
49. Article 49 — Evaluation Phase and Completion of the Merger
50. Article 50 — Notifying the Creditors of the Merger Decision
51. Article 51 — Final Procedures of the Merger
52. Article 52 — Control and Inspection
53. Article 53 — The Authority’s Powers for Additional Requests
54. Article 54 — Complaints
55. Article 55 — Penalties
56. Article 56 — Publishing the Names of the Violators
57. Article 57 — Grievance against the Authority's Decisions
58. Article 58 — Registration of Acquisition and Merger Approvals
59. Article 59
60. Article 60 — Any regulations, provisions or procedures inconsistent with the provisions of this
61. Article 61

Key provisions

Obligations and deadlines

• On reaching 30% plus one share, stop buying and notify the Authority immediately (Article 8).
• Without an intent to bid, sell down to 30% or below within three months of notifying the Authority (Article 8).
• File the offer application within 21 days of delivering written intent to the target (Article 28).
• The target board must send the offer, its recommendation and advisers' views to holders within 14 days (Article 31).
• Settle accepted offers within three days of all conditions being met (Article 40).
• Creditors objecting to a merger must do so within 30 days of the notice (Article 50).

Penalties

Article 55 subjects breaches to the penalties in the Commercial Companies Law and the Authority's conciliation procedures for PJSC offences, and lets the Authority issue a notification or warning, cancel acquisition or merger approvals, or suspend the transaction. Under Article 8 shares held above 30% without a successful offer lose their voting rights. The Authority may publish violators' names (Article 56), and failed or withdrawn bidders are barred from a new offer for six months (Article 34).

History and citations

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