Wednesday 23 September 2015

Loopholes plugged by SC

Article in The Star, some snippets:

An amendment to a securities law is to plug a loophole in the law that allowed parties to exclude liability for the veracity of statements made in marketing material related to corporate bonds.

The Capital Markets and Services (Amendment) Act 2015 (CMSA 2015) now makes it clear that any “document, agreement or contract” that seeks to exclude the liability of the issuer of that document from the accuracy and reliability of information in that document will be deemed as void.

In other words, this means that parties preparing information memoranda (info memo), that typically accompany the issuance of private debt securities such as corporate bonds, can no longer seek to exclude their liability.

The amendment effectively addresses the issues that arose following the 2014 decision of the Federal Court in the Pesaka Astana bond case.

I wrote several times about the Pesaka Astana issue (here, here and here).

More from the article from The Star:

The amendments to the CMSA also enhanced minority shareholder protection in the event of corporate takeovers and mergers. The amendment allows the SC to appoint an independent adviser for an offeree if the latter fails to appoint one.

Another good change.

I noted before regarding KPMG's independent advice on Maybulk's RPT:

I think that is highly debatable, I think there is a very good case to be made that KPMG is liable. Anyhow, I strongly recommend the authorities to come down hard on independent advisers who issue these kinds of statements:

If advisers don’t want to take any responsibility while at the same time they make very clear judgment calls which have consequences for the voting behavior of shareholders then they should simply not be allowed to be independent adviser.

I hope with the above changes that this issue is also settled.

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