TVB seeks leave to bring judicial review against SFC’s whitewash waiver ruling

Television Broadcasts (TVB) has applied for leave to bring judicial review proceedings against the Securities Futures Commission (SFC) to quash two decisions made by the regulator on the majority shareholder’s application for an exemption in making a general offer to buy all the outstanding shares in the company.

The applicationto the High Court focuses on the regulator’s decision that the granting of a whitewash wavier should be conditional upon the majority of votes cast at the general meeting on the resolution to approve the buy-back offer .

Such a decision would be against the application of the scaleback provision in the Broadcasting Ordinance, according to the notice of application for leave to apply for the judicial review.

The scaleback provision, introduced to the ordinance in 1991, requires the aggregate voting control exercised by a non-resident company with a domestic television programme licence to be scaled back to no more than 49 per cent if the company’s economic interest in the broadcaster exceeds that level.

In January, TVB offered to repurchase 31.5 per cent of its shares for HK$4.21 billion (US$540 million). Majority shareholder Young Lion Holdings has indicated it will not take up the buy-back offer, which would see the stake in TVB held by the group and its affiliates rise to 41.19 per cent. As a result, a mandatory general offer will be triggered by Young Lion under the city’s takeover codes.

Young Lion will abstain from voting on the wavier resolution, leaving minority shareholders such as Silchester International Investors LLP, a London-based fund owning 14.1 per cent of TVB, to vote.

TVB also applied for leave to bring a review to quash the regulator’s decision that there is no question of whether the waiver to be approved shall be put to a vote by shareholders at the general meeting.

The decision ignored the requirement in Schedule VI of the takeover codes that a waiver should be subject to approval by shareholders, according to the notice .

The High Court will decide whether or not to grant the leave before TVB filed a judicial review. TVB

has filed an application for judicial review.