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SCMP Reporter

The Securities and Futures Commission has reduced the takeover trigger threshold from 35 per cent to 30 per cent effective today.

The move, which follows a consultation period earlier this year, brings Hong Kong into line with other international markets.

The change means shareholders who take a stake of more than 30 per cent in a company will be obliged to make a general offer to all shareholders.

'The driver of these changes is to conform to international standards,' SFC executive director Ashley Alder said.

The SFC also reduced the 'creeper' provision - how much a majority shareholder can increase his stake in any 12-month period without triggering a general offer - from 5 per cent to 2 per cent.

The changes were expected but the timing of their implementation was abrupt. The SFC previously said it hoped the new rules would take effect on January 1.

Mr Alder said the changes - announced late last night - had been made with immediate effect to avoid giving an unfair advantage to some shareholders.

Investors holding less than 30 per cent could have taken advantage of any delayed implementation by taking their stakes above the threshold before the new rules took effect.

There will be 10-year transitional - so-called 'grandfather' - provisions for shareholders that at present hold more than 30 per cent but less than 35 per cent of a company's shares.

The old 35 per cent trigger will apply while the new 2 per cent creeper will not. After 10 years, such shareholders will be free to increase their holdings without incurring a mandatory offer subject to the 2 per cent creeper, which will then apply.

If a shareholder's stake falls below 30 per cent during the 10-year period, the new threshold will apply.

The old trigger was criticised as too high, since shareholders could exert effective control over a company with less than 35 per cent.

Britain and China have a 30 per cent trigger threshold, while Singapore's is 25 per cent. Hong Kong and South Africa were the only advanced markets still maintaining a 35 per cent trigger point.



Trigger level on takeovers down to 30pc