The firm wants its main shareholder to be exempt from triggering takeover The Securities and Futures Commission (SFC) has turned down an application from CLP Holdings for a rule interpretation exempting its major shareholder, the Kadoorie family, from making a general offer. The decision means that if the electricity supplier repurchases 11 million shares, the Kadoorie family will cross the 35 per cent general offer threshold and would have to make a mandatory general offer to buy all shares from smaller shareholders. A CLP spokesman said it was disappointed by the SFC panel's decision. 'There is still room to repurchase shares in the near term, but we are still studying a long-term plan on our share-repurchase programme. We believe that obtaining a waiver is in the interest of the company and its shareholders, and is in line with practices in other jurisdictions that CLP, and indeed Hong Kong, benchmarks against, notably the United Kingdom, Australia and Singapore,' he said. The SFC said the takeover panel decided the takeover code should not be interpreted so as to permit whitewash applications in respect of mandatory bid obligations triggered by on-market share repurchases. It was the first takeover panel decision related to on-going repurchase plans. The Kadoorie family and its concert parties hold 34.84 per cent of CLP. The takeover code, introduced in 2001, reduced the general offer trigger point from 35 per cent to 30 per cent. But because the Kadoorie family controlled companies with between 30 and 35 per cent shares at the time the code was introduced, it had a higher mandatory bid threshold of 35 per cent. Between 1998 and last year, CLP spent $4 billion repurchasing 129 million shares in the market. The share repurchases resulted in cancellation of shares, which in turn caused the Kadoorie family's interest to increase. On October 28, CLP's financial adviser Somerley applied to the SFC for a ruling that the present wording of the takeover code did not preclude a whitewash waiver application covering on-market share repurchases. The SFC ruled against such an application last month. The company appealed to the takeover panel, which last week met and supported the SFC decision that share repurchase schemes could not be used as an excuse to apply for a waiver of general offer obligations.