The securities watchdog will ban 'one-cent' or 'low-ball' offers in takeover bids from October 1.
The Securities and Futures Commission yesterday announced that the takeover code would be amended, forcing bidders to offer at least 50 per cent of the market price of the target company.
SFC chief operating officer Peter Au-Yang Cheong-yan said the commission also was keen to introduce Britain's 'put up or shut up' policy, which allows the regulator to impose a deadline by which a potential buyer must declare a firm intention to make a takeover offer or withdraw.
'In principle, the SFC agrees with the put up or shut up provisions and as a matter of practice we will apply those principles to appropriate live transactions,' Mr Au-Yang said.
However, as the policy was introduced in London only after the SFC had launched its consultation paper, the commission will have to wait until its next review of the code to add it to the provisions.
Like the put up or shut up provision, the ban on the one-cent takeover is aimed at preventing hostile bidders from frustrating the target company's business.