[now.com Finance] Investors have recently been focusing on the steps involved in a listed company's proposed privatization and its impact on shareholders. Generally, privatization is initiated by the controlling shareholder, who purchases all shares from other minority shareholders in cash or securities (with or without a cash option). If the privatization proposal is successfully passed, the listed company will apply to the Hong Kong Stock Exchange (HKEX) for delisting.

Key dates for shareholders to pay attention to

For privatization proposals of listed companies, investors and shareholders can check the relevant announcements on the Hong Kong Stock Exchange's disclosure website to understand the details of the privatization proposal, including the price, terms and conditions precedent, and its impact on the company's shareholders. Shareholders should also pay attention to the timetable of the privatization agreement arrangements, with key dates including: the date of the shareholders' meeting, the effective date of the scheme, the date of payment of the cancellation consideration, and the company's last trading day on the Stock Exchange, in order to make arrangements.

Voting rights of shareholders holding physical and non-physical shares

Shareholders of listed companies have the right to attend shareholders' meetings and vote on privatization plans. If the physical shares held by shareholders are registered in their own name, they may choose to attend and vote at the shareholders' meeting in person, or appoint someone else to attend and vote on their behalf. They may also choose to send their voting instructions directly to the company's share registrar.

For shareholders holding shares through intermediaries such as securities firms and banks, they can generally issue voting instructions to the intermediaries, who will then relay them to the nominee at the Central Clearing and Settlement System (CCASS). The CCASS nominee will then appoint a representative to attend the shareholders' meeting and vote according to the shareholder's instructions. Shareholders holding non-physical shares who wish to attend and vote in person need to contact their intermediaries beforehand to make the necessary arrangements.

During the privatization process, investors should exercise caution and make informed financial decisions. If there are any questions regarding the transaction, independent and professional financial advice should be sought.

Privatization

There are many reasons why a company may choose to go private. For example, some listed companies may have shares that are not actively traded on the Stock Exchange, share prices may be trading at a significant discount to net asset value per share, public float may not meet the Stock Exchange’s requirements, or the listed company may be considering the costs of maintaining its listing status.

A listed company can complete privatization through a "full takeover" or a "scheme".

full acquisition

The controlling shareholder may propose a full takeover of all shares held by all shareholders. If the company is incorporated in Hong Kong, the controlling shareholder (including persons acting in concert with it) has the right to compulsorily acquire the remaining shares when, within a specified period, it has acquired 90% of the disinterested shares (i.e., shares other than those held by the controlling shareholder and its persons acting in concert). If the company is incorporated in a foreign country, the controlling shareholder must act in accordance with the laws of that country.

Arrangement of Agreement

The controlling shareholders' meeting requested the company to propose a scheme of arrangement to its shareholders, recommending the cancellation of all shares held by minority shareholders. This scheme of arrangement must be governed by the companies laws of the company's place of incorporation and approved by a vote of all shareholders. If approved, the agreement will be binding on all shareholders. The shares held by minority shareholders will be cancelled, and the controlling shareholders will thus hold 100% of the voting rights in the company.

The company must convene a shareholders' meeting to approve the privatization through a scheme of arrangement, and the approval must be obtained by at least 75% of disinterested shareholders present in person or by proxy, based on their voting rights, and no more than 10% of disinterested shareholders may vote against it.

Through privatization

If a privatization proposal made through a full takeover has reached the mandatory takeover stage, or if a privatization proposal made through a scheme of arrangement has been approved by shareholders and the court, the proposal is binding on all shareholders, who must accept it. Generally, their shares will be automatically cancelled, and they will receive the consideration due according to the terms of the privatization proposal.