| (1) | In this regulation, a reference to "offeror directors" applies equally to trustees of trusts, partners of partnerships, members of a consortium and similar personae, if the offeror is not a company. |
| (2) | The directors of an offeree regulated company must not resign from the board of the offeree regulated company from the date of the firm intention announcement until the offer is declared unconditional, lapses or is withdrawn. |
| (3) | In an offer, and during the entire course of the offer proceedings— |
| (a) | a director of the offeree regulated company, whether executive or nonexecutive, must fully disclose to the offeree regulated company board, any conflict of interest or potential conflict of interest, including its nature, in relation to such transaction immediately after the director becomes aware of the conflict; and |
| (b) | the director concerned must assume a non-independent status, and inform the Board to that effect, if the director considers that the conflict or potential conflict may affect the director's independence. |
| (4) | If a director does not make a declaration required by sub-regulation (3)(b), and the board of the offeree regulated company considers that director to be non-independent, the board must declare the director to be non-independent. |
| (5) | A non-independent director— |
| (a) | may not tender an opinion or vote on any matter at a meeting of the independent board; and |
| (b) | must withdraw from any deliberations of the independent board. |
| (6) | Despite sub-regulation (5), the independent board may determine the extent of a non-independent director's attendance at any of its meetings for a defined purpose, such as furnishing factual information. |
| (7) | A determination of independence affects primarily offeree regulated company directors but may also be relevant to offerors. |
| (8) | The following situations are relevant in determining independence, but are not exhaustive: |
| (a) | A director who is a member of the boards of both an offeror and an offeree regulated company is presumed to be conflicted and non-independent, but this presumption is rebuttable at the instance of the independent board. If such a director is declared independent by the independent board, the director is conflicted at the offeror board/management level, and vice versa. |
| (b) | A director of an offeree regulated company who holds vested shares or options ("vested securities") in the offeree regulated company, which vested securities— |
| (i) | have an intrinsic value (as defined by International Financial Reporting Statements) which represents a material amount of the director's net worth; and/or |
| (ii) | represent a material holding in the offeree regulated company; |
is presumed to be conflicted and non-independent, but the presumption is rebuttable at the instance of the independent board.
| (c) | A director of an offeree regulated company is non-independent if the director- |
| (i) | holds unvested securities or options, and is offered any substitute share or option scheme, separate offer or acceleration of vesting periods that would give rise to a benefit in terms of an offer; or |
| (ii) | is partial to the outcome of an offer because of an increased or decreased future benefit or loss of office or employment. |
| (d) | A director of an offeree regulated company who is related or inter-related to any person who is, or would be considered, non-independent in relation to an offeree regulated company concerned, in terms of an offer, is rebuttably presumed to be non-independent. |
| (9) | An independent board should comprise a minimum of three independent directors, and if there are less than three independent directors, other persons must be appointed to the independent board by the existing board in accordance with the qualifications or other requirements set out in the Act. |
