Companies Act, 2008 (Act No. 71 of 2008)RegulationsCompanies Regulations, 2011Chapter 5 : Fundamental Transactions and Takeover RegulationsPart D : Duties and Conduct of Offeree and Directors110. Independent board opinion |
| (1) | The independent board of an offeree regulated company that is the subject of an offer must obtain appropriate external advice from an independent expert in the form of a fair and reasonable opinion. |
| (2) | The independent board must take cognisance of the fair and reasonable opinion received in forming its own opinion on an offer consideration, which opinion must be communicated to the relevant offeree regulated company's security holders. |
| (3) | In order to enable the independent board to express an opinion on an offer and on the offer consideration, it must either— |
| (a) | perform a valuation of the offeree regulated company's securities that are the subject of an offer, including an attributable value per security if the offer is a disposal of assets or undertaking in terms of Section 112; or |
| (b) | place reliance upon a valuation of the offeree regulated company's securities that are the subject of an offer, including an attributable value per security if the offer is a disposal of assets or undertaking in terms· of Section 112, as performed by the appointed independent expert after performing the requisite amount of work that satisfies the independent board that it is justified in placing reliance upon that valuation. |
| (4) | An independent board must form a clear basis for the expression of an opinion to relevant holders dealing with value and price compared to the consideration offered. |
| (5) | If the consideration offered per security exceeds either the estimated fair value per security or current traded price per security, but not both, a split opinion clearly detailing the independent board's view is required, e.g. fair but not reasonable or reasonable but not fair. |
| (6) | The independent board must consider factors that are difficult to quantify, or are unquantifiable, and must disclose any such factors, or state that there are none of which it is aware, and take them into account in forming its opinion in respect of fairness. |
| (7) | An independent board must form a view of a range of fair value of the offeree regulated company securities, based upon an accepted valuation approach. |
| (8) | An offer with a consideration per offeree regulated company security within the fair value range is generally considered to be fair. |
| (9) | An offer with an offer consideration per offeree regulated company security above the offeree regulated company's traded security price at the time the offer consideration(s) per security was announced, or at some other more appropriate identifiable time, is generally considered to be reasonable. |
| (10) | An offer with an offer consideration comprising or including offeror company securities requires the independent board to carefully consider the price and value per security of the offeror's securities relative to the offeree regulated company securities. In such an offer, the offeror company must either— |
| (a) | appoint an independent expert to provide a fair and reasonable opinion concerning the offeror company's relevant securities value and price to the independent board of the offeror company, the offeree regulated company's independent board and to the offeree regulated company's independent expert, in which case the independent board of the offeror company must express its opinion on the offeror company's securities value and price after considering the fair and reasonable opinion; or |
| (b) | provide relevant information, as agreed between the parties, concerning the offeror company, directly to the independent board and to the offeree regulated company's independent expert, to enable the independent board and the offeree regulated company's independent expert to consider and opine on that information. |
| (11) | If the independent board is not unanimous in its opinion, all differing opinions of members, including reasons, must be provided to holders. |