Chapter 5: Fundamental Transactions and Takeover Regulations
Part A: Interpretation and application

R90: Independent experts

  • (1) In any transaction contemplated in section 117(1)(c)(i), (ii), (v) or (vi), section 125 (2), or in regulation 88, the offeree regulated company must-
    • (a) request a ruling from the Panel whether an independent expert must be retained to report on the proposed transaction; and
      • (b) retain such an independent expert if the Panel so requires.
      • (2) Section 114 (2) and (3), read with the changes required by the context, apply with respect to any transaction for which an independent expert is required in terms of this regulation.
        • (3) In any circumstances in which an independent expert is required in terms of the Act or this Chapter-
          • (a) the independent expert must-
            • (i) be able to show that it is independent, and will reasonably be perceived to be independent, taking into account any other existing relationships and appointments; and
              • (ii) satisfy the Panel that it is competent to act in respect of the offer, which the Panel may challenge if it is not satisfied; and
              • (b) despite any prior approval given by the Panel, the Panel may at any time, either itself or in response to written representations by holders of relevant securities, require the appointment by either or both of the offeror and the offeree regulated company of a further independent expert approved by the Panel.
              • (4) An independent expert's valuation of the offeree regulated company must be performed in accordance with generally accepted valuation approaches and methods in use in the market from time to time including-
                • (a) capitalisation, income or cash flow approach which relies on the 'value-in-use' principle and requires determination of the present value of future cash flows over the useful life of the asset or business
                  • (b) comparative or market approach that relies on the principle of 'willing buyer, willing seller' and requires that the amount obtainable from the sale of an asset or undertaking is determined as if in an arm's-length transaction; and
                    • (c) cost approach that relies on historical amounts spent on the asset or undertaking.
                    • (5) In respect of mineral companies, the valuation approach and methodology must comply with the SAMVAL code.
                      • (6) The content of the independent expert's fair and reasonable opinion in relation to an offer must, among other things, include-
                        • (a) the date of the fair and reasonable opinion, and confirmation that the fair and reasonable opinion has been given to the relevant board concerned for the sole purpose of assisting the relevant board in forming and expressing an opinion for the benefit of holders of relevant securities, excluding the offeror;
                          • (b) a statement that the fair and reasonable opinion may be included, in whole or in part, in any required regulatory announcement or documentation;
                            • (c) a clear expression of opinion dealing with the fairness and reasonableness of the offer consideration(s) in regard to holders of relevant securities, excluding the offeror;
                              • (d) a detailed list of all source documentation used and reviewed and work done in accordance with the scope of the appointment;
                                • (e) a statement of the valuation approach adopted, the methods employed and all material assumptions underlying the valuation approach and methodology;
                                  • (f) a range of final valuation values attributable to the relevant securities or assets and a most likely value used as the core number for purposes of the expression of the opinion;
                                    • (g) any other valuation or pricing approaches and methodologies used in corroborating the expression of the opinion e.g. the comparative approach or cost approach;
                                      • (h) the fee payable or paid to the independent expert for the fair and reasonable opinion and confirmation that the fee is not contingent on or related to the outcome of the offer; and
                                        • (i) a declaration of the independence and competence of the independent expert, which may require evidential justification if the Panel is not satisfied with the declaration.

                                        Related Regulations

                                        No related regulations.

                                        Related Sections

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                                        Related Notes

                                        No related note.

                                        Related Forms

                                        No related forms.