Cayman Islands Stock Exchange Takeovers Code.

GRAND CAYMAN, Cayman Islands--(BUSINESS WIRE)--Nov. 6, 1998--The Cayman Islands Stock Exchange has published its own Takeovers Code which will close a regulatory loophole which has been a cause for concern within the global mutual funds industry.

The move has been made to help attract offshore closed-end mutual funds to the Exchange which is currently in its second year of operation.

The mutual funds industry has faced problems in the past because offshore closed-end funds that are listed on the London Stock Exchange are not covered by U.K. takeover rules and this has resulted in concerns by some investment managers that their offshore funds may be susceptible to unregulated hostile bids.

The issue was highlighted by the controversial takeover of the Cayman-based GT Chile Growth Fund by Regent Pacific Group of Hong Kong which fell outside the British takeover code despite the fact the closed-end Chile fund was listed on the London Stock Exchange.

The Cayman Exchange has now published its own Code, offering protection for Cayman and other offshore companies as long as they are listed in the Cayman Islands.

Cayman Islands Stock Exchange chief executive Ann Nealon: "The new regulations offer the protection of a comprehensive takeovers code for offshore companies including closed-end funds which they may not have had in the past.

"Now if offshore companies listed in London also list in Cayman, the shareholders will be afforded the full protection of a takeover code which is very similar to that applied by the Takeovers Panel in London.

"This is an important regulatory move and it seeks to address the concerns of certain international institutional investors who were worried by the potential lack of protection."

The new Code applies to any company listed on the Cayman Exchange, whether on a primary of secondary basis, irrespective of whether or not that company is resident in the Cayman Islands. However, it does not apply to open-ended mutual funds.

It covers all takeover and merger transactions where control, which is defined as 30 percent of voting rights of a company is obtained or consolidated and applies to all parties involved in the transactions.

The Cayman Exchange has also introduced rules governing the substantial acquisition of shares. These rules govern the acquisition of stock when the acquirer has control of between 15 percent and 30 percent of shares in issue. The speed at which such acquisitions take place is restricted and the rules require an accelerated disclosure of information on such purchases.

It is proposed that the staff at the Exchange perform a function similar to that of the Takeover Panel in London although there is a right of appeal to the Exchange's Council.