Introduction

The Securities and Futures Commission (the “SFC”) published the Takeovers Bulletin (Issue No. 74) in September 2025 (the “Bulletin”), which provides important guidance on two key areas: (1) the redaction of sensitive information from Documents on Display (the “DoDs”), and (2) disclosures concerning the effect of dividends and other distributions on offer prices. These clarifications aim to promote orderly market processes and ensure the fair treatment of shareholders under the Codes on Takeovers and Mergers and Share Buy-backs (the “Takeovers Code”).

Redaction from documents on display

Parties to an offer are required to submit the DoDs electronically via the SFC’s WINGS portal for public display on the SFC’s website, typically from the publication of the offer document or offeree board circular until the end of the offer period. The SFC has noted that DoDs such as service contracts may contain sensitive personal data (e.g., HKID numbers, residential addresses) and has observed an increase in last-minute redaction requests, which can cause delays.

As public disclosure of any personal information without the data subject’s consent is prohibited under the Personal Data (Privacy) Ordinance (Cap. 486) or equivalent laws, redactions of such information from the DoDs is permitted. Offerors and offeree companies bear the responsibility for identifying and redacting such information before uploading the DoDs to the SFC’s WINGS portal, to ensure full compliance with the relevant laws.

To facilitate a smooth process, parties intending to redact the DoDs should engage with the SFC’s Executive as early as possible, and in any event before final submission of the DoDs, providing the following:

1.      A submission explaining the basis of the redaction basis;

2.      A copy of the proposed redacted version of the DoDs, showing clearly the redactions and setting out, on the front page, the following:

a.      a statement to the effect that certain information contained in the document has been redacted, together with a brief description of the nature of the information redacted and reasons for redaction; and

b.      a confirmation that the remaining information is considered adequate by (i) the offeror/ offeree company and its directors, (ii) the financial adviser to the offeror/offeree company for the purpose of disclosing the nature and significance of the document, and for the offeror/offeree company to fulfil its relevant disclosure obligations under the Takeovers Code;

3.      written confirmations from the offeror or the offeree company as well as its directors and financial adviser in a form identical or substantially similar to the confirmation referred to in paragraph 2(b) above.

Disclosures of effects of dividends and
other distributions on offer price

The Bulletin reiterates the need for absolute clarity in offer documents regarding adjustments to the offer consideration for dividends or distributions, to avoid misleading shareholders. Key principles under the Takeovers Code include but do not limited to:

·           Rule 5: When there has been an announcement of a firm intention to make an offer, except with the consent of the SFC’s Executive, the offeror must proceed with the offer unless the offer is subject to the fulfilment of a specific condition and that condition has not been met; and

·           Rule 18.1: An offeror must not make a statement to the effect that it may improve its offer without committing itself to doing so and specifying the improvement.

If an offeror intends to reduce the offer consideration for dividends or distributions which might be subsequently be paid or become payable by the offeree company, the offeror must reserve this right explicitly in the announcement made under pursuant to Rule 3.5 of the Takeovers Code (the “Announcement”), and specify whether the reduction will be equivalent to all or a quantified portion of the specified dividend or other distribution. Without clear reservation, the offeror should not deduct any subsequent dividends or other distributions from the offer consideration.

Conversely, an offeror generally retains the flexibility to increase the offer consideration after the Announcement unless it makes a “no increase” statement in the Announcement. If a “no increase” statement is made, but the offeror still wishes to reserve the right to partially reduce the offer price for subsequent dividends, this intention must be explained at the same time the “no increase” statement is issued.

Takeaways

These updates underscore the SFC’s emphasis on proactive compliance and clarity in takeovers. Companies should review DoDs thoroughly and craft announcements carefully to align with the Takeovers Code, and consult the SFC and legal advisers for complex scenarios.