Permell says TCL directors must disclose share valuation

In a media release yesterday, Permell, cited an article in a daily newspaper in which it was reported that “an independent director of TCL” was attempting to defend the board’s decision not to provide a price range to shareholders which the company considered to be a fair offer notwithstanding its rejection of the $4.50 per share takeover offer made by Mexican cement giant, Cemex .

Permell noted that the director’s statement seemed to suggest that the board might be in possession of an official range of values for the company’s shares, which “by inference could only come from some sort of formal valuation process undertaken on the company’s shares.” “If the preceding is correct, what this means is that by virtue of TCL being a publicly- listed company, directors might be either wittingly or unwittingly be in possession of “material non-public information,” he stated .

He pointed out that according to the Securities Act 2012, the term “material non-public information” means, in relation to securities of a reporting issuer, any material fact or material change that has not been published .

While “material fact” means, when used in relation to the affairs of an issuer or its securities, is a fact or a series of facts, the disclosure of which would be considered important to a reasonable investor in making an investment decision .

“Accordingly, I am advised that information regarding the valuation of a company’s shares, particularly in the context of a takeover offer, quite easily qualifies as material non-public information .

And as a consequence, it therefore follows that timely if not immediate disclosure is required,” he stated .

Permell noted that material non-public information was required to be disclosed in a timely fashion to “reduce or mitigate the risk of persons with access to the information from acting upon the said undisclosed information, usually to benefit of themselves, family and/or close associates.” He also pointed out that according to Section 102 of the Act, “a person connected to a reporting issuer (i.e. TCL as defined by the Act) who either directly or indirectly, communicates or otherwise discloses any material non-public information to any person prior to such information having been published contravenes section 101 and as such commits an offence pursuant to Section 102 and is liable on conviction on indictment to a fine of five million dollars and to imprisonment for seven years.”