SIC spares the rod on OSIM and its advisers after buying error in April

THE Securities Industry Council (SIC) on Thursday said that OSIM International had breached the code by placing itself in a position where it would be required to revise its offer after it had made a "no increase" statement.

This was according to Note 3 on Rule 20.1 of the Singapore Code on Take-overs and Mergers.

The financial adviser, Credit Suisse, and legal adviser, Morgan Lewis Stamford, were also found to have failed in their responsibility to ensure that the offeror complied with the rules.

However, the hearing committee decided not to take any further action against all three parties, after taking into account that the offeror had relied on the advice of its advisers in making its open-market purchases and had afterwards promptly taken steps to inform its advisers to rectify the situation when it realised that the purchases were erroneously made above S$1.39 on a cum-dividend basis.

The offeror had also complied with the council's direction to increase its offer price to S$1.41 on a cum-dividend basis as a result of the breach, which resulted in an additional cost of S$4.7 million. It also compensated all shareholders who had sold their shares below S$1.39 on April 5, 2016, regardless of whether they sold their shares to the offeror or to third parties, to ensure that no parties were prejudiced as a result of the breach.

As for the advisers, they also took prompt action to stop the purchases and approach the council to mitigate the extent of the breach. Furthermore, both Credit Suisse and Morgan Lewis Stamford have since taken steps to improve their internal processes and controls to prevent a similar incident from re-occurring.

This followed a mistake made by Credit Suisse in purchasing shares of the lifestyle products group above the offer price on April 5 because it failed to take into account that the shares had started trading ex-dividend the day before.

This resulted in OSIM having to raise its offer price by two cents, when it had earlier said that it would not further increase its final offer price.