This article first appeared in The Edge Financial Daily on July 4, 2017

KUALA LUMPUR: Johor-based Keck Seng (M) Bhd announced that the recent shareholding changes among its substantial shareholders did not trigger any mandatory general offer (MGO).

Keck Seng explained in the filing to the stock exchange that the MGO was not triggered simply because the takeover rules are different from substantial shareholding notification rules.

Keck Seng noted that before Ocean Inc acquired the 11 million shares, or a 3.06% stake, on June 20, the parties acting in concert (PACs) had already collectively owned 56.81% of shares in the company.

Keck Seng said it had made due enquiries with its directors and substantial shareholders, particularly with its executive chairman Ho Kim Swee and its managing director Datuk Ho Cheng Chong on the matter.

Kim Swee and Cheng Chong, both of whom are brothers, are linked to Hong Kong-based Ocean Inc that had recently up its stake in Keck Seng.

Ocean Inc’s purchase of additional shares in Keck Seng pushed up Kim Swee’s holdings from 31.24% to 34.3%, while Cheng Chong’s grip increased from 31.1% to 34.06%.

As the duo’s individual holdings in Keck Seng climbed above the 33% threshold after the share purchase, it prompts the investing fraternity to ponder whether an MGO has been triggered.

The Edge Malaysia weekly had in its latest issue highlighted the concern.

Keck Seng said the MGO rules are prescribed under three regulations: Capital Markets and Services Act 2007, the Rules of Take-Overs, Mergers and Compulsory Acquisitions (Take-Over Rules), and the Malaysian Code on Take-Overs and Mergers 2016.

After Ocean Inc completed the share acquisition, the PACs own 59.87% of shares in Keck Seng, according to the bourse filing.

The PACs are Kim Swee (6.79%), Cheng Chong (6.93%), Ho Kian Cheong (6.86%), Ho Chin Chin (3.63%), Ho See See (3.27%), Ho Yeow Koon & Sons Pte Ltd (14.93%), South West Holdings Sdn Bhd (0.8%), Firmstead Realty Sdn Bhd (0.23%), Plentong Quarry (M) Sdn Bhd (5.07%), Ocean Inc (3.29%, which excludes the 3.06% acquired on June 20), Vuitton Assets Ltd (1.25%), Liteace Management Ltd (1.25%), Skytrax Ventures Ltd (1.25%) and Laser Ace Venture Ltd (1.25%).

“Hence, the further acquisition by Ocean Inc, a PAC member, did not result in any MGO trigger for the PAC under the Take-Over Rules,” it added. In addition, both Kim Swee and Cheng Ching did not acquire any further shares in Keck Seng.

Therefore, under the Take-Over Rules, Keck Seng said both Kim Swee and Cheng Chong were not deemed to have triggered an MGO by virtue of the acquisition of shares in Keck Seng by Ocean Inc.