SFC publicly censures two units of Bank of America Merrill Lynch Group for breaches of Takeovers Code

29 Jun 2016

The Securities and Futures Commission (SFC) has publicly censured Bank of America, National Association (BANA) and Merrill Lynch International (MLI), units of the Bank of America Merrill Lynch Group (BofAML Group), as a result of their failure to disclose dealings in relevant securities in two transactions (Transactions) in 2015 as required under the Code on Takeovers and Mergers (Takeovers Code).

The Transactions related to the partial offer for China Resources Beer (Holdings) Company Limited (CRB Partial Offer) and the privatisation of Power Assets Holdings Limited (Power Assets Privatisation) in which Merrill Lynch (Asia Pacific) Limited (MLAP) – a unit of the BofAML Group – acted as financial advisors (Notes 1 & 2).    

At the material time, BANA and MLI executed equity swaps during the Transactions, but they failed to comply with the disclosure obligations under the Takeovers Code (Note 3). 

In deciding the sanction, the SFC took into account BofAML Group’s full cooperation and the remedial measures it has now put in place to ensure future compliance with the Takeovers Code.

The disclosure obligations in the Takeovers Code are intentionally onerous to reflect the fact that a high degree of transparency is essential to the efficient functioning of the market in the critical period of an offer or possible offer for a company’s shares.  Timely and accurate disclosure of information in relation to relevant dealings including those of advisers plays a fundamental role in ensuring that takeovers are conducted within an orderly framework and that the integrity of the markets is maintained.

A copy of the Executive Statement is available on the SFC website.



  1. MLAP is an institution licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance.
  2. MLAP acted as the financial advisor to the offeror - CRH (Enterprise) Limited - in the CRB Partial Offer and to the offeree - Power Assets Holdings Limited - in the Power Assets Privatisation.  
  3. BANA and MLI fell within the definition of “associate” of the offeror in the CRB Partial Offer and of the offeree in the Power Assets Privatisation for the purposes of the Takeovers Code.  Both BANA and MLI were also deemed acting in concert with the offeror in the CRB Partial Offer under the Takeovers Code.

Page last updated : 29 Jun 2016