In its bid to take over the 500.96 million shares of Renong held by Time Engineering Bhd, it is reported that Taraf Perdana Sdn Bhd intend to apply for a waiver from having to undertake a mandatory general offer for the remaining shares that it does not own in Renong.

The Kuala Lumpur Stock Exchange should not abuse its power by granting Halim Saad a special exemption especially when shareholders are fuming over a 39 per cent fall in Renong share price in the past month and the market has reacted negatively over the settlement of Halim's put option with UEM and its deal with Renong.

A bidder who offers to acquire equity securities of a firm directly or indirectly and in so doing exceeds the threshold laid down by the KLSE shall be obliged to extend the offer for all the remaining shares of the firm.

Normally an exemption is granted for the following reasons:

1) If the equity securities to be acquired do not confer voting rights;

2) If the person offering wishes that the concretely designated economic substance of the offeree company should not be changed;

3) If banks or securities dealers, acting either alone or as a syndicate, make a firm underwriting of equity securities within the framework of an issue and undertake to resell, no later than three months after such threshold has been exceeded, the number of equity securities exceeding the percentage threshold, and if the resale in fact takes place within such period; and

4) If the threshold is exceeded within the framework of restructuring resulting from a reduction in capital followed by an immediate increase in order to offset a loss.

The enactment of a mandatory bid rule is to protect the interest of minority shareholders. Investors will continue to shun the market if KLSE decides to grant Taraf Perdana an exemption without due consideration on its eligibility. It will be seen as an act that tramples on the rights of minority shareholders.

Considering the close ties of Halim and Renong with the Prime Minister Dr Mahathir Mohamad, the move will be perceived as attempt by the government to bail out both Halim and Renong from their financial problems.