What Is Reverse Takeover ?

May 25, 2016

In the TODAY newspapers [19 May 2016], the main board listed company Jeya Holdings announced a reverse take- over of a micro lending company called PNG.

What is a “reversetake-over”[RTO]? This happens when a private company swaps its shares for the shares of a public listed company (‘PLC’).

In this case, PNG is a private company and its shareholders agreed to exchange their shares for majority shares in Jeya (a PLC).

In an economic downturn, PLCs either de-list (like OSIM) or they wait for private companies to do a RTO. The significance of this is that small privately owned businesses with money or who can raise funds amongst their private shareholders are able to “buy” up these public listed companies, either by de-listing them or to keep them listed on the stock exchange.