What are the key rules/laws relevant to M&A and who are the key regulatory authorities?
Mergers & Acquisitions
Austrian law does not have one specific law regulating all issues on the acquisitions of companies, but rather various different statutes apply, depending on the specific type and form of an acquisition.
In particular, the following laws are relevant:
- Cartel Act (Kartellgesetz)
- Commercial Code (Unternehmensgesetzbuch)
- Commercial Register Act (Firmenbuchgesetz)
- Corporate Transformation Act (Umwandlungsgesetz)
- Demerger Act (Spaltungsgesetz)
- EC Merger Control Regulation (EG-Fusionskontrollverordnung)
- Employment Contract Adaptation Act (Arbeitsvertragsrechts-Anpassungsgesetz)
- EU Cross-Border Merger Act (EU Verschmelzungsgesetz)
- Federal Fiscal Code (Bundesabgabenordung)
- Foreign Trade Act (Außenwirtschaftsgesetz)
- General Civil Code (Allgemeines Bürgerliches Gesetzbuch)
- Joint Stock Corporations Act (Aktiengesetz)
- Income Tax Act (Einkommenssteuergesetz)
- Limited Liability Companies Act (Gesetz über Gesellschaften mit beschränkter Haftung)
- Minority Shareholder Squeeze-Out Act (Gesellschafterausschlussgesetz)
- Real Estate Transfer Tax Act (Grunderwerbssteuergesetz)
- Reorganisation Tax Act (Umgründungssteuergesetz)
- Stamp Duty Act (Gebührengesetz)
- Stock Exchange Act (Börsegesetz)
- Takeover Act (Übernahmegesetz)
- Rules regarding specific regulated industries (eg, Banking Act (Bankwesengesetz), Insurance Supervisory Act (Versicherungsaufsichtsgesetz))
For asset deals, in particular the regulations of Article 1409 of the General Civil Code and Article 38 of the Commercial Code are pertinent. Article 1409 of the General Civil Code provides that a purchaser generally is jointly and severally liable with the seller towards the seller’s creditors for any liabilities of the acquired business having their origin prior to the acquisition. The purchaser’s liability is limited to the current net asset value of the acquired assets and applies in case the purchaser knew or should have known at the time of the purchase of the pre-existing liabilities. Article 1409 of the General Civil Code is mandatory law and cannot be waived or amended by contract. Liability can be reduced if the purchase price payable by the buyer is used to pay off the debts of the business sold.
In addition to Article 1409 of the General Civil Code also Article 38 of the Commercial Code contains special liability provisions for asset deals. Even if the buyer is not liable under the General Civil Code because, for example, the purchase price was used to pay off the debts of the business sold, the buyer still might be liable under the Commercial Code. Article 38 of the Commercial Code provides that a legal entity which acquires and continues a commercial business is liable for all debts the former owner incurred in the course of business conduct, meaning even those which are not contractually agreed to be taken over by the buyer. Unlike liability under Article 1409 of the General Civil Code, liability under the Commercial Code is not limited to the value of the acquired assets. Nevertheless, liability under Article 38 of the Commercial Code for any debts not taken over can be eliminated entirely by submitting a timely notification to the commercial register which must contain an indication of the liabilities assumed by buyer (if any) and the liabilities not so assumed.
In addition, there are successor liability provisions under the Federal Fiscal Code, the General Social Insurance Act (Allgemeines Sozialversicherungsgesetz) and the Employment Contract Adaptation Act.
Regarding the transfer of shares in Austrian limited liability companies (Gesellschaft mit beschränkter Haftung), the Limited Liability Companies Act requires that the transfer be executed in the form of a notarial deed. Therefore, the involvement of an Austrian notary public or a notary public subject to a comparable regime (eg, a German notary) is necessary.
A key regulatory authority with regard to M&A transactions is the Federal Competition Authority (Bundeswettbewerbsbehörde), which is competent for the clearance of mergers if the transaction volume does not exceed the thresholds of the EC Merger Control Regulation, but exceeds the thresholds under Austrian competition law. A transaction has to be notified to the Federal Competition Authority under Austrian competition law if the following conditions are met and no exception applies: (i) the combined worldwide aggregate turnover of all participating undertakings in the year prior to the transaction was more than €300 million; (ii) the combined domestic aggregate turnover of all participating undertakings in the year prior to the transaction was more than €30 million; and (iii) the worldwide turnover of at least two participating undertakings each was more than €5 million in the year prior to the transaction. The main exception is the following: The transaction does not need to be notified if (i) only one independent undertaking has a domestic turnover of over €5 million, and (ii) the other participating undertakings' combined worldwide aggregate turnover in the year prior to the transaction does not exceed €30 million. Special rules on turnover calculation exist for the banking, insurance and media sectors. A further relevant authority regarding cartels and merger control is the Cartel Court (Kartellgericht).
Further relevant authorities are the Commercial Register Courts (Firmenbuchgerichte), which register and publish transactions and reorganisations in the Austrian commercial register, and the Financial Market Authority (Finanzmarktaufsicht), which reviews banking acquisitions.
Public M&A transactions regarding listed joint stock corporations (Aktiengesellschaft) are also subject to the supervision of the Austrian Takeover Commission (Übernahmekommission), which monitors compliance with the Austrian takeover regulations and decides on all matters related to the Takeover Act.
The Companies Act 1981, as amended (Companies Act) is the principal piece of legislation governing companies in Bermuda and under which most companies in Bermuda are incorporated by registration. The provisions by which business combinations (either by merger, amalgamation or, in some instances scheme of arrangement) are effected in Bermuda are contained in the Companies Act. Provisions concerning the compulsory acquisition in connection with a share acquisition or business acquisition are also contained in the Companies Act. If the entity is a regulated entity and either registered under the Insurance Act 1978, as amended (Insurance Act) or the Investment Business Act 2003, as amended (Investment Business Act), these two acts may also be relevant to the transaction.
The regulatory authority responsible for registering a merger or amalgamation pursuant to the Companies Act is the Bermuda Registrar of Companies (RoC). In addition, the Bermuda Monetary Authority (BMA) may also: (i) be required to give permission from an exchange control perspective in the event there is an issue or transfer of shares in connection with the M&A transaction, unless a general permission already exist; and/or (ii) if such target is a BMA regulated and registered entity, be required to either be notified of or provide its approval to the change of control of the target.
Any Brazilian M&A Agreement is subject to civil law. The Civil Code (Law No. 10.406/01) is hence the key M&A law applicable in the country (the “Brazilian Civil Code”). The Brazilian corporation law (Law No. 6.404/76) is also of key importance (the “Brazilian Corporation Law”) and applies in most of the agreements of the country, as sizeable and relevant M&A involve corporations in the large majority of cases. A combination of skills related to the interpretation and the application of the Brazilian Civil Code and the Brazilian Corporations Law is thus indispensable for a Brazilian M&A lawyer.
M&A involving publicly held companies (which in Brazil may be listed (traded) or not) requires knowledge about the capital markets law (Law No. 6385/76) and the regulations issued by the Brazilian securities and exchange commission (Comissão de Valores Mobiliários - “CVM”). As in any relatively developed capital markets, in Brazil there are several types and layers of regulation issued by the CVM that may be applicable depending on the structure of the deal. The instructions that affect the majority of the deals of listed companies, however, are those applicable to the disclosure of relevant acts or facts to the market (CVM Instruction No. 358/02) and the several different types of mandatory tender offers which may result from M&A transactions (CVM Instruction No. 361/02).
The Brazilian Central Bank (Banco Central do Brasil - “BCB”) is the most important regulatory authority for cross-border M&A, essentially because its regulations apply to all foreign exchange transactions. Although there is no direct personal interaction between the parties of an M&A transaction with BCB officials, unless they involve financial institutions, it is very important that they have in mind the requirements related to the registration of foreign capital in Brazil. To make a long story short, with very few exceptions there is not prior approval for the investment in Brazil, but all monies invested in the market must be registered through the central bank electronic registration system (which is a simple and straight forward procedure). There are several types of registration. An investment may be subject to higher capital gains taxes depending on the type of registration at the time of investment, conversion and disinvestment. This is usually a driver in high-profile M&A deals.
British Virgin Islands
Sources of Regulation
The primary source of law relevant to M&A in the British Virgin Islands is the BVI Business Companies Act 2004, as amended (the Act).
The Act permits mergers between:
- BVI companies incorporated and registered under the Act; and
- a BVI company (or companies) incorporated under the Act and a foreign company or companies, (assuming it is permissible under the applicable foreign law).
In the case of a merger between a parent and one or more of its subsidiaries, a simplified procedure is available under the Act.
The Act also permits mergers through plan of arrangement, scheme of arrangement or by a minority squeeze-out procedure.
There are change of control rules applicable to entities regulated by the British Virgin Islands Financial Services Commission under the relevant financial services legislation, including the Banks and Trust Companies Act, 1990 and the Insurance Act, 2008.
Sources of Regulation
The primary sources of regulation of Cayman Islands M&A are (i) the Companies Law (2016 Revision) (the “Companies Law”), (ii) the Limited Liability Companies Law, 2016 (the “LLC Law”), and (iii) the common law.
- mergers, amalgamations and reconstructions by way of a scheme of arrangement are available for complex mergers (usually in the context of a restructuring) if approved by the requisite majorities of shareholders and creditors and by an order of the Cayman Islands court under section 86 or 87 of the Companies Law or section 42 or 43 of the LLC Law (as applicable); and
- section 88 of the Companies Law and section 44 of the LLC Law provide a limited minority squeeze-out procedure which may be used in connection with a contractual acquisition of equity.
Different Rules for Different Types of Company
Except to the extent described below with respect to companies listed on the Cayman Islands Stock Exchange (the “CSX”), there are not different rules for different types of company.
The Cayman Islands does not have a prescriptive set of legal principles specifically applicable to ‘take-overs’, ‘going private’ or other acquisition transactions (unlike certain other jurisdictions such as, for example, Delaware). Rather, broad common law and fiduciary principles will apply.
While there is no specific Cayman Islands statute or regulation concerning the conduct of M&A transactions, where the target’s equity securities are listed on the CSX, the CSX Code on Takeovers and Mergers and Rules Governing Substantial Acquisitions of Shares (the “Code”) will apply. The Code exists principally to ensure fair and equal treatment of all shareholders.
There are change-of-control rules applicable to entities in regulated sectors, including those regulated by the Cayman Islands Monetary Authority under the Banks and Trust Companies Law (2013 Revision), the Insurance Law, 2010 (as amended) or, with respect to mutual fund administrators, the Mutual Funds Law (2015 Revision). In addition, ownership and control restrictions apply to certain entities regulated by the Information & Communications Technology Authority Law (2016 Revision).
ZL: In China, the key rules/laws relevant to M&A are Company Law, Securities Law, Administrative Measures for the Material Assets Reorganization of Listed Companies (“Reorganization Rules”), Administrative Measures for the Takeover of Listed Companies, Measures for the Supervision and Administration over the Trading of State-owned Assets in Enterprises, Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies, Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, Several Provisions on the Alteration of Investors' Equities in Foreign Investment Enterprises, Administrative Measures for Outbound Investment, Administrative Measures for Approval and Record-filing on Overseas Investment Projects, Anti-monopoly Law, etc.
The competent regulation authorities vary for different types of the companies. In detail, the main regulation authority for M&A of the A-share listed companies is China Securities Regulatory Commission (“CSRC”) and/or Stock Exchange; the key regulation authority for M&A of the state owned companies is state owned assets supervision and administration department; the main regulation authorities for M&A of the foreign investment (foreign investor acquires the domestic companies or foreign investment companies’ acquisition, etc. ) are departments of business, foreign exchange, and others; National Development and Reform (“NDRC”), Ministry of the Commerce, and other related authorities regulate the outbound investment of the domestic companies; meanwhile, acquisitions referring to certain special industrial companies need the approvals of the industrial regulation departments. For example, the mergers and acquisitions among finance, insurance, securities companies may be involved the supervision of the China Banking Regulatory Commission, the China Insurance Regulatory Commission, CSRC.
Finland and the Nordic countries generally provide a very stable and predictable regulatory environment for M&A activity. The local process for private M&A deals is broadly similar to that of the UK or the US with relevant transaction documentation being drafted in English. The key legislation relating to M&A activity is modern, and allows for flexible design of transaction and holding structures.
The key laws relating to M&A in Finland are the Limited Liability Companies Act governing the type of limited companies that are most commonly used in Finland, and the Competition Act governing the local merger control approval process. The Act on the Monitoring of Foreigners' Corporate Acquisitions in Finland may become applicable in certain cases where there is an important national interest in the target company (e.g. defence industry). In addition to the above, there are relevant provisions in the local employment legislation in relation to transfer of business operations. Also various tax laws become relevant in an M&A context.
The key regulatory authorities for M&A activities in Finland are the Finnish Competition and Consumer Authority handling local merger control approvals, the Finnish Tax Authorities, and the Ministry of Economic Affairs and Employment, which handles the monitoring and approvals for foreign corporate acquisitions in certain sectors having important national interest.
The regulatory environment for M&A has remained quite stable with certain notable changes to tax and industry-specific regulations. Finland has recently imposed restrictions on the deduction of certain interest payments to affiliated entities for tax purposes. This has particular relevance to both new and existing cross-border financing structures (often implemented in an M&A context). Tax authorities are expected to increasingly scrutinise certain types of transaction structures, including those that involve shareholder loans between Finnish operating companies and offshore holding structures. The tax authorities are also very focused on transfer pricing and there is some high-profile tax litigation pending in this regard. Finland’s corporate tax rate was quite recently lowered to 20%.
The Civil Code (Bürgerliches Gesetzbuch), the Commercial Code (Handelsgesetzbuch), the Limited Liability Companies Act (GmbH-Gesetz) and the Stock Corporation Act (Aktiengesetz) provide the key rules to M&A with special rules for the different types of entities. Public companies and offers relating thereto are more specifically regulated by the Securities Trading Act (Wertpapierhandlesgesetz), the Securities Acquisition and Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) and the Offer Regulation (Angebotsverordnung).
Public takeovers are overseen by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht ’BaFin’). BaFin is also competent for the supervision of the financial industry (banking and insurance), including regulatory review of acquisitions in those industries. The Federal Network Agency (Bundesnetzagentur) supervises transactions related to the energy, telecommunication and infrastructure sectors.
Under the Foreign Trade Act (Außenwirtschaftsgesetz) and the Foreign Trade Ordinance (Außenwirtschaftsverordnung), the Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie) has the authority to review whether an acquisition of 25% or more of the voting rights in a German business by an acquirer domiciled outside the territory of the European Union (EU) or the European Free Trade Association (EFTA) poses a threat to public order or national security. Generally speaking, there is no obligation to notify any such transaction to the ministry or to seek the ministry’s approval. Nevertheless, if the acquisition includes a business that manufactures goods or provides services related to public order or national security (e.g. dual-use goods) most potential acquirers will apply for a certificate of non-objection (Unbedenklichkeitsbescheinigung) by the ministry in order to avoid a later interdiction of the acquisition. De facto acquirers should therefore notify such transactions to obtain legal certainty. A statutory obligation to notify an acquisition is only invoked if the target´s business concerns particularly sensitive goods (e.g. war weapons, products with IT-security functions used to process classified state information, etc.).
With respect to merger control, for relevant transactions that are not within the regime of European merger control, the German Federal Cartel Office (Bundeskartellamt) is the competent authority.
For the purposes of this questionnaire, the focus will be on M&A transactions relating to Greek companies limited by shares (anonimi eteria), which represent the vast majority of target companies in M&A transactions in Greece.
It is worth noting that the major part of Greek legislation pertaining to M&A transactions stems from the application of European Union legislation, which has been incorporated within the Greek legal system.
The key provisions on the mergers of target companies are to be found in Law 2190/1920 containing provisions applicable to various types of mergers of target companies through different combinations of absorption, division and formation of companies. There are no statutory provisions regulating the merger of companies of different types, although there are provisions regarding the transformation of a company limited by shares into another type of company and vice versa. Law 2190/1920 does not regulate the spin-off of a division, sector or department and its absorption or acquisition by another company, although such transactions are quite common in the Greek market and are regulated by applicable tax legislation and the application of companies’ law by analogy.
The key provisions on the effecting of share and asset acquisitions, which are the type of acquisition deal most often encountered in Greece, are to be found in Law 2190/1920 in combination with the Greek Civil Code. Moreover, tax Law 4172/2013 (‘Income Tax Code’), the Legislative Decree 1297/1972 and the Law 2166/1993 provide tax and other incentives applicable to M&A transactions.
M&A deals regarding companies listed on the Athens Exchange are governed by specific rules with respect to the transfer agreement itself (transfer of shares on or off exchange) and the disclosure obligations, which will be set forth below.
A key regulatory and supervisory authority with major role in the Greek M&A activity, reference should be made to Hellenic Competition Commission, having the authority to protect the proper functioning of the market and to ensure the enforcement of the rules on competition. In cases of companies listed on the Athens Exchange and depending on the way an M&A deal will take place, the Hellenic Capital Market Commission (hereinafter HCMC), which aims to ensure the protection and the efficient operation of the capital market in Greece, may also be involved. Moreover, several business sectors in Greece are regulated by dedicated regulatory and/or supervisory authorities (such as the Regulatory Authority for Energy or the Bank of Greece for credit institutions, financing institutions, etc), whose prior notification or approval may be required for a M&A deal involving entities in such sector.
The Companies (Guernsey) Law, 2008, as amended (Guernsey Companies Law) provides the legal framework for a Guernsey company’s operation in all areas, including any merger and acquisition (M&A) of the Guernsey company.
The UK Panel on Takeovers and Mergers (Takeovers Panel) regulates takeovers and mergers in Guernsey that fall within the ambit of the UK City Code on Takeovers and Mergers (Takeover Code). The Takeover Code will apply to a Guernsey company when either:
- the company’s securities are admitted to trading on a regulated market or multilateral trading facility (MTF) in the UK or on any stock exchange in the Channel Islands or the Isle of Man; or
- if the company has its place of central management and control in the UK, Channel Islands or Isle of Man and one or more of the following apply:
- any of its securities have been admitted to trading on a regulated market or MTF in the UK, Channel Islands or Isle of Man at any time in the last 10 years;
- dealings or prices for dealings have been published for a continuous period of at least 6 months in the previous 10 years;
- any of the company’s securities have been subject to a marketing arrangement as defined under UK Companies legislation at any time in the previous 10 years;
- the company has publicly filed a prospectus with the Registrar of Companies or any other relevant authority in the UK, Channel Islands or Isle of Man at any time in the previous 10 years.
The Takeover Code does not apply to open-ended investment companies.
If the M&A involves a business which is regulated in Guernsey (this includes banks, insurance companies, investment businesses and trust and fiduciary businesses), the consent of the Guernsey Financial Services Commission (GFSC) will be required. Change of control notifications may also need to be made where a parent undertaking of a GFSC licensed entity is acquired or subject to a merger.
The Channel Islands Competition and Regulatory Authorities (CICRA) regulate any merger or acquisition which satisfies a turnover test relating to turnover arising in Guernsey and the Channel Islands.
Isle of Man
In the Isle of Man a company may be incorporated under either the traditional Isle of Man Companies Acts 1931-2004 (1931 Act) or the modern Isle of Man Companies Act 2006 (2006 Act). The act under which a company is incorporated will provide the legal framework for its operation in all areas including any merger and acquisition (M&A).
The United Kingdom (UK) City Code on Takeovers and Mergers (Takeover Code) extends to the Isle of Man and applies in relation to certain Isle of Man listed companies. The Takeover Code will apply to a Manx company if any of its securities are admitted to a regulated market or multilateral trading facility in the UK (such as AIM or ISDX Growth Market) or any stock exchange in the Isle of Man or Channel Islands.
The Takeover Code may also apply to any other public company incorporated in the Isle of Man if it has its place of central management and control in the UK.
The key laws applicable to M&A in Japan are:
- The Companies Act;
- The Financial Instruments and Exchange Act (FIEA);
- The Act on Prohibition of Private Monopolization and Maintenance of Fair Trade; and
- The Foreign Exchange and Foreign Trade Act.
The Financial Services Agency, the Japan Fair Trade Commission and the Ministry of Finance are the key regulatory authorities.
The key corporate specific legislation governing M&A in the Norwegian market is primarily the Private Limited Liability Companies Act (1997) (the "LLCA"), the Public Limited Liability Companies Act (1997) (the "PLLCA") and the Partnership Act (1985). Further, public companies whose securities are listed on the Oslo Stock Exchange or another regulated market in Norway are also subject to the Securities Trading Act (2007) (the "STA"), the Securities Trading Regulation (2007), the Stock Exchange Act (the "SEA"), the Stock Exchange Regulation (the "SER").
In addition to the above-mentioned corporate framework, business transactions will on a case by case basis be supplemented by various and more general provisions found in, inter alia, the Contract Act (1918) (which applies to almost any contract), the Sales of Goods Act (1988), the Income Tax Act (1999) and the Accounting Act (1998) (both pertaining to transactional tax considerations) and the Working Environment Act (2005). In addition, the Competition Act (2004) provides regulations on, and the procedure to intervene against, anti-competitive concentrations. Companies that are active in the Norwegian market (generally in larger transactions) must also consider and abide by the merger control provisions set out in the EEA Agreement.
The primary regulators governing the M&A activity in Norway are the Financial Supervisory Authority (Finanstilsynet) (FSAN), the Norwegian Competition Authority (the "NCA"), the Ministry of Finance, the Ministry of Justice and the Ministry of Trade, Industry and Fishery.
The main document regulating the M&A sector in Russia is the Civil Code of the Russian Federation (Part 1) dated 30 November 1994 No. 51-FZ, which has recently undergone substantial reform aimed, inter alia, at liberalisation of legal regulation of the M&A sector and, generally, corporate and contract law.
Depending on the form of the target Russian company, Federal law ‘On joint-stock companies’ or Federal law ‘On limited liability companies’ also will apply to the transaction in question.
An important part of M&A regulation is set forth in Federal law ‘On protection of competition' dated 26 July 2006 No. 135-FZ.
Specific M&A relevant provisions can be found in other laws and regulations, such as Federal law ‘On securities market’ dated 22 April 1996 No. 39-FZ and Federal law No. 57-FZ ‘On procedures for foreign investments in companies of strategic importance for national defence and state security’ dated 29 April 2008.
The Federal Antimonopoly Service of the Russian Federation (FAS) is responsible for control over compliance with antimonopoly legislation, legislation in the field of natural monopolies’ activity, legislation on foreign investments in Russia. FAS may also issue some decrees or regulations related to some procedural aspects of M&A transactions.
A wide range of powers has been transferred from the Federal Service on Financial Markets (former Federal Commission for the Securities Market) to the Central Bank of Russia starting 1 September 2013. It is now responsible for adoption of regulations, control and supervision over all financial markets.
The Kingdom's legislative structure is based primarily on Sharia Law, the fundamental principles of Islam which remain uncodified. This is supplemented by more specific laws and regulations, which, in turn, must comply with the provisions of Sharia Law. General legal principles, such as fairness and the assumption of risk by an asset-holder, are enshrined in Sharia Law and are often relevant and applicable to legal issues.
The law most relevant to both public and private corporate transactions is the New Companies Law of 2015 ("NCL"), which came into force in May 2016 and replaced the previous Companies Law of 1965. The NCL now applies to all companies in the Kingdom, but provides those companies incorporated prior to May 2016 with a one year grace period to make the necessary updates to comply with its provisions.
For public M&A specifically, merger and acquisition regulations have been developed by the Kingdom's Capital Market Authority ("CMA"), modelled largely on the UK Takeover Code. These regulations came into force in 2007 and were subsequently amended in 2012 (the "M&A Regulations").
The Saudi Arabia General Investment Authority ("SAGIA") is the authority responsible for regulating all foreign investment, both in the private and public sectors, and manages the licensing regime for such investments. There is also a Foreign Investment Law including sector-specific rules and ownership restrictions applicable to foreign investors ("FIL").
The Ministry of Commerce and Investment ("MOCI") regulates the establishment and liquidation of private entities (for example, sole proprietorships, partnerships, branches of foreign entities limited liability companies, closed joint stock companies ("CJSCs") and public joint stock companies ("PJSCs") (the latter being the form of listed corporate vehicle in the Kingdom)).
The following are the Thai laws which are generally relevant in M&A activities and the governmental authorities in charge of them: -
The Securities and Exchange Act B.E. 2535 (1992), as amended, (SEC Act) including various notifications (such as disclosure requirements and takeover regulations) issued under it - the Securities and Exchange Commission (SEC) is the regulatory authority for this legislation.
The Thai Public Limited Company Act B.E. 2535 (1992), as amended (PLC Act) – the Ministry of Commerce (MoC) is the regulatory authority for this legislation. The PLC Act is relevant where an acquiror or a target company is a public company.
The Thai Civil and Commercial Code, as amended (CCC) – the MoC is the regulatory authority for this legislation. The CCC is relevant where an acquirer or a target company is a private company.
The Foreign Business Act, B.E. 2542 (1999)(FBA) - the MoC is the regulatory authority for this legislation.
The cornerstones of M&A regulation in Malta are found in the Civil Code (Chapter 16 of the Laws of Malta) and the Companies Act (Chapter 386 of the Laws of Malta) ( the ‘CA’). These are supplemented by the Listing Rules issued by the Malta Financial Services Authority, applicable to those companies whose securities are admitted to trading on a regulated market.
The framework regulating market abuse set out in the Financial Markets Abuse Act (Chapter 476 of the Laws of Malta) and the anti-trust regime as promulgated by the Control of Concentration Regulations (Subsidiary Legislation 379.08, Laws of Malta) complement the main legislation together with sector-specific rules, targeting, amongst others, the financial and investment services, banking, insurance and gaming industries.
Supervision and monitoring is vested in the Registry of Companies. Compliance of issuers having securities admitted to trading on a regulated market is vested with the Listing Authority, a specialised arm within the Malta Financial Services Authority (the ‘MFSA’). The MFSA is also the regulator of banking and financial institutions, investment services providers and insurance companies. The Malta Competition and Affairs Authority monitors anti-trust matters.
Mergers and acquisitions are governed principally by the Companies Act 2001, Securities Act 2005 and the Competition Act 2007.
The institution and regulatory bodies regulating mergers and acquisitions are Registrar of Companies (ROC), the Financial Services Commission (FSC) and the Competition Commission.
In the U.S., both the federal government and state governments regulate matters relevant to M&A.
At the federal level, M&A activity is subject to the federal securities laws, principally the Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of 1934 (the Exchange Act). The Securities and Exchange Commission (SEC) is the federal agency charged with enforcing the federal securities laws and has promulgated extensive rules and regulations under both the Securities Act and Exchange Act. The Securities Act governs the offer and sale of securities, and so potentially applies to any transaction in which securities are being purchased, sold or exchanged, including M&A transactions. The Exchange Act deals with, among other things, ongoing reporting obligations for public companies, tender offers, proxy statements and shareholder obligations to disclose ownership and transactions with respect to shares of public companies. All M&A transactions must also comply with the federal antitrust laws, which are enforced by the Antitrust Division of the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC). Acquisitions by non-U.S. entities are also potentially subject to review by the Committee on Foreign Investment in the U.S. (CFIUS).
In the U.S., corporations are incorporated under the laws of a particular state (rather than federal law). As a result, state law principally addresses matters such as the formation and dissolution of corporations, duties of boards of directors, mergers and other forms of business combinations, shareholder voting requirements, shareholder meetings and amendments to organisational documents. State law relevant to corporations consists of both the state corporation statutes enacted by state governments as well as common law arising out of judicial decisions. Though state laws relevant to corporations have many common elements across states, there are significant differences among them (particularly with respect to matters such as business combinations and the obligations of directors in connection with M&A activity). Because many major U.S. corporations are incorporated in Delaware, the Delaware General Corporation Law (DGCL) and the common law embodied in decisions of the Delaware courts are generally the most important and influential state corporation law. However, on key matters relevant to M&A activity, a number of states have diverged from Delaware and so it is necessary to consider the law of the state of incorporation of the relevant companies in connection with a transaction.
Companies in certain industries such as banking, power and utilities, insurance, airlines, media and telecommunications may also be covered by specific state and federal regulatory regimes.
M&A transactions in Vietnam are primarily regulated by:
- the Law on Enterprises (2014) and its implementing legislation (the Law on Enterprises), from a general corporate law perspective; and
- the Law on Investment (2014) and its implementing legislation (the Law on Investment), from a general investment law perspective.
In the context of listed and other public companies, the Law on Securities (2013) and its implementing legislation (the Law on Securities) are of fundamental importance.
Other industry sector-specific laws also contain specific provisions regulating M&A transactions occurring within the relevant industry sectors, which are also of fundamental importance. Key examples include:
- the Law on Credit Institutions (2010) and its implementing legislation (the Law on Credit Institutions), in the context of the banking and finance sector; and
- the Law on Real Estate Business (2014) and its implementing legislation (the Law on Real Estate Business, in the context of the real estate sector.
International treaties of which Vietnam is a member are also crucial and must always be considered in relation to any Vietnam-based M&A transaction, including, most importantly, the market access commitments made by Vietnam to the WTO upon accession in 2006 (the WTO Commitments). In many cases the WTO Commitments are the key source of foreign ownership restrictions and related market access rules.
It is also often necessary for parties to consider other broadly-applicable laws such as the Law on Competition (2004) and its implementing legislation (the Law on Competition).
The key (but not the only relevant) regulatory authorities in relation to Vietnam-based M&A transactions include:
- the Ministry of Planning and Investment (at central Government level) (the MPI) and the various relevant Departments of Planning and Investment (at municipal or provincial level) (the DPI);
- the Ministry of Industry and Trade (at central Government level) (the MOIT) and the various relevant Departments of Industry and Trade (at municipal or provincial level) (the DOIT), as well as the Vietnam Competition Authority (the VCA), which falls under the jurisdiction of the MOIT;
- the State Securities Commission (the SSC), in the case of listed or other public target companies; and
- the State Bank of Vietnam (the SBV), which amongst other important functions regulates foreign exchange control in Vietnam.
The key laws governing M&A in Jersey are:
- Part 18 (Takeovers), Part 18A (Compromises and Arrangements) and Part 18B (Mergers) of the Companies (Jersey) Law 1991;
- The UK City Code on Takeovers and Mergers (Takeover Code);
- The Competition (Jersey) Law 2005.
The key regulatory authorities are:
The UK Takeover Panel (Panel) has been appointed by the Companies (Appointment of Takeovers and Mergers Panel) (Jersey) Order 2009, made under Article 2 of the Companies (Takeovers and Mergers Panel) (Jersey) Law 2008, to carry out certain regulatory functions in relation to takeovers and mergers under Jersey law that fall within the ambit of the Takeover Code. The Takeover Code applies to offers for companies, other than open-ended investment companies, registered (and having their registered office) in the UK, the Channel Islands or the Isle of Man, where those companies have any of their securities admitted to trading on a regulated market in the UK or on any stock exchange in the Channel Islands or the Isle of Man. The Takeover Code also applies to offers for public companies and, in certain limited circumstances (relating to previous listings, marketing arrangements and issue of prospectuses), private companies, which have their registered offices in Jersey and which are considered by the Panel to have their place of central management and control in the UK, Channel Islands or Isle of Man.
The prior approval of the Channel Islands Competition and Regulatory Authorities will be required where the share of supply or purchase of one or more parties to a merger in any product or service exceeds relevant thresholds as set out in the Competition (Mergers and Acquisitions) (Jersey) Order 2010.
The consent of the Jersey Financial Services Commission will be required if the merger or acquisition involves entities carrying on a regulated activity in Jersey (which includes banking, insurance, funds, trust or fiduciary business) or if variation is needed of a consent issued to the target company pursuant to the Control of Borrowing (Jersey) Order 1958.
Key regulations applicable to M&A in Romania include: (i) the Romanian New Civil Code (the “NCC”), into force since 2011, (ii) Law no. 31/1990 on companies, irrespective of the target’s form of organization (i.e. limited liability company or joint-stock company), or (iii) the Capital Markets Law No. 297/2004.
The key regulatory authorities depend on a case by case basis, however the following entities are likely to come up when structuring a deal: (i) Romanian Trade Registry – ensures publicity of all matters related to shareholding, and management, (ii) the Romanian Competition Council – clears economic concentrations, (iii) in certain cases, the Supreme Council for National Defence, and (iv) where listed companies are involved, the Financial Services Authorities – approve applicable prospectuses (the “FSA”).
The key laws relevant to M&A in New Zealand are:
- the Companies Act 1993 – which governs the administration of New Zealand companies;
- the Takeovers Code – for transactions involving ‘code companies’ (any New Zealand company that is listed, or that has more than 50 shareholders);
- the NZSX Listing Rules – if one of the parties to the transaction is listed on the New Zealand Stock Exchange;
- the Financial Markets Conduct Act 2013 – which governs offer of financial products;
- the Overseas Investment Act 2005 and Regulations – if the business/assets being acquired are worth more than NZ$100 million or there is sensitive land; and
- the Commerce Act 1986 – if there are anti trust/competition law issues.
The key regulators are:
- for matters governed by the Companies Act or the Financial Reporting Act, the Ministry of Business Innovation and Economy (MBIE) – also referred to in this capacity as the Companies Office;
- for listed company matters, NZX, the exchange operator;
- for takeovers, the Takeovers Panel;
- for any offer of financial products (including scrip under a takeover offer), the Financial Markets Authority (FMA);
- for Overseas Investment Act matters, the Overseas Investment Office (OIO); and
- for anti trust/competition law issues, the Commerce Commission.
The basic legal framework for all M&A activity in the UK is provided by the English common law of contract and by way of statute, primarily, the Companies Act 2006 (the "Companies Act"), which, among other things, contains provisions relating to the conduct of takeovers and other mergers, business combinations and reconstructions.
In addition, UK public M&A is also regulated by the City Code on Takeovers and Mergers (the "Code"), a body of rules with statutory force which, broadly speaking, governs the conduct of takeovers of public companies listed on a UK stock exchange or regulated market (essentially the LSE or AIM). The Code is administered by the UK Panel on Takeovers and Mergers (the "Panel").
The Panel is responsible for the regulation and conduct of UK takeovers and must be made aware of and kept abreast of all matters related to any proposed takeover of a target company to which the Code applies.
The Code is a principles-based system, containing 38 detailed and specific rules which are framed around six key general principles. These, together, set out the standards of behaviour which market participants are expected to adhere to. It is a requirement of the Code that the rules are interpreted in accordance with the spirit of the general principles.
For those considering an acquisition of a listed UK target, the Criminal Justice Act 1993, together with the European Market Abuse Regulation set out rules intended to prevent insider dealing in target shares, together with measures intended to prevent market abuse or other distorting behaviour. These provisions are supplemented by certain provisions in the UK Listing Rules and the Code which govern disclosure of any dealings in shares in the target.
Where an acquirer is proposing to offer listed shares in whole or partial consideration for the shares it is proposing to acquire, the provisions set out in the Listing Rules and Prospectus Rules relating to the information which must be prepared (generally in the form of a prospectus) and made available in connection with such an offer will also apply.
Depending on the industry sector of the target company, there may also be other specific regulatory regimes to be observed, for example, the consent of the UK Financial Conduct Authority (the "FCA") is required in respect of any acquisition of a UK regulated financial institution. It is also worth noting that the UK secretary of state has the ability to intervene in transactions under certain limited circumstances which raise exceptional public interest considerations, primarily relating to the security of the UK or the stability of its financial system.
On larger transactions, it may also be necessary to secure approval(s) under applicable merger control rules. The application of these rules is considered in more detail at question 11 below.
The main Spanish rules regarding private contracts, including share purchase agreements, are both, the Civil Code (Código Civil) and the Code of Commerce (Código de Comercio). Additionally, the regulation of the corporate Spanish companies is the Spanish Companies Act (Ley de Sociedades de Capital). Besides, provided that any of the participating company´s share capital is quoted on the Spanish Stock Exchange, it also applies the Spanish Act of the Stock Exchange Market (Ley del Mercado de Valores) and any eventual takeover bids are foreseen in the Royal Decree 1066/2007, on the public takeovers bids regime (Real Decreto sobre el régimen de las ofertas públicas de adquisición de valores). In the event that the transaction implies the purchase of shares quoted on the Stock Exchange, the competent authority to preserve the law fulfilment is the Spanish Stock Exchange Commission (Comisión Nacional del Mercado de Valores or CNMV). Additionally, in terms of antitrust, the National Commission on the Markets and Competition (Comisión Nacional de Competencia) is the authority which is responsible for preserving and promoting an effective competition in the national markets. The different Commercial Registers (Registros Mercantiles) – which are located all over the country - are the competent to register companies´ life, implying legal beginning of effects (and available public information) once registered. But not the transfer of shares itself, which does not have to be registered (when transferred not by way of a Structural Change). In this case, and going back to private contracts, the Public Notaries, who in Spain attest the date of transfer and the capacity and authority of the relevant attendees, substitute any other regulatory authority – without prejudice to the National Commission on the Markets and Competition, when applicable.
The main regulations on mergers, spin-offs and other forms of corporate reorganizations are included in the Act of Structural Changes of Legal Companies (Ley de Modificaciones Estructurales de las Sociedades Mercantiles). As the previous case, the different Commercial Registers are the competent to register the corporate reorganizations, implying also legal beginning of effects (and available public information) once registered, without prejudice to competences of the Spanish Stock Exchange Commission (if any participating company´s share capital is quoted on the Spanish Stock Exchange) and the National Commission on the Markets and Competition (antitrust), when applicable.
The key laws relevant to M&A transactions in Turkey are (i) the Turkish Code of Obligations (regulating the contractual aspects between the parties), (ii) the Turkish Commercial Code (governing the corporate governance, mergers and spin-off transactions and the transfer of shares), (iii) the Capital Markets Law (specifically applicable to listed companies), (iv) the Corporate Tax Law (setting forth specific tax-related provisions regarding the merger and spin-off transactions) and (v) the Law on the Protection of Competition (aiming to prevent transactions restricting the competition).
In general terms, there is no obligation to obtain the approval of a public authority regarding M&A transactions.
However, in some cases, the approval of a public authority is mandatory depending on the specificity of the relevant M&A transaction. In this respect, the key regulatory authorities are (i) the Turkish Competition Authority in charge of approving the transactions which might have an adverse impact on competition in Turkey and (ii) the Capital Markets Board of Turkey overseeing the public takeovers.
Prior approval of certain public authorities is also required when the M&A transaction occurs in a specifically regulated sector and meets given thresholds and/or criteria, e.g. (i) the Banking Regulation and Supervision Agency, (ii) the Undersecretariat of Treasury of the Prime Ministry (insurance), (iii) the Energy Market Regulatory Authority, (iv) the Radio and Television Supreme Council (media), (v) Information and Communication Technologies authority (telecommunication), (vi) Tobacco and Alcohol Market Regulatory Authority and (vii) General Directorate of Mining Affairs.