What public-facing documentation is it necessary for a buyer to produce in connection with the acquisition of a listed company?
Mergers & Acquisitions
In the non-solicited acquisition of Brazilian listed companies which, as mentioned above, are very rare, the potential buyers have to produce the bid documents (edital) which contains very basic information about the proposed acquisition (such as, but not limited to, price, conditions, etc.). Other than that the documents filed with the antitrust authorities are public unless a specific request for privacy is made at the time of filing (such privacy only being possible in certain specific cases - but not all).
British Virgin Islands
There are no BVI laws or regulations requiring disclosure of discussions of acquisition decisions. The listing rules of the relevant stock exchange on which a BVI company may be listed will be relevant for such public documentary disclosure requirements.
The Cayman Islands do not have a law or regulation requiring disclosure of discussions of acquisition decisions.
For companies listed on the CSX, the Code provides that, during the course of an offer or when an offer is in contemplation, the offeror, the offeree and any of their respective advisers may not furnish information to some shareholders if such information is not available to all shareholders. This principle does not apply to the furnishing of information in confidence by the offeree company to a bona fide potential offeror or vice versa. To the extent that the discussions of the Board may contravene this provision, they should be disclosed to shareholders. For companies listed on other exchanges, the relevant listing rules will be relevant.
ZL: In terms of the Administrative Measures for the Takeover of Listed Companies, the buyer is obliged to produce: i) Report of Change in Equity when the equity it holds in a listed company has reached the statutory percentage, ii) Report of Takeover by Offer when it intends to increase its equity in the target company by tender offer, iii) Report of Takeover when it intends to increase its equity in the target company by agreement, indirect holding, etc. Meantime, the buyer shall submit to the Securities Exchange and the target company relevant documents in terms of the buyer identity, the funding source and other documents required by the CSRC for reference. When the acquisition of a listed company is conducted through material asset restructuring, the buyer is required to publicly commit to provide the information concerning the material asset restructuring and guarantee the authenticity, correctness and completeness of the above information.
If the acquirer launches a tender offer for the acquisition of a listed company, such offeror must before the commencement of the offer period prepare and publish an offer document. Such offer document must be filed to the Finnish Financial Services Authority ('FFSA') and contain sufficient information enabling an informed assessment of the merits of the offer (such as background and reasons of the offer, presentation of the target and offeror, grounds for the pricing of the offer, other terms and conditions, etc.). The Ministry of Finance Decree on Offer Documents, the Helsinki Takeover Code issued by the Finnish Securities Market Association, and the standards and guidelines issued by the FFSA include detailed requirements on the contents of the offer document.
An offer process requires first of all an announcement document. This document should contain: the bidder’s decision to launch a public offer, the offer price, the nature of the offer and the necessary information to access the published offer (such as a URL under which the offer document can be viewed). Shortly thereafter, an actual offer document is needed. This document is crucial for the target company’s shareholders to make their decision regarding the acceptance of the offer. Therefore, all relevant details which could affect the shareholders’ decision should be contained therein. German takeover law provides detailed information on the necessary elements of this offer document. Further disclosure is essential if the bidder submits an exchange offer rather than a cash offer. Additionally, the bidder’s ability to meet payment obligations in the offers must be confirmed by a securities services provider (usually a bank). A statement on the offer from the target company’s board and supervisory board will be issued following the publication of the offer document. This statement provides the target company’s shareholders with an opinion on the offer. The statement has to deal with the kind and amount of the consideration, the consequences for the target company, its employees and representatives, the conditions of employment and the sites of the target company, the goals pursued by the bidder, and the intention of the board and supervisory board members, who are shareholders of the target company, to accept the offer. During the following acceptance period the shareholders have the opportunity to accept the offer via acceptance forms from their depositary banks. The bidder is required to continuously state its total shareholdings in the target company during this period either weekly or daily during the last week of the offer period. The bidder is obliged to disclose the final results of the offer. Additional statements are required by the bidder in particular regarding all future acquisitions within one year as of the publication of the final results of the offer.
The answer depends on the way the acquisition of a listed company will take place (e.g. take over bid, transfer deal, share capital increase with the simultaneous participation of the buyer, etc) as well as on the entity purchasing the securities. In a simple share transfer, the buyer may not be required to provide any public facing documentation except for the materialising the on- exchange or off- exchange transfer (for example in order to acquire shares on exchange, such buyer must open a securities account with a custodian/investment firm for which legalisation documents will be required). In other transfers, however, more information may be required. In general, it must be noted Law 3340/2005 on market abuse includes provisions for the use of privileged information (i.e. prohibiting the use of confidential information by the board members of a listed company, etc) as well as provisions on obligations over listed companies for disclosure obligations (eg providing list of persons with access to confidential information, etc). Thus, in case the buyer is a listed company itself, such buyer must conform to the disclosure obligations in connection with the M&A deal. Furthermore, depending on the way the deal takes place, Law 3401/2005 on Prospectus (implementing the Prospectus Directive in Greece) may also need to be reviewed. For example, in case the acquisition of the listed entity is made through a share capital increase where a strategic investor (buyer) participates therein, a prospectus may be required. Or in case of a public offering of shares, a prospectus must be prepared which contains information concerning the issuer (target company), the securities offered to the public as well as other important information regarding the structure of the transaction and the offering of the securities and includes a summary, which briefly contains the most important information included in the prospectus. Furthermore, in case of a take-over bid, the buyer-offeror must produce the take-over bid offering memorandum with information about the buyer, securities acquired, consideration etc. in accordance with Law 3461/2007 on take over bids.
The requirements for public facing documentation will be determined by the rules of the stock exchange on which the target is listed.
Isle of Man
The requirements for public facing documentation will be determined by the rules of the stock exchange on which the target is listed.
The key public-facing documentation that is necessary for a buyer to produce in connection with the acquisition of a listed company are as follows:
• Notification of the buyer’s decision to make an offer, which is published by the Oslo Stock Exchange.
• An offer document (or a prospectus or equivalent document if applicable)
• An acceptance form.
• The buyer’s announcement of the result of the offer.
The offer document must be prepared and distributed to all shareholders in accordance with the provisions of the STA. In all material respects, the offer document will be the same irrespective of a bid being recommended or hostile, mandatory or voluntary. The offer document must inter alia include a description of the offer together with correct and complete information and a description on matters of significance for evaluating the offer.
The board of directors of the target company must also provide a statement on their response to the offer. In a recommended offer, it is not unusual that a buyer will prepare an initial draft board statement. Such draft statement will then be submitted to the target’s board exhibited to a draft transaction agreement. Note that depending on its terms, such transaction agreement between the target and a bidder regarding a potential takeover could trigger a disclosure obligation for the target. There are currently no explicit statutory provisions under Norwegian law requiring a buyer or a target to disclose the full details of such a transaction agreement. Nevertheless, the Code of Practise now recommends that significant transaction agreements should be disclosed. The decision to disclose such transaction agreements is still discretionary. Even so, it is recommended that the Buyer and the target seek to agree in advance if and when such disclosure should take place.
Note that in a mandatory offer (see question 24 below), a buyer must also obtain a bank guarantee confirming its ability to settle the consideration offered in full.
If the buyer is issuing a share-for-share offer, the buyer must comply with the provisions set out in chapter 7 of the STA. Very often, this will trigger an obligation on the Buyer to publish a combined prospectus and offer document.
Additional press announcements and supplements to the offer document or prospectus will often be required, for example if the buyer wants to increase the consideration offered. In hostile bid situations, it is not uncommon that a great variety of revised offers, announcements or circulars could be issued.
Russian law does not require the buyer to produce any public-facing documentation, except as referred to in the response to question 16 and except as mentioned below.
In case of acquisition of more than 30% of shares of a public joint-stock company, the buyer is required to submit its offer to the Bank of Russia for preliminary review before its delivery to the target.
A bidder for a listed target must produce and deliver and/or make available to the target shareholders the following:
• an announcement (including the identity of the bidder, the terms and conditions of the offer, and details of the proposed shareholding and any indemnity arrangements);
• a board circular from the target's board (summarising the terms and conditions of the offer and the target board's view on the same);
• an offer document (including financial information on the offer and parties involved, shareholdings of the bidder and target and any other unique arrangements); and
• if a valuation of assets is provided in connection with the offer, the opinion of a named independent valuer.
The offer document and board circular must also be published more widely by the bidder and target company, respectively. The offer document can only be published with the prior consent of the CMA.
Certain documents are also required to be made available for inspection for the duration of the offer period, with the offer document or target board circular identifying where such documents can be inspected. These documents are:
• the bidder and target's constitutional documents and audited consolidated accounts;
• written consents of financial advisers and documents related to the offer's financing arrangements;
• documents related to break fees or other similar arrangements;
• documents showing an irrevocable commitment to accept an offer; and
• other reports, valuations, letters or documents or parts of documents which are exhibited to, or referred to in, any document issued by the bidder or target in relation to the offer.
When a buyer acquires more than 5% of the shares of a listed company in Japan, a substantial shareholding report must be submitted to the Kanto Local Financial Bureau, which becomes publically available through the EDINET (Electronic Disclosure for Investors’ Network) system, pursuant to the FIEA. The buyer also has to submit a change of position report every time the buyer's shareholding ratio is increased or decreased by more than 1% thereafter.
In addition, when a buyer acquires shares of a company which is obligated to file an annual securities report pursuant to the FIEA (including a listed company) by tender-offer, the buyer needs to produce various public-facing documents. Firstly, the buyer must submit a Tender-Offer Statement to the Kanto Local Financial Bureau on the date it issued the Public Notice of the Commencement of the Tender Offer pursuant to the FIEA. The Tender-Offer Statement must include the terms and conditions of the tender-offer and information regarding the tender-offeror/target company, etc. The buyer also needs to disclose the results of the tender-offer (such as number of the tendered-shares) on the day following the last day of the offer period, by electronic public notice or in a daily newspaper. On the same date as the disclosure of the results of the tender-offer, the buyer must also submit the Tender-Offer Report to the Kanto Local Financial Bureau.
Generally, the common forms are: -
- 247-3 - announcement of intention to make a tender offer – which is generally required where there is, among other things, a formal letter submitted by the acquirer to a major shareholder.
- 247-4 - the tender offer form.
- 246-2- the disclosure of shareholding interest form which is required when the acquirer acquires shares and increases the number of shares held by it to a number which reaches or passes a multiple of 5 percent.
The bidder must provide the recipients of a public offer with an offer document. The offer document is a formal legal document containing detailed information for the shareholders to decide if they want to sell their shares. The offer document must be prepared in accordance with the principles of the Takeover Act and the recipients must have sufficient time and information in order to be able to reach a properly informed decision about the offer. The offer document must be prepared carefully, accurately and without omissions. The bidder also must appoint an independent expert to assess if the offer document is complete, in line with the legal requirements stipulated in the Takeover Act (especially with regard to the consideration that is offered) and if the bidder is capable of financing the offer. In addition, also the target company needs to appoint an independent expert who has to assess the offer and the target’s management and its supervisory board must issue responses to the bid.
Public offer documents can be downloaded on the website of the Takeover Commission.
Some follow-up documents also have to be filed with the Takeover Commission and published after such filing (e.g., note on the result of the tender proceedings).
In the context of a bid, the offeror is required to draw up and publish an offer document containing the information necessary so as to enable holders of securities in the target company to reach a properly informed decision on the bid.
Chapter 11 of the Listing Rules prescribes the minimum information that ought to be disclosed in the offer document. In addition to information relating to the terms of the bid, the identity of offeror, the securities in relation to which the bid is being made and the consideration offered, the offer document should, inter alia, also set out the conditions to which the bid is subject, the time allowed for the acceptance of the bid as well as information concerning the financing of the bid. The offer document should also disclose the offeror’s intentions with regard to the future business of the target company and of the offeror company (in so far as it is affected by the bid), and with regard to the safeguarding of the jobs of their employees and management, including any material change in the conditions of employment, and in particular the offeror’s strategic plans for the two companies and the likely repercussions on employment and the locations of the companies’ places of business. A report on the consideration offered, drawn up by an independent expert and confirming that the offeror has sufficient resources to meet the consideration to be provided on full acceptance of the offer and to pay any debts incurred in connection with the offer ought to be appended to the offer document.
The type of documentation a buyer is required to produce is determined by whether the acquisition is structured as an all-cash deal or if the consideration will include stock. In an all-cash deal structured as a two-step transaction, the buyer is required to prepare an offer to purchase in connection with the tender offer. The offer to purchase contains very limited information about the target and acquirer, a summary of the negotiations leading up to the transaction, certain information about the acquirer’s plans for the target company and the source and amount of the funds the acquirer is using for the transaction (including a description of any financing arrangements). The target company must prepare and file a Schedule 14D-9, in which the target board provides its recommendation to shareholders with respect to the tender offer.
In a one-step all-cash deal, the target company must prepare a proxy statement for delivery to its shareholders. The proxy statement contains much of the same information about the buyer as an offer to purchase.
In transactions involving stock consideration, the buyer is generally required to prepare and file with the SEC a registration statement containing a prospectus that includes information about both the buyer and the target company. That prospectus will also usually function as the proxy statement for the target company in a merger structure. Among other things, the proxy statement/prospectus must contain all the information (including buyer financial statement information) that would be included in a prospectus for the buyer, including, if the acquisition is material to the buyer, pro forma financial statements. In an exchange offer (which is not a common structure outside of the hostile bid context), the buyer’s prospectus will also contain the information that would be contained in an offer to purchase for cash, and the target company is required to file Schedule 14D-9. For acquirers which are not already reporting companies under the Exchange Act, the disclosure requirements associated with using stock consideration can be quite substantial and can involve significant time in order to comply.
Where the purchaser is required to implement a mandatory public offer in relation to shares in a public target company, the purchaser is required to prepare, have approved by the SSC, and then publish a standard-form offer document, which sets out all of the key particulars of the purchaser and the offer.
Where the purchaser is already (or post-acquisition will become) a “major shareholder” (that is, holding 5% or more of the issued voting share capital) of a public company, the purchaser is required to prepare and then disclose publicly a standard-form disclosure document setting out the key particulars of the purchaser and the shares having been acquired.
- Offer document
- Acceptance form
- Prospectus or similar document (if required)
This will be determined by the rules of the stock exchange upon which the target is listed but typically this will include:
- a circular setting out the terms and conditions of the offer;
- the offer document and/or prospectus; and
- an acceptance form.
The acquisition of shares in a listed-company is carried out by specific intermediaries (investment firms, credit institutions authorised to provide financial services, and financial investment services companies), through specific capital markets procedures. Such procedures generally mirror European directives, and regulations dealing with capital markets and public offerings.
In case of acquisition of more than 33% of a listed company’s shares, the buyer must give a notice to the FSA. The FSA will approve the notice and forward it to the target company and to a central and local newspaper in view of publication. Within 30 days as of the publication of the notice, the buyer must submit a mandatory takeover bid addressed to all of the target’s shareholders to the FSA in view of approval.
No specific public-facing documentation must be provided for on the market acquisitions of shares in listed companies.
However, in case of mandatory or voluntary take-over bids the potential buyer must provide vast information in connection with both its and the envisaged transaction, including a complete identification of the buyer and any other information that the authorities seem appropriate for the investors’ protection.
For a takeover:
- a Takeover Offer;
- if the consideration includes scrip, a Product Disclosure Statement;
- Scheme Implementation Agreement; and
- Notice of Meeting/Information Memorandum (including mandatory Independent Adviser Report (valuation/terms)).
There are a number of public documents that a buyer is required to prepare, publish and disseminate in connection with an acquisition of a listed company. These include:
- the various announcements required under the Code (e.g. announcement of a possible offer or a firm intention to make an offer, an announcement that commences an offer period, such as a leak announcement and periodic announcements of acceptance levels, extensions of offer etc.);
- circular to the target shareholders summarising the terms and conditions of the offer;
- where a contractual offer is being made, the offer document and, in a hostile bid, subsequent documents (including any revised offer document);
- a form of acceptance, to be used by target shareholder in order to accept a contractual offer will also be prepared and circulated with the offer document;
- in the case of an offer by way of scheme of arrangement, a scheme document (note that this document is produced by the target, with input from the bidder); and
- prospectus (or equivalent) if the bidder is offering its own securities by way of consideration.
Documents or advertisements must be prepared with the highest standard of care and accuracy, and the information contained in them must be adequately and fairly presented. Information must be made equally available to all the target shareholders.
Any document or advertisement published by a bidder should include a responsibility statement whereby the bidder's directors accept responsibility for information, to the effect that to the best of their knowledge and belief, after taking reasonable care, the information is accurate and not misleading. Where the bid has been recommended by Target directors, the offer document produced by the bidder should also include a letter from the chairman of the target board making a recommendation to target shareholders. In an unrecommended offer, if information relating to the target is included, having been compiled from published sources, the responsibility then is only to ensure that it is correctly and fairly reproduced and presented.
Potential liability may also arise for the bidder and, in certain circumstances, any director, officers or shareholders of the bidder if the offer document fails to meet certain detailed disclosure requirements set out in the Code.
Essentially it is important that any information published by a bidder or by its directors, representatives or advisers in the course of the takeover – whether orally, through the press, by formal documents or any other means – is prepared with due care, is accurate and is not misleading.
Even if no personal liability attaches to a director, it can be damaging (not to mention embarrassing) to have to correct an inaccurate or unverifiable statement publicly
In Spain, it is only necessary for a buyer to produce public-facing documentation in public takeover bids (OPAs) scenarios. Such information shall be controlled by the Spanish Stock Exchange Commission (Comisión Nacional del Mercado de Valores or CNMV). Please note that the buyer shall execute a public takeover bid (OPA) if the buyer becomes, or will become, the owner of, at least, 30% of the listed company share capital or, in general terms, when the buyer acquires the direct or indirect control of the listed company.
In such events, the Royal Decree 1066/2007, on the public takeovers bids regime (Real Decreto sobre el régimen de las ofertas públicas de adquisición de valores), which shall be taken into consideration with other regulations, establishes the minimum information that shall include, from one side, the mandatory public announcements and, from the other, the informative prospectus on the takeover bid which shall be made available to the general public and the employees. The minimum information that shall include both documents is very exhaustive and, in general terms, refers to (i) the buyer and its group; (ii) the relevant listed company; (iii) the relevant shares and other rights of the applicable listed company; (iv) the offered consideration; (v) the takeover bid conditions; (vi) guaranties; (vii) financing; (viii) the acceptance and liquidation process, and (ix) the purpose and necessary authorizations to execute such takeover bid.