What regulatory/third party approvals are required and what waiting periods do these impose, if any?
Mergers & Acquisitions
There is no specific approvals related to foreign investments (with very few and specific exceptions), but, on the other range, there may be a wide range of regulatory approvals and waiting periods, which will mostly depend on the industry where the target acts. The approval that is required market-wide, regardless of the industry is antitrust related. Pursuant to Law No. 12,529/2011, a merger control notification will be required if a transaction with effects in Brazil is qualified as a “concentration” under the merger regulation and at least two of the economic groups involved in the deal (including the seller group) have met revenue thresholds in the previous fiscal year. The thresholds are: turnover or total volume of business in the amount of BRL 750 million (approx. €176.4 million) by one party and BRL 75 million (approx. €17.64 million) by any other party. The definition of “concentration” is very broad, covering: (i) acquisition of control; (ii) acquisition of certain minority stakes (acquisition of 20% and in a few cases even of 5% may be reportable) or assets and (iii) certain association/collaborative agreements, consortia and joint ventures.
Highly regulated industries such as infrastructure (which is on the rise in the country) also need to be quoted and not for a good reason. Preliminary approval by government entities is frequently required in this industry in the case of disposals of controlling stake. The problem is that the definition of control is not uniform across the regulatory agencies and the thresholds differ. There are also no legal deadlines for the response of Brazilian agencies and by default a deal is not authorized if there is no express approval. That makes the process of preliminary approval highly dependent on the interface between the parties of an M&A and the government authorities.
Another important restriction imposed by regulatory authorities, which usually drive the drafting of corporate structures, is the restriction imposed on foreigners (entities or individuals) to own (or control) rural properties in Brazil. This restriction is expected to be lifted by the Brazilian congress soon, although there is not yet a timeline for voting the related senate project.
There are a number of statutory consents and approvals required under Bermuda law in an M&A transaction. The BMA is required to give its permission for the acquisition (whether by transfer or issuance) of shares in a target company.
Further material change and change-of-control consents are also likely to be required for regulated entities licensed by the BMA due to the nature of their business, including, insurers, banks and investment businesses.
Whilst the approval of the BMA for the straightforward permission to issue or transfer shares is generally available within a few business days, other regulatory approvals can take a few weeks.
Where a target company is operating in a market which is not supervised by the BMA but by another authority, for example, telecommunications, specific advice should be sought.
British Virgin Islands
There are no third party approvals required under the Act and there is no equivalent of a takeover code in the BVI, however the takeover code of whichever jurisdiction the target may be listed in will be a factor. Certain regulated entities are however subject to restrictions placed on them by other sources of legislation namely in the insurance, regulated funds and bank and trust company sectors.
Takeovers in the insurance business will be covered by the Insurance Act 2008 as amended (Insurance Act) along with secondary insurance regulations; under the Insurance Act it is necessary for regulatory approval from the Financial Services Commission (Commission). If the insurer is involved in the life and health insurance business the approval of the court will also be required. There is no specific timeline provided in the Insurance Act, however the Commission may at the cost of the insurer investigate any proposed merger. The Insurance Act further states that any merger of any part of the business not approved by the Commission (or courts, to the extent required) shall be void.
Regulated funds will have additional criteria imposed by the Securities Investment Business Act 2010 (SIBA) which requires the written approval of the Commission prior to: (a) a parent company which is a regulated fund acquiring a subsidiary company; and (b) any person who owns, holds or acquires a significant interest in a regulated fund be permitted to dispose of its interest in such fund.
BVI target companies that are banks or trust companies licensed under the Bank and Trust Companies Act, as amended (BTCA) will also need to seek consent of the Commission prior to any transfer, sale, charge or other disposition of the interest in a license.
Other than those set out at question 1, there are generally no authorisations, consents, approvals, licences, validations or exemptions required by law from any governmental authority, agency or other official body in the Cayman Islands in connection an M&A transaction. While the merger documents are required to be filed with the Registrar of Companies, upon the satisfaction of the statutory requirements, the plan of merger will be registered – there is no discretion to refuse registration.
A scheme of arrangement is subject to the sanction of the court, although the court’s principal role in the scheme is to ensure procedural fairness and not to assess the commercial benefits of the proposal. Any shareholder or creditor who objects to the scheme is entitled to attend the relevant court hearing to object. However, an objection solely on the grounds that the scheme is commercially a ‘bad deal’ is unlikely to succeed if such scheme has the support of the requisite majorities.
ZL: The required approvals are different in accordance with the different forms, parties of the transaction, and target company’s nature of the M&A.
For example, if the counterparty of M&A is a state owned company, then the transaction is likely to be required to go through the listing transfer process at Assets and Equity Exchange, asset appraisal process of the target shares and obtain approval/filing from the state owned assets supervision and administration department; the transaction of a listed company that involves Material Asset Restructuring, Back-door Listing or issuing shares etc. is required to obtain approval from CSRC or Stock Exchange; if the target company is an offshore company, then the transaction is also required to go through the examination, filing and registration process with NDRC, Ministry of the Commerce, and foreign exchange bank; the M&A of certain industry may also requires the approval from competent industrial administrations, e.g. the M&A of financing, insurance, securities company may requires approval from China Banking Regulatory Commission, the China Insurance Regulatory Commission and CSRC.
According to our experience, it’s different in every case to complete the approval from regulator/a third party. The time cost depends mainly on the department, level of approval, structure of transaction, industry of the target company etc. Generally, it takes more time to obtain approval from the state owned assets supervision and administration department, CSRC and NDRC；it takes less time to obtain approval from Industrial and Commercial Bureau and the State Administration of Foreign Exchange etc.
M&A transactions exceeding certain turnover hurdles must be notified either to the Finnish Competition and Consumer Authority or to the European Commission in accordance with the applicable national and EU merger control legislation. The national merger control process may take from one to four months depending on whether the matter can be decided in first phase investigations or whether the authorities consider that the matter requires further scrutiny in second phase investigations.
If the target company is engaged in a business that is of material national interest (including for example the defence sector or important infrastructure), then the Act on the Monitoring of Foreigners' Corporate Acquisitions in Finland may become applicable and the transaction may require the approval of the Ministry of Economic Affairs and Employment.
The timetable for M&A transactions depends on various prerequisites, which usually differ from case to case. However, from a general experience it is fair to say that a private transaction usually requires a minimum period of three to six months. The average duration from kick-off to closing (including merger control) should be nine to twelve months. Public transactions usually take a minimum period of three to six months from the announcement of the offer to closing (four weeks for the preparation of the offer, ten days for the approval by BaFin of the offer, followed by a minimum acceptance period of the offer of four weeks during which the executive board and the supervisory board of the target will also prepare and publish a statement that includes a recommendation for the shareholders as to accept or reject the offer, extended acceptance period of two weeks if offer is successful and approximately two weeks for the closing of the offer).
In a public takeover prior to the bid’s commencement and publication, the offer document must be approved by the BaFin. Furthermore, approval from the competent competition authorities may be needed. Other consent requirements depend largely on the nature of the offer. If shares are to be offered as consideration, the approval of the bidder’s shareholders is often required depending on the nature of the bidder’s company statutes in the course of a necessary capital increase, etc. As mentioned in the answers to questions 2.10 and 2.11, employee approval at the target company level is not required.
With respect to merger clearance below the thresholds of a European merger clearance procedure, the following applies: After submission of a complete notification, the German Federal Cartel Office (FCO) must decide within one month whether to clear the merger (phase I) or, if the transaction raises competition concerns, whether to commence an in-depth investigation (phase II). Decisions in phase II proceedings must be issued within four months from the notification date. In the event that the notifying parties propose commitments in Phase II to mitigate concerns of the FCO, phase II is automatically extended by one month (i.e. five months from date of notification) to allow the FCO to market test the commitments. With the consent of the notifying parties, further extensions of the review period are possible.
With respect to certain key sectors (such as defence, energy, aviation) specific procedures apply that can also result in approval requirements of regulatory bodies.
The completion of mergers is subject to approval by competent supervising authority and registration with companies’ registry, the overall process being completely usually during a period of 2 to 4 months from the merger kick-off. Share and asset deals are not in principle subject to any regulatory/third party approvals, except where special legislation applies to specific types of assets (e.g. real estate, intellectual property etc.). That said, the regulatory approvals and/or notifications required in the event of M&A deals in Greece are highly dependent on the sector in which the target company belongs. Thus, some sectors are supervised by regulatory authorities whose prior notification and/ or approval may be required depending on the percentages of share capital/ voting rights to be acquired (eg in case of transfer of shares of credit institutions or investment firms where the prior notification or approval by the Bank of Greece or the HCMC accordingly may be required depending on the percentages of shares sold and/or acquired). In such cases, different procedures must be followed in order for the transfer to be completed and various time frames apply.
As a typical example, under the protective and regulatory regime of the Hellenic Competition Commission, Law 3959/2011 dictates that any acquisitions, including the closing and performance of any deal, is subject to the approval of the Commission, when the buyer and the target company have an aggregate worldwide turnover of at least 150 million euros and two of the participating companies have a turnover of at least 15 million euros in Greece. Article 8 of Law 3959/2011 sets out the outline of the waiting periods for the issuance of the approval; unless any procedural impediments set forth by the law take place, the M&A deal will be deemed approved or otherwise within a maximum of 120 days after the Commission has been notified of the deal.
Where the approval of CICRA is required, there are two application routes available:
- if the acquiring entity is a credit or financial institution, the shortened merger application route may be used. Upon receipt of the application, CICRA will register the application and post a notice on its website inviting comments from the public for a period of 7 days. If no comments are received and CICRA has no concerns over the proposed merger or acquisition, a short form decision will be published on the next working day after expiry of 14 days from the date of registration of the application. If CICRA does have concerns, it will require the parties to prepare a standard application form;
- in all other circumstances, the standard application route must be used. If the transaction is unlikely to raise substantive competition issues, a draft application form should be submitted to CICRA at least 5 working days in advance of the intended final form being filed. If the application is likely to raise significant issues, CICRA also expects the parties to request a pre-filing meeting to discuss the proposal and potential issues. Upon receipt of the application, CICRA will register the application and publish a notice on their website inviting comments from the pubic for a period of 2 weeks. Whilst there is no deadline for a response on the application form, CICRA endeavours to reach a decision within 25 working days of registration, subject to requiring any further information. If issues arise that mean that CICRA may refuse the application or grant consent but with conditions, CICRA will undertake a second detailed review. Again, there is no statutory deadline for a response but CICRA aims to reach a final decision within 6 months from the date of first registration.
If a proposed merger or acquisition involves a company which is itself, or which is a (direct or indirect) parent undertaking of, a GFSC regulated entity, certain notifications or applications will need to be made to the GFSC. These will depend on the type of regulatory licence held by the Guernsey entity and the particular transaction. By way of example, the GFSC may take up to 60 days to consent to a change of controller application whereas some changes need only be notified to the GFSC within 14 days after the event has taken place.
The Takeovers Panel regulates M&A of Guernsey companies which are subject to the Takeover Code.
Additional regulatory approvals may be required depending on the specific business sector of the target, for example, the Alderney Gambling Control Commission; CICRA in exercise of its regulatory powers over utilities companies.
Isle of Man
Regulatory approval may be required by the relevant authority for companies within the financial services and insurance, gambling and telecommunications sectors. Notification periods and consent requirements vary depending upon sector and business type and are subject to policy requirements.
A company licensed by the Isle of Man Financial Services Authority (FSA) to carry on deposit taking activities must gain the consent of the FSA before entering into a transaction involving the acquisition of, or any change in, a controlling interest in the company.
A financial services company is required to notify the FSA of an acquisition of, or any change in, a controlling interest at least 20 business days before the transaction takes place.
In the case of an insurance company the FSA would require notification at least 28 days in advance of any change in controller.
With regard to Isle of Man licenced online gambling operations, all changes in beneficial ownership in excess of 5%, or 20% if the shares are publically listed, must be notified to the Isle of Man Gambling Supervision Commission.
The Panel on Takeovers and Mergers regulate M&As of companies which are subject to the Takeover Code.
As a point of basis, undertakings of shares or assets in a Norwegian company are not subject to any regulatory or third party approvals. Norwegian competition laws do however set out a merger control similar to most European jurisdiction. If companies involved in a business combination or an acquisition exceeds certain thresholds, it must be notified to the NCA before completion. The NCA has up to 25 working days to make its initial assessment of the proposed transaction, however, allowing for pre-deadline clearance, so that at any time during the procedure the NCA can state that it will not pursue the case further. The NCA must, prior to the expiry of this deadline, notify the parties involved that a decision to intervene may be applicable. The transaction is suspended until clearance from the authority, and, as such, the companies are imposed with a standstill obligation. As under the EU merger rules, a public bid or a series of transactions in securities admitted to trading on a regulated market such as the Oslo Stock Exchange can be partly implemented, notwithstanding the general standstill obligation. In order for such exemption to be effective, the acquisition will have to be notified immediately to the NCA; ‘immediately’ in this regard will normally mean the day on which control is acquired.
Even if the business combination or acquisitions is not subject to mandatory control, the NCA still has power to intervene against an acquisition of concentration that has effect or is liable to have effect in Norway, provided, however, that the Norwegian Competition Act's material and procedural conditions for intervention apply. The NCA must execute such intervention by order of submission of a complete notification no later than three months after the date of the final acquisition. Within two years from the date of the most recent acquisition, the NCA may also intervene against successive transactions, provided the substantive condition for intervention is fulfilled.
Other than the competition rules on notice, it should be noted that in special sectors there are sector-specific requirements to consider, such as requirements for public permits and approvals. Some of these rules may require filing and clearance before a transaction can be implemented. Sector-specific legislation includes, inter alia, banking, insurance, shipping, mining, electricity, telecommunications, oil, gas and agriculture.
Even though a business combination or acquisition is not subject to any notification or waiting periods required by law, a bidder should also be aware that a transaction might be subject to third party approvals grounded on the target company's contractual and commercial obligations. For example, financing contracts of a target company may enable a right for the third party to declare an event of default or prepayment. A buyer should always take into consideration such change of control provisions when conducting a due diligence of a target company.
Depending of the circumstances surrounding a particular transaction, the following regulatory approvals may be required:
a) Preliminary approval under antitrust legislation is required for, among other things:
• reorganisations by merger and/or accession;
• joint venture agreements between competing entities;
• acquisition of more than 1/3 participation interest in LLC (25% of shares in JSC) and increase of stake beyond 50% and 2/3 participation interest in LLC (50% and 75% of shares in JSC); and
• acquisition of direct or indirect control over a legal entity and acquisition of major production assets and non-tangible assets.
provided that the combined value of assets of the buyer’s group and the target’s group (or groups of participants in reorganisation, joint venture) exceeds RUR 7 billion (approximately USD 107 million) or their combined net sales for the preceding calendar year exceed RUR 10 billion (approximately USD 154 million) and, in the case of acquisition deals, the value of the target’s group’s assets exceeds RUR 400 million (approximately USD 6.1 million).
The application for preliminary approval is considered by the FAS within 30 days, which can be extended up to a maximum of 3 (three) months (although in practice the FAS sometimes can exceed that term).
b) Preliminary approval under the legislation on investments into ‘strategic’ companies (i.e. companies operating in sensitive industries, such as nuclear power industry, military industry, encryption tools industry, space and aviation industry, as well as companies that are major regional and inter-regional tv and radio broadcasters, natural monopolies, etc.) is required for acquisition by a foreign investor of, among other things:
• direct or indirect control over 50% of voting shares (participation interest) in a ’strategic’ company (25% for ‘strategic’ companies using a subsoil field of federal significance);
• the right to appoint sole executive body (CEO) or elect more than 50% of management board or board of directors of a ‘strategic’ company (25% for ‘strategic’ companies using a subsoil field of federal significance).
The application for preliminary approval is considered by the FAS and the Governmental Commission for Control over Foreign Investment (the ‘Government Commission’) within 3 (three) months, which can be extended up to a maximum of 6 (six) months.
c) Additionally, preliminary approval under the legislation on foreign investments is required in case of acquisition of direct or indirect control over more than 25% of shares (participation interest) in a Russian legal entity by foreign states, international organisations or companies controlled by them.
The application for preliminary approval is considered by the FAS and the Governmental Commission according to the procedure established for preliminary approval under the legislation on investments into ‘strategic’ companies (please see above).
d) Preliminary approval under the legislation on natural monopolies is required for certain transaction by natural monopolies or with respect to natural monopolies, namely:
• acquisition of fixed production-related assets that are not related to natural monopoly’s core business, and which cost more than 10% of the natural monopoly’ book value;
• making investments by natural monopolies into manufacturing (distribution) of goods not subject to legislation on natural monopolies and the value of which exceeds 10% of the natural monopolies’ book value;
• sale, lease or other disposal by a third party of fixed production-related assets of a natural monopoly if their balance sheet value exceeds 10% of the natural monopoly’ book value.
The application for preliminary approval is considered by the FAS within 60 (sixty) days from the date when the FAS receives all documents that are required for consideration.
In a public M&A context, CMA approvals, including approval of the terms and contents of the offer document, will be required for the transaction to complete and, if applicable, for trading in the public securities offered as consideration to be permitted. In addition, a merger or acquisition which may result in an entity becoming dominant in a market must be cleared by the Competition Council.
In all instances, SAGIA licensing approvals will be required where non-GCC investors are involved. New rules now allow for such approvals to be granted within five business days of an application, although in practice the process may take longer if SAGIA requests additional information.
MOCI approval and notarisation of amendments to the articles of association will typically be required where LLCs are involved, but there is no fixed timeline for such approval. In practice, this tends to be between 4-6 weeks.
Depending on the industry, additional regulatory approvals may be required. This includes, for example, approvals from the Saudi Arabia Monetary Agency in relation to transactions including banks and insurance companies, and other Government approvals where the activity undertaken is a 'special activity', such as in the healthcare or transportation sector.
The Antimonopoly Act requires prior notice of an M&A transaction to the Japan Fair Trade Commission, and a waiting period of 30 days or more if the size of a target company and/or an acquiring company are bigger than certain limits prescribed under the Antimonopoly Act. Special prior notice to the Bank of Japan is also required in the case of an acquisition by a foreign company of a company in certain industries specified under the Foreign Exchange and Foreign Trade Act, and will be subject to a 30-day waiting period.
MoC in charge of the FBA
A share transfer may result in a target company becoming majority foreign-owned in which case, if the target engages in a business restricted to foreigners under the FBA, an application for a foreign business licence from the MoC may be required.
In some cases, a transfer may result in the change of the nationality of the major shareholders that ultimately own and control a company in Thailand which has obtained permission to operate a business in Thailand by virtue of a treaty to which Thailand is a party. In such a case, the target company may be required to submit an application for a foreign business licence from the MoC.
MoC in charge of the Trade Competition Act
The Trade Competition Act (TCA) prohibits the mergers of businesses that may result in a monopoly or unfair competition, as prescribed by the Trade Competition Commission (TCC), unless permission is obtained from the TCC. To date, however, no implementing regulations have been enacted so merger controls have not been enforced.
In July 2016, the Council of State completed its examination of a new draft of the Trade Competition Act (New Act). The New Act is being circulated to the relevant authorities for further consideration of the changes before introduction to the National Legislative Assembly. Although the general principles regarding abuse of dominant position, mergers, collusive conduct and unfair trade practices remain the same, the New Act aims to overhaul the TCA by transforming the TCC into an independent agency. Further, the New Act will criminalize overseas mergers which result in monopolies or unfair competition in Thailand. The New Act will increase the penalty to a fine of an amount not exceeding 20 percent of the offender’s income during the year of the offence, but will remove the imprisonment penalty under the TCA. There is no clear timeline for when the New Act will come into effect.
Other regulatory approvals
This depends on the business sector of the target company. For example if the target company is a financial institution, approval from the Bank of Thailand would be required for any person wishing to hold more than 10 per cent of the target company.
Third party approvals
Other third party approvals would depend on the existence of any change of control provision which requires the target company to obtain consent from a lender, major supplier, concessionaire or a joint venture partner prior to the transfer of a certain number of shares in the target company.
If the transaction volume exceeds the thresholds of the EC Merger Control Regulation, then only such regulation applies. The Austrian cartel regulations are fully replaced in such case and a notification to the Federal Competition Authority is not necessary.
If the EU thresholds are not met, then in particular the Austrian Cartel Act applies. The Cartel Act foresees that mergers have to be notified to the Federal Competition Authority if the undertakings involved in the acquisition exceed the thresholds specified in the Cartel Act (see above question 1.).
The notification requirement is mandatory and thus any transaction cannot be consummated until clearance has been obtained. Failure to notify or the providing of false or incomplete information may be subject to fines imposed by the Federal Competition Authority.
The Federal Competition Authority basically has four weeks (can be extended to a maximum of six weeks) upon receipt of the notification to assess the transaction. The examination is completed in this phase 1 if either the Federal Competition Authority issues a clearance prior to the expiry of the time period of four weeks or if this time period expires and the Federal Competition Authority has not appealed in order to initiate phase 2 proceedings. Where the Federal Competition Authority initiates phase 2 proceedings at the Cartel Court, the examination period amounts to 5 months and can be extended for one additional month. The decision by the Cartel Court in phase 2 may be to prohibit the merger, approve it conditionally or unconditionally clear the transaction.
Foreign Trade Act
In addition to the clearance of the Federal Competition Authority, any acquisition of a controlling interest or any interest exceeding 25% of the shares in an Austrian target which operates in a specifically protected industry sector (such as defence equipment, telecommunications or energy) by a foreign investor – meaning investors with their seats outside of the EU, Norway, Iceland, Switzerland or Lichtenstein – has to be approved by the Austrian Ministry of Economic Affairs beforehand.
Laws on the Purchase of Real Property
If a controlling shareholding in companies that own Austrian real estate is acquired by persons outside the European Union and the European Economic Area, an approval from the competent authority of the region where the real estate is located may be required.
Public M&A transactions are subject to the supervision of the Takeover Commission, which supervises the compliance of the transaction with the Takeover Act. The Takeover Commission has a substantive duty to assess all matters regarding the Takeover Act. If a ruling of the Takeover Commission is required, such ruling has to be issued as quickly as possible and within one month at the latest. For the (initial) assessment of the offer document, the Takeover Commission has de facto a period of eleven trading days since the bidder can publish the offer document on the twelfth trading day after the Takeover Commission received the offer document (see question 16 below).
Specific Regulated Industries
Rules regarding specific regulated industries (e.g., banking and insurance) could foresee additional approval requirements under certain circumstances.
It is not uncommon for acquisitions to be subject to attainment of consents and approvals. Restrictions to share transfers may arise from the articles of association of the target in the form of pre-emption rights or from contractual obligations entered into by the target company in the form of change of control clauses.
Completion may also depend on attainment of sector-specific consent, such as in the case of target companies licensed by a regulatory authority, including companies licensed as credit or financial institutions under the Banking Act (Chapter 371 of the Laws of Malta) and/or Financial Institutions Act (Chapter 376 of the Laws of Malta), or service providers under the Insurance Business Act (Chapter 403 of the Laws of Malta), the Insurance Intermediaries Act (Chapter 487 of the Laws of Malta), the Investment Services Act (Chapter 370 of the Laws of Malta) and the Trust and Trustees Act (Chapter 331 of the Laws of Malta). A period of approximately two months would need to be factored in for the purposes of attaining regulatory approval.
Depending on the nature of the transaction, a notification may also need to be filed with the Office for Competition in terms of the Regulations on Control of Concentrations (Chapter 379.08 of the Laws of Malta). Depending on the nature of the concentration, a decision may be obtained as early as 4 weeks from date of submission up to a maximum of 4 months.
M&A transactions in the United States may be subject to review on several fronts, including:
- Review by the Antitrust Division of the Department of Justice (DOJ) and Federal Trade Commission (FTC) for compliance with federal antitrust laws;
- Review by the Committee on Foreign Investment in the United States (CFIUS) if the transaction has a potential impact on national security;
- If securities are being issued to the public in the transaction, review by the SEC prior to declaring the registration statement effective; and
- In certain industries, such as banking, power and utilities, insurance and telecommunications, one or more federal or state regulatory agencies may have the power to review and approve transactions.
While all U.S. companies are subject to the federal antitrust laws, the Hart-Scott-Rodino Act (the “HSR Act”) requires that the DOJ and FTC be notified of transactions meeting certain criteria and a waiting period elapse before those transactions are completed (in order to allow the possibility of advance review by the DOJ or FTC). Once the parties to the transaction make the necessary filings with each agency, a waiting period of 30 calendar days commences, which can be terminated early at the reviewing agency’s discretion. If the reviewing agency makes a request for additional information (a so-called second request), the waiting period is extended until 30 calendar days after substantial compliance by the companies with the request.
Where a transaction could result in the control of a U.S. business by a foreign person, CFIUS may review it to assess its impact on national security. Transactions in industries considered to be critical infrastructure, such as aerospace, chemicals, telecommunications, semiconductors, energy and transportation infrastructure are typical candidates for review. By statute, the review process involves a 30-day initial review period and, if deemed appropriate by CFIUS, a further 45-day investigation period. In practice, the review process can take substantially longer depending on the nature of any concerns and the ability and willingness of the parties to take remedial steps to address any concerns.
In addition, it may be necessary to seek to obtain consents or waivers from third parties under contracts in connection with an M&A transaction.
In the context of private target companies, it is often necessary for the target company to apply to the DPI for the issuance of an “M&A Approval” as a condition precedent to any M&A transaction involving a foreign purchaser, the statutory processing time for which is 15 business days.
In many cases, an M&A transaction will necessitate amendments to the enterprise registration certificate and/or investment registration certificate held by the target company or its investors, the statutory processing time for which ranges from three to 15 business days in most cases (and in many cases may be attended to as a condition subsequent without risk to the purchaser).
VCA approval is required, from a Law on Competition perspective, in the context of major “economic concentration” transactions.
In many cases, there will be deal-specific or sector-specific regulatory approvals which must be obtained. Careful case-by-case analysis of the necessary approvals is always of fundamental importance.
Statutory processing times in Vietnam only commence once the relevant State authority has issued an official receipt for the relevant application dossier, which it will only do once it is satisfied that the application dossier is complete and compliant (which often takes material time to achieve).
Generally all applications for mergers are directed to the ROC, with the FSC in copy (where applicable). The companies have to file their merger proposal to the ROC. Once approved the ROC shall issue a certificate of merger.
In relation to listed Global Business Companies (GBCs) and Reporting Issuers , the offeror must communicate its firm intention to make an offer to the board of the target company, the FSC and the relevant securities exchange if the target company is listed. The offeror must file a copy of the offer document with the FSC and the relevant securities exchange and pay the applicable fees to the FSC. Within 14 days of filing, the offeror must communicate a copy of the offer document by registered post to the shareholders and notify the board of the target company of same in writing. The board of the target company must communicate a reply document to the shareholders of the target company with 21 days of the posting of the offer document by the offeror, providing all relevant information that will enable the shareholders to make an informed decision.
A “reporting issuer” means an issuer –
- who by way of a prospectus, has made an offer of securities;
- who has made a takeover offer by way of an exchange of securities or similar procedure;
- whose securities are listed on a securities exchange in Mauritius; or
- who has not less than 100 shareholders.
Thereafter, the offeror has to inform the FSC and the relevant securities exchange of any revision or extension or expiration of an offer and within 5 days thereof has to make a public announcement in this respect in at least 2 daily newspapers.
The offer shall be open for at least 35 days not exceeding 60 days as from the date of communication of the offer document to the shareholders.
Certain mergers are subject to review by the Competition Commission in following circumstances:
- where all the parties together, after a merger, shall acquire or supply more than 30% or more of goods and services (which they were providing before) on a relevant market; or
- where one of the parties to the merger alone supplies or acquires prior to the merger 30% or more of goods or services on a relevant market; and
- the Competition Commission has reasonable grounds to believe that the merger situation has resulted in or is likely to result in a substantial lessening of competition within any market for goods and services.
If a proposed merger or acquisition involves a company which is itself, or which is the holding company of, a regulated entity, certain notifications or applications may need to be made to the FSC. These will depend on the type of regulatory licence held by the Mauritian entity and transaction in question.
The Takeover Code, if applicable, will impose certain mandatory timing for stages of the takeover offer.
If the merger or acquisition involves entities carrying on a regulated activity in Jersey or if any variation of the consent issued under the Control of Borrowing (Jersey) Order 1958, this will require a notification to and/or the consent of the Jersey Financial Services Commission (JFSC). Application requirements and notification and approval periods vary depending upon sector and business type and JFSC policy.
Where the approval of the Channel Islands Competition Regulatory Authorities (CICRA) is required, a standard application will require: (i) a draft application submitted at least 5 working days in advance of the intended filing date; (ii) notice of the application will then by published by CICRA for 2 weeks; and (iii) CICRA endeavours to reach a decision within 25 working days (although there is no statutory deadline). There is also a shortened application procedure where the acquiring entity is a credit or financial institution in which case notice of the application is published for 7 days and if no comments or concerns are raised, a decision will be made and published on the next working day after the expiry of 14 days from the date of the application.
Any M&A transaction must be notified to the Competition Council, prior and after its closing, if the aggregate turnover of the involved parties exceeds the RON equivalent of EUR 10 million and at least two of the involved parties achieved on the territory of Romania a turnover higher than the RON equivalent of EUR 4 million in the previous financial year. The Competition Council should reply within 45 days whether an investigation is required or not. If an investigation is started, it may take up to 5 months, it being completed with a favourable/negative decision regarding the transaction.
Also, an approval from the Supreme Council for National Defence (“CSAT”) is required if assets or companies of interest for national security are involved. If a CSAT analysis is deemed as necessary, it may take up to 50 days as of the date CSAT holds the necessary documents and information. A Government Decision will be issued if the transaction is considered a risk to national security, implementing any necessary measures in view of forbidding it.
If the transaction involves significant business/assets and/or sensitive land, OIO consent – which currently takes between 3-4 months (without sensitive land) or 4 6 months (with sensitive land).
If the transaction involves anti trust/competition law issues, Commerce Commission clearance (or less commonly, authorisation). Timeframes are wholly dependent on the complexity of the application. Simple clearance decisions can be obtained in 25 working days, while complex clearances may take over 60 working days. Authorisations take, at a minimum 3 months (and, sometimes, significantly longer).
Depending on the target’s business, other specific regulatory approvals may be required (for example Reserve Bank of New Zealand consent).
Third party approvals will depend on the nature of the target and its business; landlord and commercial counterparty consents to a change of control are the most common.
Approvals are required from: (i) anti-trust authorities, depending on the entities involved in the proposed transaction; and/or (ii) other regulatory authorities, in case of companies involved is sectors like financial, insurance or energy, among others.
In case of Structural Changes, there are no approvals from employees but the proposed Structural Change has to be approved by the General Shareholders’ Meeting. As well, creditors have in specific Structural Changes a one-month term opposition right (unless their credits are sufficiently guaranteed and therefore they are not affected as a consequence of the Structural Change). In general, there are no other approvals or consultations in case of these Structural Changes since they imply that, following the specific process of approval and publicity established by law, all rights and obligations (including employees and labour and Social Security obligations) are automatically transferred through a so called “universal succession”, without the need of claiming for other consents or authorisations.
In case of acquisition, there are two different scenarios:
- Shares deal: as a general rule, legally shareholders have pre-emption right of purchase but it differs depending on the legal form of entity. As well, pre-emptive rights can be altered/modified in the by-laws (although it is not usual, sometimes these alterations/modifications are only in private stakeholders’ agreements without changes in the by-laws). There are no approvals from employees.
- Assets deal: considering the transfer of essential assets or a business unit, the General Shareholders’ Meeting of the seller entity (the company owning the assets) has to approve the proposed transfer. There are no approvals from employees.
Additionally, asset deals require: (a) consents from creditors to the new debtor; (b) notifications to debtors in order to inform them about the new creditor; and (c) as a general rule, consents from counterparties of agreements transferred, unless the respective agreement permits the transfer without consent.
A merger transaction becomes effective upon registration with the competent Trade Registry Office. Please refer to our explanations above (under Question 5) regarding the main formalities to be performed before a merger transaction can be submitted to the competent Trade Registry Office. The registration process itself takes a few business days (in practice 3 to 5 business days) depending on the work load of the Trade Registry Office.
Besides, M&A transaction must be notified to the Turkish Competition Authority if the thresholds provided in the Communiqué of the Competition Authority relating to the notification of mergers and acquisitions are met. This Communiqué provides that an acquisition transaction shall be subject to the approval of the Competition Authority in case:
- the aggregate turnover in Turkey of the parties exceeds TRY 100 million and the individual turnover in Turkey of at least two of the parties exceeds TRY 30 million; or
- the worldwide turnover of at least one of the parties exceeds TRY 500 million and the Turkish turnover of one of the parties to a merger or the Turkish turnover of the acquired assets or business in an acquisition exceeds TRY 30 million.
In practice, the examination process by the Turkish Competition Authority may take four to six weeks as from the filing of the notification with the Competition Authority depending on its workload, provided that the application file is complete and the transaction does not need any specific review due to the market share/turnover/market situation of the parties.
Furthermore, sector specific regulatory approvals may also be necessary prior to M&A transactions, in market sectors such as banking, insurance, energy, media and telecommunication. In practice, these approvals can be obtained within periods of time varying between 1 to 3 months.