At what stage of negotiation is public disclosure required or customary?
Mergers & Acquisitions (2nd edition)
Please refer to the relevant Offshore Chapter.
Pursuant to Section 5 para (2) and para (3) of the Takeover Act, in public transactions the bidder must immediately inform the public and the target if its management board and supervisory board have taken the decision to launch an offer or a situation has arisen which results in being obliged to launch a mandatory offer (see question 24. below). Furthermore, a potential bidder has to announce the intention to make an offer if the target’s share price fluctuates considerably or if there are rumours about an offer or speculation that an offer is to be launched and there are reasons to believe that this is due to the preparation of an offer, the fact that an offer is being considered or the purchase of shares by the bidder. The announcement does not need to contain details about the intended offer.
The bidder must notify the Takeover Commission of its offer and provide the Takeover Commission with the offer document within ten trading days (if no extension is granted – up to forty trading days) after the bidder has announced its intention to launch an offer. The notification period for mandatory bids is twenty trading days and cannot be extended.
The bidder must publish the offer document (see question 20 below) together with the confirmation of an independent expert at the earliest on the twelfth trading day and no later than the fifteenth trading day after such documents are received by the Takeover Commission, if the publishing is not prohibited by the Takeover Commission. Such publishing triggers the offer period. The offer needs to be published in a national newspaper that is available throughout Austria or in the form of a brochure that is provided free of charge to the public by the target company at its registered office and by the bodies instructed to pay the consideration. If the offer documents are not published in full in the Official Gazette of the Vienna Newspaper, at least information where the offer documents can be obtained needs to be published in such Official Gazette. If the bidder and/or the target company have a website, the offer document also has to be published on such websites.
The offer period has to be at least two weeks and can be for a maximum of ten weeks (the Takeover Commission can extend such offer period under certain circumstances). The result of the bid must be published immediately after the expiration of the offer period. In case of a mandatory bid or a voluntary bid aimed at control of the target, the offer period is extended for three months from the date of announcing the result of the bid.
In a public takeover situation, the Code makes it clear that secrecy is paramount, information should be shared on a “need to know” basis and that all parties must conduct themselves so as to minimize the chances of a leak of information.
There are certain circumstances under the Code where an announcement is required:
- When a firm intention to make an offer has been notified to the target board by or on behalf of a bidder;
- When an acquisition of an interest in shares in a public target company gives rise to an obligation to make a mandatory bid;
- When, following an approach by or on behalf of a bidder to the target board, the target has become subject to rumour and speculation or there is an untoward movement in its share price (see below);
- When, after a bidder first actively considers an offer but before an approach to the target board, the target is the subject of rumour and speculation or there is an untoward movement in the target share price and there are reasonable grounds for concluding that it is the activity of the potential bidder which has led to the situation (see below).
The announcement of a firm intention to make an offer must contain information specified in the Code and will be a detailed announcement setting out the main terms of the offer and information about the bidder, where the offer is for cash or includes an element of cash, confirmation from an appropriate third party that cash resources are available to satisfy full acceptance of the offer and the rationale for making the offer, among other things.
Where there has been rumour and speculation or an untoward movement in the share price of the target company, the Code requires an announcement be made. An untoward movement is described as a movement of 10% or more compared with the lowest price for the target company shares since the time of the approach to the target board or an abrupt increase of a smaller percentage (for example, 5% in a single day). Care must be taken with respect to the contents of an announcement (including a leak announcement) made prior to the announcement of a firm intention to make an offer as bidders may be held to statements made in such announcements. The Panel monitor dealings in shares and movements in the target company’s share price closely and the target company’s financial adviser(s) will be in regular contact with the Panel where there are movements in the target company’s share price or if there is unusual trading activity.
Bidders may also make a statement of an intention not to make an offer. The Code requires these be as clear and unambiguous as possible and the consequence of making such an announcement is that the bidder (and any person acting in concert with it) will not be able to make another bid for the target or acquire shares which could lead to a mandatory offer being made for the target company for 6 months. Failure to do so could lead to the extension of the 6 month period. A bidder may be able to make another bid for the target company within the prescribed period if certain circumstances have arisen (e.g. a third party has made a bid for the target company) provided that this was contemplated in the announcement of the bidder.
Commercial Register registration is effected post-completion, unless in the event of a corporate reorganization or increase of the capital with an in-kind contribution. CPC notifications are to be submitted after signing of a share/quota purchase agreement or an equivalent binding documentation, but before implementation of the transaction.
For private companies, there is no general obligation to disclose acquisition negotiations in public. In acquisition involving a public company, the disclosure obligations are regulated by the applicable securities market legislation and anti-market manipulation rules, and depending on the circumstances, the disclosure may become required. For example, an issuer must make a public announcement through the regulated market (i) when the issuer’s board is advised or otherwise becomes aware that a buy side is being sought for a transaction that involves a substantial shareholding; (ii) when the issuer’s board is advised or otherwise becomes aware of a firm intention to acquire a substantial shareholding in it; or (iii) when an offer has been made to acquire a substantial shareholding.
In private M&A transactions, public disclosure occurs customarily after the signing or at the closing of the transaction. On the other hand, in M&A transactions involving a listed company, once the binding transaction agreements are executed by the parties, the publicly held company must disclose to the market such situation, if the transactions agreements met the requirements set forth in the applicable law to be publicly disclosed. This is completed by a relevant information report (reporte de información relevante) submitted by the company to the Superintendence of Finance (Superintendencia Financiera - SFC).
In public M&A transactions of a listed company, the decision and obligation to make a public tender for the acquisition of 25% or more of the capital stock of such company or the acquisition of 5% of more of the shareholding interest if the acquirer is already the beneficial owner of more than 25% of the company’s voting capital of that company, must be prior communicated to the SFC and to the Colombian stock exchange (Bolsa de Valores de Colombia).
There is no requirement to notify possible bid to target or to disclose it to the public prior to announcing or filing the offer provided that confidentiality is temporarily necessary for the implementation of the transaction, and can be maintained.
If confidentiality can no longer be ensured (notably in case of leak), an immediate announcement is required from bidder and/or target. Bidder may announce at any time, provided that it does not amount to market manipulation. Public announcement without filing does not constitute an offer.
When there are reasonable reasons to believe that a potential bidder is preparing a public offer, particularly when the market of the securities of an issuer is subject to significant changes in terms of volume or price, the AMF may ask such potential bidder to disclose its intentions to the public in a given time period (i.e. “put up or shut up”).
For a takeover, public disclosure is required when the offer is made. Pre-bid agreements to accept an offer must also be disclosed and are therefore generally sequenced with the offer itself.
For a scheme of arrangement, disclosure typically occurs when agreement on deal terms is reached between the offeror and target to proceed with the transaction – disclosure is not required under the Listing Rules (assuming either the buyer or target is listed) while the transaction proposal remains a confidential, incomplete proposal or negotiation.
Disclosure of private M&A transactions is not required unless a relevant counterparty is subject to specific regulatory disclosure obligations.
The Capital Market Law provides that the target should immediately upon receipt of a written notification from an acquirer expressing the intention to submit a tender offer, notify FRA and EGX of receipt of such notification. The notification obligation also applies in the event of signing a memorandum of understanding, letter of intention or agreement to carry out a due diligence or any other similar agreement.
Further, as per the EGX Listing Rules, events/information that could materially affect the target company (e.g. price of the share) must be disclosed to the EGX.
Please see the answer to question 15 above - The Cayman Islands do not have any regulations relating to the making or content of any announcement.
In private M&A transactions, public disclosure is customarily after the signing or at the same time as the closing.
In public M&A transactions:
- the resolution or obligation to launch a tender offer must be promptly communicated to Consob and simultaneously disclosed to the public. This obligation is binding, indistinctively, on any potential acquirer of a listed company, whether or not listed on a regulated market (under Art. 102 of the Consolidated Financial Act);
- investors who acquire certain amount of the share capital of a listed company (10%, 20%, 25%) are required to disclose to Consob and to the target company their strategy (i.e. whether or not the investor is acting alone, if he is willing to enter into a shareholders’ agreement, etc.) for the six month period following the acquisition (under Art. 120, subpar. 4-bis, of the Consolidated Financial Act); and
- information regarding M&A transactions involving a listed company that, if made public, would likely significantly affect the share price, must be disclosed as soon as possible (the Market Abuse Regulation, MAR).
However, listed companies are able to delay disclosure if their legitimate interests would likely be prejudiced and if: (i) the delay is not capable of misleading the public, and (ii) the issuer is able to ensure that the information remains confidential.
Secrecy must be maintained until an offer announcement is made. An announcement is required in certain circumstances, including where discussions need to be extended beyond a very restricted number of people or where, following an approach to the target, the target becomes the subject of rumour and speculation and/or where there is anomalous movement in its share price. The responsibility for the announcement is with the bidder, unless it has approached the target, in which case, the target is primarily responsible.
Usually no disclosure is required until there is a binding offer. However, any fact that may affect the trading price of the shares must be immediately disclosed to the market which can easily be the case of any M&A involving any listed company. Hence, if the negotiation leaks, the parties may have to inform the market the status of the negotiation at a very early stage and even before a binding offer exists.
Disclosure under the Companies Law
No express provisions require disclosure in the case of private M&As until completion of the procedure. Upon completion of the procedure, the necessary filings will need to be made with the ROC in respect of the change of shareholder of the company.
Disclosure for listed companies in the Cyprus Stock Exchange
Pursuant to the Public Takeover Law, prior to the decision to make a takeover bid, the offeror must make sure that his decision to make a takeover bid is final and must announce his decision only when he has every reason to believe that it can materialize. In addition to the above generality, the offeror is obliged to announce immediately the making of a bid (a) when he has a firm intention to make a bid; or (b) upon an acquisition of securities which give rise to an obligation to make a bid under the law.
Furthermore, within twelve (12) days from the announcement of a firm intention to make a bid, the offeror draws up the offer document according to the directives of the Commission and communicates it to the Commission and the board of the target company. The Commission may, within the time limit set out in the respective legislation, approve the offer documents or indicate to the offeror amendments before final approval or prohibit the publication of the offer document and issues its decision.
As long as the approval of the Commission to publish the offer document is secured, the offeror:
i. announces, in accordance with section 7, and publishes as soon as possible in at least two daily newspapers the approval of the offer document (the same obligation exists in case the offer document is rejected by the Commission, in which case the reasons for rejection must be stated);
ii. communicates as soon as possible the offer document to the target company and to the representatives of the offeror’s employees or where there are no such representatives, to the employees themselves; and
iii. within seven (7) days from the announcement of the document approval (a) sends by post a copy of the offer document to the holders of securities subject to the bid, (b) lists the said document to its internet site, provided it maintains one, and (c) sends the said document to the regulated market where the securities are listed, with the purpose of listing the document on its internet site.
Finally, in accordance with the provisions of the Public Takeover Law, during the takeover bid period:
(a) the offeror, any other person holding a percentage of five per cent (5%) or more of the voting rights of the target company or the offeror company, must announce immediately, every acquisition of securities of these companies by themselves, persons acting in their own name on their behalf or in concert with them, by controlled undertakings, as well as the acquisition price and any voting rights already held in that company;
(b) anybody acquiring a percentage equal to half per cent (0,5%) or greater of the voting rights of the offeree company or the offeror, must make an announcement for this acquisition as well as every subsequent acquisition of securities of these companies by himself, persons acting in their own name on his behalf or in concert with him or by his controlled undertakings, as well as the acquisition price and any voting rights already held in that company
For the purposes of the Public Takeover Law, the obligation to announce is satisfied with simultaneous announcement to the following:
(a) to the regulated market in the Republic of Cyprus where the securities are listed, and the regulated market lists it on its internet site;
(b) to the Commission;
(c) to the internet site of the person making the announcement, provided it maintains one;
(d) if the announcement is made by the offeror, to the representatives of its employees, or where there are no such representatives, the employees themselves, and the board of the offeree company;
(e) if the announcement is made by the offeree company, to the representatives of its employees, or where there are no such representatives, the employees themselves, and the board of the offeror.
Under Norwegian law, the fact that a listed company is discussing a potential takeover or a merger will at some point constitute insider information that must be disclosed to the market. Oslo Stock Exchange (OSE)’s Appeals Committee has previously ruled that confidential negotiations between a potential bidder and the target's board could trigger disclosure requirements even before it is highly probable that a takeover offer will be launched. Therefore, a bidder and the target's board must be prepared for situations where OSE, and the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (Økokrim), take the position that the disclosure requirement is triggered at a very early stage. This could be from when the target enters into a non-disclosure agreement that allows potential bidders due diligence access. However, if a target is approached regarding a potential intention to launch a bid, this will not by itself trigger any disclosure requirements for the target. A listed target is not obliged to comment on rumours, but accurate rumours about a potential bid can indicate that the target is unable to ensure confidentiality, which may require an announcement. These rules apply to all listed companies, whether they are bidders or targets.
For non-listed companies, there are no statutory provisions that require a non-listed company disclose in public that it is negotiating a takeover of shares or the business activities in another company. If, however, the undertakings concerned on the acquirer and the target side exceeds certain turnover thresholds, competition clearance will be necessary after the parties having executed the final sale and purchase agreement, but prior to such transaction being closed. However, note that the Norwegian Act on Alternative Investment Fund Managers (AIFM), under certain circumstances imposes a set of disclosure obligations on Alternative Investment Fund’s (AIF) manager in relation to such funds’ acquisitions of companies or businesses in Norway. This disclosure obligation is triggered when an AIF acquires control (more than 50% of the votes) of a target company, that either: (i) has its shares admitted to trading on a stock exchange or another regulated market (irrespective of that listed target company’s number of employees, revenues or balance sheet); or (ii) is a non-listed private or non-listed public company, but employs 250 or more, and either has annual revenues exceeding €50m or a balance sheet exceeding €43m.
Subject to the disclosure obligations of companies listed on YSX, which are set out in questions 5 and 6, no specific public disclosure obligations apply to acquisitions of companies in Myanmar. If the acquiring company is a company listed overseas, public disclosure may be required under the listing rules applicable to such acquiring company.
Apart from the general provisions on the obligation to notify the competent authorities, there is no requirement to disclose the negotiation of a potential acquisition of a private company.
Persons involved in a takeover of a listed company are only allowed to disclose confidential information if such disclosure can be considered appropriate under their respective duty of care. Confidential information is defined as including any unpublished information of a precise nature relating to one or more issuers and financial means and which could potentially affect the price of such means. Similarly, such disclosure needs to be precise and true, or else it can result in market distortion and imposition of criminal and administrative charges.
Under the Takeover Act, once a bidder has decided to make an offer it must publish this decision without undue delay. A mere market rumor about a possible offer will not trigger said announcement obligation or a duty to formally decide on an offer. However, specific market rumors may require the target to make an ad hoc announcement on the potential offer.
In its announcement, the bidder must disclose its decision to make an offer for the target shares and whether the bid is a full or a partial offer. Before announcing its decision to launch an offer, the bidder must notify BaFin and all relevant German stock exchanges. However, the bidder is not obligated to announce the details of the bid, such as the price and conditions, at this stage.
Suspicious facts, for example, those caused by speculations by the press, do not imply an announcement obligation for the bidder.
Negotiations will in principle be confidential prior to the official notification to the FSMA. Of course, there might be legal grounds for disclosure under the markets abuse regulation. Under certain circumstances, delayed disclosure is, however, possible.
Someone having the intention to launch a public offer is required to formally notify the FSMA. The FSMA will publish this notification. Prior to this publication, it is not allowed to announce a bid in any form whatsoever. There are, however, exceptions to this principle:
- if deemed necessary for the proper functioning of the market, the FSMA may request a person who might be involved in a possible public takeover bid to publish a notice without delay or do so itself.
- following the so-called “put up or shut up” principle, if a person itself or through an intermediary, has made statements that raise questions about its intention to make a bid, the FSMA may request the publication of a notice clarifying this intention. The person who has confirmed its intention to make a bid shall give formal notice within the time limit set by the FSMA. The person who does not confirm its intention to make a bid in due time is prohibited to submit a bid for the securities of the target company concerned for a period of six months.
16.1 Public disclosure is only relevant in the context of target companies being public companies (whether listed or unlisted).
16.2 Where the vendor or the purchaser is deemed by law to constitute an Internal Shareholder, any proposed sale or purchase by such Internal Shareholder or its related persons or entities must be publicly disclosed no later than three business days prior to the proposed date of implementation of the proposed transaction.
16.3 In relation to any Major Shareholder not being an Internal Shareholder, any disclosable sale or purchase by it or its related persons or entities must be publicly disclosed within seven calendar days as from the date of completion.
16.4 In the case of a Mandatory Public Offer transaction, the target company must publicly disclose the public offer within three business days of receiving the required public offer documents, the offeror must announce the public offer within seven calendar days of receiving SSC approval being obtained, and the public offer must remain open for a period of between 30 and 60 calendar days.
Under the Directive on Ad hoc Publicity, preliminary negotiations in respect of a transaction may already be potentially price-sensitive and thus trigger a disclosure duty of the target. However, in negotiated transactions, the Swiss target is permitted to, and regularly will, postpone disclosure until a definitive transaction agreement has been signed, provided that confidentiality is ensured and an immediate disclosure is immediately made if a leak occurs. It is thus customary that a transaction is made public when the bidder launches its public offer.
Other than existing mandatory requirements (please see in question 15 above), there are no customarily accepted standards of disclosure. In certain cases, disclosure is made at the stage of signing of binding contractual documents. In others – upon completion of a transaction.
Please see above. Confidentiality is usually maintained until the main terms of the deal are reached.
In most cases there is a degree of negotiation with the QFMA. For instance, Article 2(2) states that a listed company which is party to an acquisition or merger outside of Qatar must disclose the offer details.
There is no general duty of disclosure for either the target or the buyer while negotiations are taking place. This duty changes, however, once a binding agreement has been entered into or a tender offer has been commenced. Upon entrance into a definitive agreement, the public buyer and target must file Form 8-Ks, as more fully described in Question 6, informing their shareholders of the entrance into a binding material agreement.
The requirements are slightly different in relation to the commencement of a tender offer. If acceptance of the offer would result in the buyer owning more than 5% of the target, then the buyer must file a Schedule TO informing the public and the shareholders about the offer.
Additionally, while there are no U.S. securities laws that require the parties to keep negotiations confidential, it is customary for the parties to enter into a confidentiality agreement at the outset of negotiations to maintain the secrecy of the transaction until a binding agreement is signed. This custom exists because a number of negative consequences can result from premature disclosure of a potential transaction such as increasing the price of the target’s shares (if the market views the potential deal favorably) or prompting competing bids for the target.
For private companies, there is no general obligation to disclose any acquisition to the public (see however question 10 above regarding obligations to consult with trade unions). In transactions involving a publicly listed company, the relevant securities market legislation and stock exchange rules are applicable. Depending on the circumstances, disclosure may become required, e.g. when the Board of Directors of the offeror has resolved to make the public offer.
For public companies, disclosure is usually done at the signing of the term sheet or at the signing of the definitive agreement. However, in the event that during the course of the negotiations, news or rumors of the potential acquisitions leak into the market, the PSE would typically ask the public company to comment on those reports.
There is no requirement to make a public disclosure unless the company is subject to the Takeover Code. Where the Takeover Code applies, a potential bid should be kept secret until it is formally announced. Once the bidder has notified the target’s board that they intend to make an offer they are also obliged to make an announcement that they have made a formal takeover offer. The requirement to make an announcement under the Takeover Code may also arise in a number of other situations such as where the acquisition necessitates a mandatory offer, where the target becomes subject to unusual share price movement, rumours or speculation and where negotiations extend beyond the parties involved and their immediate advisors.
Under the Stock Exchange Rules, a listed company must disclose material information when certain decisions are made by the company in connection with an M&A transaction. Similarly, under the FIEA, a company that is obliged to submit an annual securities report must submit an extraordinary report when certain material decisions are made in connection with an M&A transaction.
In practice, companies try to avoid making a decision in an M&A transaction that would trigger any such disclosure obligation until the parties enter into a definitive agreement with respect to such transaction.
Isle of Man
There is no requirement under the 1931 Act or the 2006 Act for public disclosure. If the target is listed on a foreign stock exchange, in which case the rules of the foreign stock exchange will apply.
If the Takeover Code applies, Rule 8 requires public disclosure, as set out at question 15 above.
Other than the Listing Rules of the Stock Exchange of Mauritius there is no requirement for public disclosure for non-listed companies.
Other than as mentioned in question 15 above, there is no requirement for public disclosure under Bermuda law. If the Company is listed on the BSX, public disclosure is required on the signing of the relevant transaction agreement. Customarily, public disclosure happens immediately after the execution of an Agreement and Plan of Merger/Amalgamation or an Implementation Agreement (as applicable).
British Virgin Islands
See above, there is no BVI law requirement relating to documentary requirements for public disclosure. Whether such disclosure is customary will be driven by non-BVI related factors.
No specific disclosure is required before an offer is made. However, the Takeover Code (if it applies) does contain requirements in relation to the disclosure of dealings and positions.
Public disclosure of deals is imposed on publicly traded companies but not privately held ones. While the CMB’s disclosure rules do not specifically spell out at what stage negotiations must be disclosed by publicly held companies and leaves specific disclosure decisions at the discretion of the parties involved on a case-by-case basis, it is generally accepted that the obligation of the parties to disclose negotiations escalates as possibility of meeting of minds becomes more imminent and coming to an agreement becomes more likely.
The CMB has also published guidelines listing certain exemplary cases where disclosure needs to take place. Being engaged in acquisition discussions needs to be disclosed if there is only one potential buyer and one target company, the intention to reach an agreement is evident, and if there is a meeting of the parties’ minds concrete enough to influence the value of shares and the investment decisions of investors.