What information relating to a target company will be publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?
Mergers & Acquisitions
Basic information on the target such as the company name, the type of corporation, the line of business, its managing directors and authorised signatories, its share capital, former reorganisations as well as its articles of association and its annual financial statements are publicly available.
Depending on the concrete assets of the target company (eg, real estate, patent, trademark), further information may be obtained from particular public registers such as the Austrian Land Register (Grundbuch) or the Patent Register (Patentregister).
Furthermore, all insolvency proceedings are registered with the publicly accessible Austrian insolvency data base.
In private M&A transactions, which is the dominant form in Austria, companies are not required to disclose diligence related information.
The managing directors of an Austrian company are required to keep company-related information confidential in the company’s interest. By way of exception, the disclosure of information to a potential acquirer is permissible if and to the extent that this does not impair the interests of the company. An exception applies in case of competing takeover bids for a publicly listed company. If the management of the target company has granted access to information to one bidder, it is commonly argued that disclosure of the same amount of information is required to any competing bidder (to assure equal treatment and in order to maximise the offer price in the shareholders’ interest).
If the entities are listed and the bid is a recommended bid, the target company may look to limit the scope of due diligence undertaken and, in particular, withhold sensitive financial and business information until it is clear the bidder has a genuine interest in proceeding with the transaction. Generally if the acquisition is by way of a hostile bid, the target company will not assist in providing due diligence information and any due diligence will be limited solely to information that is publicly available.
The following information is publicly available in Bermuda:
(a) By way of a search of the entries and filings shown in respect of a Company in the Register of Companies at the offices of the Registrar of Companies, which will include:
- the certificate of incorporation and memorandum of association;
- the address of the registered office;
- any prospectus or offer document required to be filed pursuant to the Companies Act;
- certain other filings required pursuant to the Companies Act, including any charges registered against the company under the Companies Act.
(b) At the Registered Office of the Company, including the following:
- details of directors and officers on the register of directors and officers. The register of directors and officers is open for inspection during business hours (subject to such reasonable restrictions as the company may impose, so that not less than two hours in each day be allowed for inspection); and
- the register of members, which shall include the names and addresses of the shareholders, in the case of a company having a share capital, details of the number of shares held by each shareholder (distinguishing each share by its number so long as the share has a number), the amount paid up on the shares and the date on which the person was entered in the register of members as a shareholder. The register of members of a company is open for inspection during business hours (subject to such reasonable restrictions as the company may impose, so that not less than two hours in each day be allowed for inspection). It should be noted, however, that shares can be held by, and registered in the name of, a nominee.
(c) If the company is listed on the Bermuda Stock Exchange (BSX), at the BSX. Such information will include any filings with or announcements to the BSX, including published accounts and auditors' reports.
At the Registry of the Supreme Court, the entries and filings shown in respect of the Company in the Supreme Court Causes Book. Such information will include any pending legal proceedings or judgments.
Brazilian listed companies must disclose periodic and non-periodic information. Both are disclosed through electronic systems by the CVM and the local stock exchange (BM&FBovespa). The most important periodic information are of course the financial statements. However, Brazilian companies are also obliged to disclose and regularly update a standard form, called FR (formulário de referência), which is similar to the US 10-K. The bylaws and minutes of shareholders’ meetings and board of director’s meetings are also available to the general public. Non-periodic information is disclosed to material facts, which are essentially notices to the general publics about facts, acts or omissions of the management and/or affecting the business of the company that may influence the decision of shareholders to buy, sell or maintain shares of the company. A pretty satisfactory due diligence may be implemented through these documents. Truth is, however, that M&As in Brazil usually include and require a deeper level of scrutiny. Buyers, sellers and sometimes the target company hence usually execute NDAs and set up data rooms with information which is not generally available in the context of the negotiations.
British Virgin Islands
Publicly available company information for companies incorporated in the BVI is available from two main sources (a) the Registry of Corporate Affairs and (b) the High Court. Information held by the Registry can be accessed via an online search which will grant access to the BVI company’s memorandum and articles of association, certificate of incorporation, details of its registered agent and registered office along with the company’s fee payment record and whether or not it is in good standing.
A recent amendment act that came into force in April 2016 requires companies to provide a register of directors to the Registrar however, unless they opt to do so it is not required for a BVI company to make this information publicly available. Similarly a register of public charges may also be published, however unlike a private registration, it is not mandatory for a BVI company to carry out a public registration of any charges over its assets. The private registers in relation to directors, shareholders and charges will only be released to a potential acquirer on the instruction of the target company’s client of record.
A high court search will reveal any proceedings currently filed against the target company.
Publicly available information in the Cayman Islands is limited to the company name and the location of its registered office. If the target company is listed, additional information may be available (for example, any SEC filings). A search of the court registers in the Cayman Islands will disclose any originating process, in which the company is identified as a defendant or respondent, pending before the Grand Court of the Cayman Islands.
ZL: In an acquisition where the acquirer is a listed company, if such acquisition constitutes reorganization of material assets, generally, according to Measures of Material Assets Reorganization and Standards on the Contents and Formats of Information Disclosures by Companies Publicly Offering Securities No.26 - Material Asset Restructuring of Listed Companies (Revision in 2014), the listed company shall disclose in detail the information that may have material effect on the transaction, including but not limited to the target company’s general information, historical summary of shareholding, major assets, permits and licenses required for operation, major financing and assurance, material business contracts, financial subsidy, tax, administrative penalty, litigation and disputes, and major financial data.
In an acquisition where the acquirer is a non-listed company, generally, there is no mandatory requirement for disclosure. In terms of business custom, generally, whether to disclose related due diligence information to a potential acquirer is depended on the positions, bargaining power, and business demands of both parties. Where both parties of the transaction are of equal positions, the target company is at least obligated to disclose important information that may have material effect on the transaction and valuation of the target company, in order for the potential acquirer to decide on valuation of the acquisition. In an amicable transaction, the target company usually discloses relatively full fledged due diligence information to the potential acquirer.
With respect to private companies, all information registered in the Finnish Trade Register becomes publicly available. This information includes, e.g. the members of the Board of Directors, the Managing Director, other signatories, share capital and number of shares, etc. Also, the financial statements become available through the Trade Register after they have been adopted and filed to the tax authorities. Also, any person can require a limited liability company to provide the share and shareholder registers for review. In addition to the above, publicly listed companies are also subject to an ongoing disclosure obligation pursuant to the relevant securities law and stock exchange regulations.
In a public deal context, it is up to the Board of Directors of the target company to resolve whether they consider an offer received from an acquirer to be of serious nature, and therefore it being appropriate to allow a potential acquirer to receive more detailed information for diligence purposes.
Private companies are obliged to disclose general information such as the names of the managing directors, the capital stock and in some cases the names of shareholders, financial statements and the articles of association. These documents are available at the Commercial Register (Handelsregister) kept with the Local Courts and at the Federal Gazette (Bundesanzeiger) and can be inspected by potential acquirers (usually online).
Regarding public companies financial statements must comply with the EU Directive on Takeover Bids. Pursuant to its implementation in the disclosure requirements for public companies, all listed companies in Germany are required to disclose additional takeover-relevant information in their financial statements, inter alia, about the existence of change-of-control-clauses / covenants and golden parachutes. Moreover, additional information has to be published on the public company's homepage.
In addition, a bidder can rely on certain public information if the target is a listed company, such as ad hoc announcements, analyst statements, stock exchange filings, reports of shareholders crossing voting rights thresholds, financial statements to the extent they have been published, etc.
Greek companies are registered in the General Commercial Registry of the Ministry of Commerce (GEMI). The Registry keeps a public status account for each company which includes crucial information regarding the company (name, seat, company form etc.), its corporate structure and its annual financial reports. However, in practice the Registry’s current operation is suboptimal, resulting to deficiencies in the availability of the information required. The data available for listed companies is much more detailed and regularly updated, mainly accessible through the platform of the Athens Exchange and the listed companies’ websites.
There are no specific legal provisions regulating the amount of diligence related information to be disclosed to a potential acquirer. However, pursuant to the Greek Civil Code, during the stage of negotiations of any kind of transaction, the parties are obliged to act in good faith, and, thus, to avoid providing incomplete or misleading information. Any attempt to mislead may not only hinder the M&A process, but, also, incur significant legal consequences, that should be weighed in when considering what information will be disclosed.
The following information in respect of a Guernsey company is available from the Guernsey Companies Registry:
- information on the Company including its registered office and the details of its directors and (if applicable) resident agent;
- an annual validation which must be filed by the end of January each year confirming the total number of shares in issue as at 31 December of the previous year;
- certificate of registration and memorandum and articles of incorporation; and
- special resolutions (and any other resolutions which are required to be filed under the Guernsey Companies Law).
A search can also be undertaken at the Guernsey court to ascertain if any order has been made or proceedings commenced for the winding up of the company.
Shareholder details and annual accounts are not publicly available at the Guernsey Companies Registry. However, the Guernsey Companies Law sets out a procedure whereby a company’s register of shareholders may be inspected and/or a copy of the register may be obtained upon payment of a prescribed fee, provided the request is made for a proper purpose.
If the company is listed on an exchange, copies of its annual accounts, interim reports and regulatory news announcements can be obtained; the relevant rules of the exchange will apply.
If the Takeover Code applies there are certain requirements on provision of information.
Isle of Man
Publically available information for a 1931 Act company includes:
- memorandum and articles of association;
- filed annual returns;
- details of current directors and shareholders;
- shareholder special resolutions;
- register of charges; and
The information publically available for a 2006 Act company is more limited but includes:
- memorandum and articles of association;
- filed annual returns; and
- registered agent details.
Other information may be available for both types of company through other sources such as public announcements issued by the target.
With regard to disclosure of information, save where the target is listed on a foreign stock exchange, in which case the rules of the foreign stock exchange will apply, there is no regime applicable for compulsory disclosure.
If the Takeover Code applies, a bidder will be entitled to receive, upon request, the same information that has been provided to a competing bidder.
Regardless of whether a target company is listed company or private company, under the Companies Act information publicly available through the commercial registry, or public notices of the target company includes:
- Registered name
- Date of incorporation
- Business purpose
- Total number of authorized shares
- Total number of issued shares
- Amount of capital
- Restrictions on share transfer
- Composition of management bodies
- Names of the directors and company auditors
- Balance sheet
- Income statement (if the company has an issued capital of JPY 500 million or more, or its aggregate liabilities are JPY 20 billion or more)
In the case of a listed company, the following information is also publicly available through the securities reports required to be filed under the FIEA, or timely disclosure requirements under stock exchange regulations:
- Overview of the company, including its history, structure of its business and status of its affiliates and employees
- Operating and financial review and prospects
- Equipment and facilities
- Other company information, including regarding shares, bonds, major shareholders and corporate governance
- Financial information
Annual securities reports, quarterly (or semi-annual) reports
- Changes in the company’s major shareholders
- Stock exchange, stock transfer, company split, merger and business transfer, etc.
- Information that is likely to impact investors’ investment decisions
Timely disclosure rules
As a rule, a target company is not obliged to disclose due diligence related information to a potential acquirer, though it can be illegal to disclose false information.
Corporate formation documents, articles of association and other related documents can be retrieved or requested from the NRBE. Further, the NRBE offers an online search web base in which general information of a target company may be found, including register of directors, chief executive officers, auditors, announcements of authorisation to issue shares or acquire treasury shares granted to the board of directors as well as transcripts of the latest annual accounts and information on agreements with shareholders (above certain minimum thresholds). Information on bond loans, including the full set of the bond documentation, for any bond raised in the Norwegian/Nordic bond market may be available from Nordic Trustee. Information on any real estate owned (not leased) by the target in Norway, together with a complete list of registered mortgages on such real estate will be searchable on several forums. Charges registered over the target's inventory and fixed assets may also be requested from the NRBE. A list of major shareholders will be available in the notes to the target’s annual accounts, and will often also be available on such company’s web pages. A complete list of shareholders may also be requested from the target itself, and the target will be obliged to hand out such information to anyone requesting a transcript.
For target companies listed on a Norwegian market, the STA sets out several disclosure provisions, which entails that publicly available information may be quite extensive. Information memorandums and prospectuses used in share offerings or following a major transaction will be available, and may set out considerable information on the target company. Further, audited annual accounts and related directors' and auditors' reports as well as quarterly interim reports are made available to potential investors. Various announcement by the target company through the Oslo Stock Exchange is also publicly available and searchable through the exchange's online search motor "newsweb".
As a point of basis, a target company is not obliged to grant a potential acquirer any form of due diligence access. Also note that providing one potential acquirer with the opportunity to conduct due diligence does not automatically oblige the target to grant the same opportunity to other parties. Notwithstanding the foregoing, the board of directors of a target company will have a fiduciary duty to act in the best interest of the company. To what extent the target has such an obligation to grant a potential acquirer due diligence access will depend on whether it is considered to be in the best interest of the target and its shareholders to facilitate such due diligence.
If the target company is a public joint-stock company, it shall disclose all information related to its business (annual reports, financial reports, etc.).
If the target company is a non-public company, general information with regard to the amount of its share capital, general director, etc. can be found on the website of the Federal Tax Service.
Russian Federal law ‘On state registration of legal entities and individual entrepreneurs’ envisages that certain facts about the business of legal entities and entrepreneurs are to be published, including, among other things, information on reorganisation, liquidation, increase/decrease of charter capital, appointment/termination of authority of sole executive body, net assets, pledge of assets of a legal entity etc. The above information shall be published in the Unified federal register of legally relevant information on business of legal entities, individual entrepreneurs and other economic agents (http://www.fedresurs.ru/).
Certain information can be collected not only from the target company, but also from third parties (tax authorities, the federal service for state registration, cadastre and cartography (Rosreestr) and others).
Recent changes to the Russian Civil Code introduced a good faith standard in relation to the negotiation process. Pursuant thereto, non-disclosure of reasonably expected information in the course of negotiations or provision of false information can be regarded as bad faith behavior of a party to negotiations and therefore a breach of legal requirements. These provisions, however, have not been tested in practice and there is no commonly accepted position on the standards and scope of the required disclosure.
A significant number of M&A transactions (especially with involvement of foreign investors) include a due diligence stage.
Public companies in the Kingdom are required to publish information in accordance with the CMA rules. This includes annual audited accounts, interim accounts, annual reports and directors reports, as well as news of material/price sensitive importance to the relevant entity. A potential acquirer will have limited ability to request information which would not otherwise need to be disclosed by a public target company; anything it does receive that is material and not already published will need to be disclosed at the time of an announcement of a public offer.
By contrast, very little information is publicly available in respect of private companies in the Kingdom. A company's articles of association do not form part of any public record in the Kingdom. Whilst the MOCI can be approached for basic information regarding a company via an online search of its commercial register, such information tends to be limited to the registered address, paid-up capital, identity of shareholders, names of directors and evidence of incorporation. In addition, although the NCL requires that the constitutional documents and subsequent amendments of an entity be filed with MOCI and uploaded to its website, these are not publicly available, and can only be accessed by MOCI itself and other authorised Government departments and entities. Due diligence is therefore almost entirely dependent upon the co-operation between the seller and target.
There is no ability to conduct court searches on private entities, and searches of the IP register (which take time to procure) are of limited value.
Unlisted target company
Generally, information is not publicly available, except for basic corporate information such as corporate documents (e.g. directors’ names, shareholders’ names, authorised directors etc.), memorandum and articles of association and annual audited financial statements, which are available in Thai only.
There is no statutory obligation requiring a target company to disclose information to a potential acquirer. This is negotiated on a case-by-case basis.
Listed target company
Information that is available to the public is: -
- corporate documents (e.g. directors’ names, shareholders’ names, authorised directors etc.), memorandum and articles of association (in Thai and some in English);
- quarterly reviewed and annual audited financial statements (in both Thai and English);
- annual registration statement containing updated business information (in Thai);
- annual report (in both Thai and English); and
- public filings upon the occurrence of certain material events (in both Thai and English).
Like a private company, there is no statutory obligation requiring a listed target company to disclose information to a potential acquirer. If a potential acquirer wishes to acquire more in-depth information, this will be negotiated on a case-by-case basis.
Publicly available information on Maltese-registered target companies is available from various sources. Documentation filed in compliance with the CA is publicly available at the Registry of Companies. This information would typically include copies of the company’s annual accounts as well as returns relating to various matters including the transfer or charging of the shares. A search at the Public Registry will disclose the ownership of immovable property situated in Malta and the registration of any hypothecs or other registrable privileges against the company. Searches with respect to pending litigation, decisions and judicial acts may be effected at the Registry of the Law Courts whilst searches involving registrable intellectual property rights may be effected at the Malta Industrial Property Registrations Directorate.
A target is under no legal obligation to disclose confidential information to a potential acquirer. Indeed, a target cannot disclose information it is contractually bound not to disclose. The Listing Rules prohibit an issuer from disclosing information, including unpublished price sensitive information unless certain conditions are met. Conditions include the attainment of the express consent of the company’s shareholders to make such disclosure and the entry into confidentiality agreements.
Public companies in the United States are generally required to file annual and quarterly reports with the SEC. Among other things, these reports provide a description of the company’s business, summaries of material events (including legal proceedings), selected financial information and financial statements (which are fully audited, in the case of annual reports) and management’s discussion and analysis of the company’s financial condition and results of operations. Public companies are also required to file reports on Form 8-K with the SEC to report certain events, including entry into material definitive agreements, acquisitions or dispositions of businesses or significant amounts of assets and changes of control. Public companies generally must also file proxy statements providing information regarding the shareholder meeting to which they relate, the matters to be voted on by the shareholders at such meeting and what the company’s recommendation is with respect thereto, and other information relating to the company such as a description of the board of directors and its committees, executive and director compensation and ownership of the company’s securities by directors, officers and large shareholders.
When seeking shareholder approval of a transaction targets must also make additional information available to their shareholders, such as the background and reasons for the transaction and summaries of the financial analyses of its bankers. Targets typically also disclose to their shareholders projections made available to the buyer in such situations.
Beyond what companies are required to file with the SEC, a great deal of information is publicly available on company websites and from industry and trade publications and news sources. Except in very limited circumstances, filings with the SEC are publicly available through the SEC’s EDGAR website.
A target company has no general obligation to disclose diligence information to a potential acquirer. However, a target company’s board of directors must balance the absence of any such affirmative obligation with its fiduciary duties to its shareholders. In certain circumstances, such as where a change of control is inevitable, it is possible that refusing to provide information to potential suitors could constitute a breach of those duties. If a target company does elect to provide bidders with information, there is no specific requirement that they provide all bidders or potential bidders with the same information, although a board choosing to do so would need to have a legitimate rationale for providing differential levels of information to bidders and potential bidders.
In the context of private companies, there is very little corporate information available in the public domain, and such information as is available is often not fully reliable or up-to-date.
In relation to all Vietnam-domiciled companies, the MPI does maintain a National Business Registration Portal, located at https://dangkykinhdoanh.gov.vn and https://fdi.dkkd.gov.vn/, from which the basic corporate particulars of any target company can be obtained.
There is also limited scope to conduct on the public record searches for particulars of the following in relation to any target companies:
- intellectual property rights registered with the National Office of Intellectual Property;
- secured transactions registered with the National Agency for Registration of Secured Transactions; and
- land use rights held by the target company over land located within Vietnam, including any security interests registered over such land use rights, as registered with each respective municipal or provincial Department of Natural Resources and Environment.
Reliable litigation searches are not possible to conduct in Vietnam.
Public companies are required to disclose publicly the following minimum information, which will generally be available online:
- audited financial statements;
- annual reports;
- information relating to meetings of the General Meeting of Shareholders;
- information relating to any securities offering and reports on the use of capital;
- information in relation to foreign ownership ratio; and
- information regarding the occurrence of irregular events in relation to capital, shares, shareholders, or important activities of the company.
Listed companies also have a wide range of obligations to make disclosures to one or more of the public, the SSC, and/or the stock exchange or securities trading centre on which their securities are traded, in relation to matters such as major corporate actions, major securities transactions, actions of major shareholders, and other types of market-sensitive information. Such disclosed information will generally be available online.
The Companies Act 2001 makes provision for the public inspection of a company’s records upon service of a written notice being served on the company in this respect. The records that can be inspected are –
- the certificate of incorporation or registration of the company;
- the constitution of the company, if it has one;
- the share register;
- the full names and residential addresses of the directors;
- the registered office and address for service of the company; and
- copies of the instruments creating or evidencing charges which are required to be filed with the ROC.
The following information in respect of a Mauritius company is available from the Mauritius ROC:
- information on the Company including its registered office and the details of its directors;
- details of shares and shareholders;
- constitution; and
- details of charges granted over the assets of the company.
However, the above information are publicly available only in relation to domestic companies, whereas information on global business companies are available upon the written authorisation of the relevant company.
A search can also be undertaken at the Registry of the Supreme Court to ascertain if any order has been made or proceedings commenced for the winding up of the company.
Annual accounts of global business companies are not publicly available as these are filed with the FSC and searches at the FSC are not allowed.
If the company is listed on an exchange, copies of its annual accounts, interim reports and regulatory news announcements can be obtained.
The register of members of a Jersey company is available for inspection by any member and, for a fee not exceeding the prescribed maximum, any other person. A person may require a copy of the register, in the case of any company, on payment of a fee not exceeding the prescribed maximum and in the case of a public company on submission of a statutory declaration relating to the use of the copy. The annual return to the registrar of companies (available online) will include names, addresses and holdings of members (holding more than 1% of the capital/issued shares) together with the number of members holding less than 1% (and the total number of shares in such holdings) as at 1 January in each year or a statement that they have not changed since the last time they were submitted. In the case of public companies, the annual return will also show director details.
A public company or a company with more than 30 members (calculated in accordance with the Companies (Jersey) Law 1991) must deliver its accounts to the Registrar within 7 months of the end of the financial period to which they relate. These accounts will be publicly available. A private company is not required to make its annual financial statements publicly available.
A search of the Jersey Companies Registry will also show basic information on the company including its registered office, its incorporation documents, its memorandum and articles of association, prospectuses and any special resolutions filed.
Searches can also be made of public registers which show Jersey security, land, bankruptcy (désastre) and litigation proceedings.
If the company is listed on an exchange, copies of its accounts, interim reports and announcements can be obtained.
Public information on non-listed companies consist in their identification data (name, headquarters, registration code, company status, etc.), subscribed and paid share capital, current shareholders and directors and their identification data, registered branches and secondary units and, if such information were provided by the company, balance sheet related data such as total turnover, employees number, profits and losses, etc. Such information may be obtained from the Romanian Trade Registry or Ministry of Public Finance as well as from different websites tracking the financial and legal activity of Romanian companies.
Issuers admitted to trading on a regulated market are also bound by transparency obligations. Generally, such companies have the obligation to disclose to the public without delay any events which concern them and which may have an impact on their share price. Additionally, listed companies have to draft and make available to the public quarterly, half-yearly and yearly financial reports.
Moreover, the law protects the listed companies against insider dealing. Insider dealing rules apply to any person having knowledge of privileged inside information in relation to the target company (i.e. board member, shareholder, employee or third parties that unlawfully or fraudulently obtained inside information as result of criminal activities) and prohibits such person to:
- disclose, make available, recommend or induce a third party on the basis of such information to make an acquisition or disposal of the target’s shares; or
- make use of the inside information to acquire or dispose, for its own account or for the account of a third party, directly or indirectly, target’s shares; or
use the inside information for cancelling or amending an order concerning the target’s shares to which the information relates where the order was placed before the participant possessed the inside information.
What information is publicly available in relation to a target company will depend principally on whether the company is large and/or listed on the NZX.
If a company is “large” for the purposes of the Companies Act/Financial Reporting Act, the company must file its audited financial statements on the Companies Office register.
If a company is listed, in addition to filing its financial statements, the company must provide half year and full year reports and is subject to continuous disclosure obligations for any material matters.
Outside that limited public information and certain other information (for example, share registers, certain director’s certificates which a shareholder can request from a company under the Companies Act), a target company has no obligation to provide a potential acquirer with due diligence access.
In the UK, a public company is required to immediately notify the market of any non-public information relating to it which, if made public, could be expected to have a significant effect on the price of its financial instruments.
Put simply, this is essentially any information that a reasonable investor would be likely to use as part of the basis for the making of their investment decisions. Certain exceptions apply to the above rule, permitting a delay in disclosure under certain limited circumstances (for example, where negotiations are currently on-going in respect of a specific transaction).
This fundamental disclosure requirement is supplemented by certain other periodic reporting requirements on listed companies, including the publication of an annual report and accounts and half-yearly financial information. In addition to the above, many listed companies go further than this, providing additional disclosure to the market on a periodic basis, such as quarterly financial statements and trading updates.
Listed targets which are themselves acquisitive or which have recently raised equity finance in the markets will most likely also have had to produce a prospectus or offer document. These documents are publicly available, thereby providing an additional level of granular detail on the target's operations and business performance.
In addition to the above and, particularly in the case of larger listed companies, there will often be some degree of analyst coverage, with periodically updated analyst reports being prepared and published on the target's business and prospects.
Listed companies are also required to disclose information regarding their corporate governance arrangements, together with the details of their major shareholders.
As a consequence, a bidder's working assumption when assessing a UK listed target will generally be that the vast majority of the material information relating to its business and operations is already available within the public domain.
In the context of a private M&A transaction, in many cases, there may be little current information available on the target. There is a requirement for private companies to file their accounts on an annual basis, together with other key information relating to their share capital, shareholders and officers at Companies House (the UK company registry), but this information will generally not be up to date and, consequently, disclosure for private M&A processes is usually a matter for agreement between the seller and potential bidders.
Provided that the target company does not have its share capital quoted on the Stock Exchange, the public information can be obtained mainly through (i) the Commercial Registers (Registros Mercantiles) – the setting up conditions, the financial statements, the by-laws, the governance bodies, all general powers of attorney granted, its auditors appointed, any Structural Change, etc; (ii) the Real Estate Registers (Registros de la Propiedad) -real estate properties, lease agreements, options, etc; and (iii) the Intellectual and Industrial Spanish Office (Oficina Española de Patentes y Marcas) – trademarks, patents, commercial names, etc.
Additionally, if the target company has its share capital quoted on the Stock Exchange, as this market is more regulated, the relevant information shall be included by the target company in its corporate webpage and duly reported to the Spanish Stock Exchange Commission (Comisión Nacional del Mercado de Valores or CNMV). In this regard, in this case, as well as the information which may be obtained through the Commercial Registers (Registros Mercantiles), some other information should be reported by the target company in its webpage, among other, that referring to significant shareholders, treasury stock and shareholders’ agreements.
By way of law, there is no obligation to provide the potential acquirer with certain information. However, the common practice in Spain is to provide with some relevant information moving from an early stage of the transfer process to the final one (at closing). In this regard, there is a wide range of possibilities, from a limited provision of documents to a very complete one, distinguishing, in the event, between the different phases and bidders. Mainly it depends on the terms and conditions agreed on the letter of intent or the memorandum of understanding and on the applicable exclusivity and confidentiality clauses.
In bilateral process, with no other potential acquirer, usually the information provided is higher and more relevant. Under a tender process, where there are several bidders, the seller usually limits the provision of information and only increases it when there is only one final bidder in order to promote the potential binding offer and/or the closing.
Speaking about joint-stock companies and limited liability companies (the two legal forms most commonly used in M&A transactions), the articles of association (with any amendments thereto) are publicly available, including information at least regarding the founders, trade name, purpose and scope of activity, registered address, nominal value of the share capital, capital in kind (if any), total number of shares and number of shares subscribed by each founder, composition of the management body, representation and commitment modalities, activity period, dividend distribution mechanism and announcement rules.
For joint-stock companies, the articles of association must also contain information regarding the modalities for convening the general assembly and the voting rights, type of share certificates (i.e. bearer or registered), privileges granted to different groups of shares and share transfer restrictions.
One should note that in joint-stock companies, the transfer of shares is not subject to registration with the Trade Registry and thus publicly available articles of association may not be up-to-date regarding the shareholding structure. This being said, for limited liability companies, publicly available articles of association should always be up-to-date since the transfer of shares must be registered with the competent Trade Registry.
Furthermore, operations modifying the legal structure of the company or requiring the information of shareholders / creditors so as to allow them to use their legal rights, are also announced in the Trade Registry Gazette of Turkey and, if the company is subject to a mandatory independent audit because it exceeds some thresholds set by the Council of Ministers, on its internet site.
Specific assets of the company may also be subject to registration with registries, such as land title registry, ship registry, patent and trademark office, etc.
It is also mandatory for companies operating in some regulated market sectors to announce in their internet site information aiming to inform the shareholders, creditors and public, such as the annual activity report, financial statement and audit reports.
In case the target is a listed company, the potential acquirer can also rely on specific disclosures made through the company's internet site and the Public Disclosure Platform, an electronic system through which electronically signed notifications required by the Capital Markets Board regulations are publicly disclosed. There three principle categories of disclosure: (i) disclosure of consolidated and unconsolidated financial reports / financial statements, (ii) disclosure of any material events giving rise to insider information (i.e. material information that may influence the value of a capital markets instrument or the decisions of the investors) and continuous information (i.e. any other material information that must be publicly disclosed) and (iii) disclosure of any other events required to be publicly disclosed.
It is also worth mentioning that disclosure of diligence related information to the extent possible would relieve the seller(s) of future responsibility.