What public-facing documentation must a buyer produce in connection with the acquisition of a listed company?
Mergers & Acquisitions (2nd edition)
Acquisitions of stakes in Offshore Listing Vehicles which trigger the provisions of the Takeover Code require the buyer to produce an offer document, containing the information set out therein. This includes information regarding the offeror, the offeror’s intentions regarding the offeree company and its employees, and the resources for such offer.
The bidder must provide the recipients of a public offer with an offer document. The offer document is a formal legal document containing detailed information for the shareholders to decide if they want to sell their shares. The offer document must be prepared in accordance with the principles of the Takeover Act and the recipients must have sufficient time and information in order to be able to reach a properly informed decision about the offer. The offer document must be prepared carefully, accurately and without omissions. The bidder also must appoint an independent expert to assess if the offer document is complete, in line with the legal requirements stipulated in the Takeover Act (especially with regard to the consideration that is offered) and if the bidder is capable of financing the offer. In addition, also the target company needs to appoint an independent expert who has to assess the offer and the target’s management and its supervisory board must issue responses to the bid.
Public offer documents can be downloaded from the website of the Takeover Commission.
Some follow-up documents also have to be filed with the Takeover Commission and published after such filing (e.g., note on the result of the tender proceedings).
Where the takeover bid is being made by way of an offer to all target shareholders, the key documentation to be produced by a bidder will be:
- The various announcements that the Code requires (see question 16);
- The offer document, the contents of which are prescribed by the Code and which will normally contain (in addition to the specific requirements of the Code) a letter from the bidder setting out the offer and, if recommended, a letter from the Chairman of the target company as well as the long term commercial rationale for the offer and the bidder’s intention with respect to business, the employees and pension schemes of the target company;
- A form of acceptance to be used by target shareholders who hold their shares in certificated form to accept the offer; and
- If a listed bidder is offering shares as consideration, or is conducting a share issue in order to raise cash to fund the offer, then an FCA approved prospectus and/or bidder shareholder circular may also be required.
If the bidder is offering target shareholders cash or a cash alternative, the announcement of a firm intention to make an offer and the offer document itself must each contain, among other things, a statement from an appropriate third party (usually the bidder’s financial adviser) confirming that the bidder has sufficient cash to complete the transaction. If the bidder fails to honour its cash commitment, and it can be shown that the third party providing the confirmation has not acted responsibly and taken all responsible steps to assure itself that the cash is available, then the third party making the cash confirmation statement will be required to provide the cash necessary to complete the offer. Given this sanction, the cash confirmation exercise is a detailed exercise carried out by the appropriate third party prior to satisfying itself it can make the statement.
If the takeover offer is being made by way of a scheme of arrangement, a scheme circular will be produced for target shareholders. Although it is the target company‘s scheme of arrangement, the bidder will be heavily involved in the production of this document which, in effect, replaces the offer document. Its contents are prescribed by the Code.
All documents must be prepared with the highest standards of care and the information in them must be adequately and fairly presented and made equally available to all target shareholders.
General rules regarding public announcements of significant corporate events must be followed. The tender offer for acquisition of a listed company must contain general information on the buyer (name, seat and management address, etc.), the targeted shares (number, type, offered price), and the post-acquisition plans of the buyer for the target listed company. The tender offer must also include copies of (i) any existing shareholders’ agreements, which govern voting rights of the shareholders of the buyer and (ii) documents, evidencing the means of financing the tender.
With respect to the acquisition of a listed company, buyer will have to file a letter with the (Superintendencia Financiera de Colombia- SFC) (for regulatory authorization), that contains some details of the transaction such as the number of shares purchased, their value, price paid for them and the origin of the resources for the payment or financing. Additionally, buyer will have to submit corporate and financial documents such as the certificates of incorporation and good standing, the capital structure, the financial statements, among others. Buyer will also have to submit the information regarding the structure of its corporate governance and the modifications that it intends to do to the management system to prevent money laundry and terrorism financing (SARLAFT).
For an anti-trust notice or authorization, a buyer will usually need to file the information regarding the markets in which it is involved, the activities that it carries out in Colombia and other relevant financial information. For this purpose, it is usually necessary to submit the financial statements, market studies, description of the geographical areas in which the services are provided, the competitors, details of the products and services, details of the total sales in Colombia, insurance brokers, list of services providers and information related to the market dynamics.
The filing must contain the draft offer prospectus and, if any, prior notices given to any authorities empowered to authorize the contemplated transaction.
The draft offer prospectus must notably be made public upon filing of the offer with the AMF on the bidder's web site, the AMF's website and, in case of a joint prospectus, on the target’s web site.
The bidder must release a press release setting forth the main terms of his draft offer prospectus, at the latest upon filing its offer with the AMF.
A buyer of a listed entity will be required to prepare:
- a Takeover Offer and associated notices;
- if the consideration includes an offer of scrip, a Product Disclosure Statement in relation to the relevant securities being offered; and
- if the transaction is undertaken as a scheme, a Scheme Implementation Agreement; and
- various other procedural notices to the market and/or shareholders.
An acquirer for the purpose of a tender offer must submit an information memorandum, enclosed to which all documents specified by Financial Regulatory Authority, including:
- A bank certificate issued from a registered bank in Egypt confirming that the acquirer has sufficient funds for the purpose of the offer.
- A detailed report in connection with the valuation grounds of the proposed purchase price and the share value.
- Any agreements related to the Offer and the persons with which the acquirer is dealing according to agreements or understanding.
Further, the information memorandum must include information related to duration and main terms of the offer, details of the funding resources, and the envisaged activities and plan during the 12 months following the acquisition and whether the target company will remain listed. The information memorandum should also be certified by the acquirer, financial and legal consultants.
The Cayman Islands do not have a law or regulation requiring disclosure of discussions of acquisition decisions.
For companies listed on the CSX, the Code provides that, during the course of an offer or when an offer is in contemplation, the offeror, the offeree and any of their respective advisers may not furnish information to some shareholders if such information is not available to all shareholders. This principle does not apply to the furnishing of information in confidence by the offeree company to a bona fide potential offeror or vice versa. To the extent that the discussions of the Board may contravene this provision, they should be disclosed to shareholders. For companies listed on other exchanges, the relevant listing rules will be relevant.
Art. 102 of the Consolidated Financial Act provides that buyers that submit a tender offer must publish an “offer document”, which has to be sent to Consob within 20 days from when the offer is made public, in order for the offer’s compliance with the law provisions to be checked. Content requirements and the rules on filing and notification are set out under Art. 38 of the Issuers’ Regulation. Generally, the document must indicate: (i) the buyer’s identity, (ii) the category and quantity of securities involved, (iii) the price per share, (iv) the initial and final date of the acceptance period.
If listed shares are issued as consideration, the offer prospectus must comply with the principles and provisions under EU Commission Regulation No. 809/2004.
In the case of mergers, Art. 70 of the Issuers’ Regulation provides that an information document must be drafted by issuers that intend to carry out extraordinary transactions. The document must outline all risks and uncertainty regarding the transaction that could significantly influence the issuer’s business.
The main documentation produced in the course of a bid includes the following: (i) a holding or leak announcement; (ii) Rule 2.5 announcement (announcing a firm intention to make an offer); (iii) announcement response (usually in response to a hostile bid); (iv) main offer document; (v) target’s defence document (in response to offer document in a hostile bid).
With a scheme of arrangement, the documentation is largely the same with the exception of a circular to target shareholders and a notice convening meetings of shareholders instead of an offer document.
In the non-solicited acquisition of Brazilian listed companies which, as mentioned above, are very rare, the potential buyers have to produce the bid documents (edital) which contains very basic information about the proposed acquisition (such as, but not limited to, price, conditions, etc.). Other than that the documents filed with the antitrust authorities are public unless a specific request for privacy is made at the time of filing (such privacy only being possible in certain specific cases - but not all).
In the case of a public takeover bid, the following are required:
(i) announcement of the intent to make a public offer or confirming the decision to make a public offer;
(ii) the offer document must include confirmation by a credit institution or other organization that sufficient funds are available to satisfy full acceptance of the offer;
(iii) acceptance and transfer form, issued by the offeror and sent to all of the target’s shareholders;
(iv) a reasoned opinion by the target’s board of directors sent to the target’s security holders accompanied by an independent expert report;
(v) a revised offer document, where applicable; and
(vi) final result of the offer announced and published in daily national newspapers.
The key public-facing documentation that is necessary for a buyer to produce in connection with the acquisition of a listed company are as follows:
- Notification of the buyer’s decision to make an offer, which is published by the Oslo Stock Exchange.
- An offer document (or a prospectus or equivalent document if applicable)
- An acceptance form.
- The buyer’s announcement of the result of the offer.
The offer document must be prepared and distributed to all shareholders in accordance with the provisions of the STA. In all material respects, the offer document will be the same irrespective of a bid being recommended or hostile, mandatory or voluntary. The offer document must inter alia include a description of the offer together with correct and complete information and a description on matters of significance for evaluating the offer.
The board of directors of the target company must also provide a statement on their response to the offer. In a recommended offer, it is not unusual that a buyer will prepare an initial draft board statement. Such draft statement will then be submitted to the target’s board exhibited to a draft transaction agreement. Note that depending on its terms, such transaction agreement between the target and a bidder regarding a potential takeover could trigger a disclosure obligation for the target. There are currently no explicit statutory provisions under Norwegian law requiring a buyer or a target to disclose the full details of such a transaction agreement. Nevertheless, the Code of Practise now recommends that significant transaction agreements should be disclosed. The decision to disclose such transaction agreements is still discretionary. Even so, it is recommended that the Buyer and the target seek to agree in advance if and when such disclosure should take place.
Note that in a mandatory offer (see question 25 below), a buyer must also obtain a bank guarantee confirming its ability to settle the consideration offered in full.
If the buyer is issuing a share-for-share offer, the buyer must comply with the provisions set out in chapter 7 of the STA. Very often, this will trigger an obligation on the Buyer to publish a combined prospectus and offer document.
Additional press announcements and supplements to the offer document or prospectus will often be required, for example if the buyer wants to increase the consideration offered. In hostile bid situations, it is not uncommon that a great variety of revised offers, announcements or circulars could be issued.
There are currently no takeover regulations in Myanmar applicable to listed companies, and this is not specifically regulated.
A person planning to launch or required to submit a bid must notify the bid to the HCMC and to the target’s BoD, and then proceed to a public announcement, which must among others enlist the corporate name and registered office of the offeree company, the name and address of the offeror or, in case of a legal entity, the corporate name, the legal status, the registered office and address the corporate name and address of the offeror’s advisor.
Within three days after its approval by the HCMC, the information document has to be posted by the offeror at the target’s registered and branch offices, at the consultant’s office and at the credit institutions or investment firms authorized by the offeror. It also must be published in the offeror’s website, as well as on the site of its consultant.
If the offeror decides to improve the terms of the bid, the revised offer must be submitted for approval to the HCMC, communicated to the BoD of the target company and published by the offeror at the Stock Market’s website, at the daily price report of the Stock Market and at the offeror’s website. Finally, the results of the bid have to be made public by the offeror within two days after the expiration of the time period of acceptance, and they have to be communicated to the representatives of the employees.
The key transaction document in a public tender offer is the offer document, which must be submitted in the German language. In order to comply with the requirements set out in the Takeover Act, the offer document must contain the information necessary to enable the target shareholders to make an informed decision on the offer, including information regarding price, financing and other terms and conditions of the offer and information on the target and the bidder, as well as information on future plans and governance post closing. Other than the offer document, there will also be various press releases, announcements and notifications required to be made to BaFin and the respective Stock Exchange.
A fairness opinion by an investment bank confirming the adequacy of the offered consideration is not mandatory, but is customary.
A bidder is required to produce various documents following a public offer.
A person having the intention to launch a public offer is first of all required to notify the FSMA, who will publish this notification.
The bidder is further required to draft and publish a prospectus, which must be approved by the FSMA. The content of the prospectus is included in an annex to the Royal Decree of 27 April 2007 on public offers. It should enable the holders of securities of the target company to form an informed opinion on the transaction.
In the event of a voluntary public offer by a shareholder having control over the target company, the independent directors of the target should appoint an expert. The bidder should cover the costs. The expert is required to issue a report on the securities that are the object of the offer. The report should be made public by the bidder as annex to the prospectus.
At the request of the FSMA, the parties to the bid shall immediately transfer all agreements which may have a material impact on the assessment of the bid, its course and outcome and these agreements might need to be made public. It concerns for example commitments to contribute to the offer, an arrangement defining preferential rights to transfer or acquire voting securities of the target company, agreements conferring rights on a party to require the creation of new shares.
Further certain information on the transactions regarding the securities of, amongst others, the target and the bidder might need to be communicated to the FSMA during the offer period. Amongst others the bidder, the target company or persons acting in concert with the aforementioned entities and members of the board of the bidder or the target company are subject to this requirement.
The board of the bidder has certain information obligations towards the employees’ representatives or the employees. Notably, they should be informed about the publication of the public offer and should be provided with a copy of the prospectus (see also above - question 10).
Finally, some public announcements by the bidder in relation to the offer, such as the outcome of the offer, are required.
21.1 Any foreign citizen or foreign-domiciled company wishing to acquire any shares in any listed (or other public) company in Vietnam must firstly:
- apply to the VSD for and be issued with a Securities Trading Code
- establish with a licensed Custodian Bank an Indirect Investment Capital Account, denominated in VND; and
- engage the services of a Vietnam licensed securities broker, and open a Securities Trading Account with that securities broker.
21.2 Each of the compulsory registrations referred to in Section 21.1 above require the applicant to provide detailed personal or corporate particulars, together with supporting documents for identification purposes (such as passports or corporate constitutional documents). Such information and documents are not, however, made generally available to the public as a result of these compulsory registration steps.
21.3 For so long as any shareholder is not a Major Shareholder (i.e., holds less than 5% of issued and paid-up voting share capital, aggregated with its related persons and entities) nor an Internal Shareholder, the only information relating to them which will be generally available to the public is their name and number of shares held (which information can generally only be obtained by way of accessing a copy of the register of shareholders of the relevant listed company, as maintained electronically by the Vietnam Securities Depository, which is very difficult to achieve except with the direct assistance of the relevant listed company).
21.4 Upon becoming a Major Shareholder (or, once having become a Major Shareholder or Internal Shareholder, upon implementing any disclosable share sale or purchase transaction), that shareholder is required to implement its public disclosure obligations by way of the completion and publication of a disclosure form in the prescribed form. These prescribed forms require the relevant shareholder to disclose publicly details such as:
- its name and registered head office or residential address;
- the numbers and classes of shares held by it;
- the names and addresses of its related persons or entities and their shareholdings; and
- its securities trading code.
A Swiss public tender offer typically starts with the pre-announcement of the offer by the bidder. The pre-announcement is a short document setting out the principal terms of the offer (i.e. price, type of consideration, conditions and timetable). Within six weeks of the publication of the pre-announcement the bidder must publish the offer prospectus. The offer prospectus sets out the offer terms and contains certain information on the bidder, the target, and the securities offered in exchange, if any. Upon completion of the offer period and the additional acceptance period, respectively, the bidder must publish the respective tender results. All offer documents must be published in German and French (and on a voluntary basis in other languages) through electronic channels, and must be put on the bidder's website or a special offer website on the internet. In addition, the prospectus must be mailed to interested parties upon request. The Takeover Board will publish the offer documents on its website.
Russian law does not require the buyer to produce any public-facing documentation, except as referred to in the response to question 15 and except as mentioned below.
In the event of of acquisition of more than 30% of shares of a public joint-stock company, the buyer is required to submit its offer (whether mandatory of voluntary) to the Bank of Russia for preliminary review before its delivery to the target.
Depending on the mechanism used, usually, the buyer must prepare an offer document (plus various notes published on the stock market – regulated market or ATS).
Under the QFMA Mergers & Acquisitions Rules, the offeror must submit a merger and acquisition application containing the following information:
- The offeror's name, nationality, and address.
- Information about the offeror's company, such as its headquarters, objectives, current capital, company's address, names of directors, names of shareholders, the percentage each shareholder owns in the offeree company.
- The name, headquarters, address and capital of the offeree company
- The number of shares owned by the offeree in the listed offeree company must be shown in a statement
- Minimum and maximum of the shares to be acquired and minimum and maximum percentage of the offeree company's capital
- The price offered to the offeree.
- The purpose of the merger or acquisition.
- A copy of the articles of association and memorandum of association of the target company shall be provided to the offeree and the offeror.
- The offeror shall submit an updated copy of its shareholders' register.
- A copy of acquisition or merger agreement signed by both parties.
- In case of cash payment, a bank guarantee issued by a local bank ensuring that the offeror has the capability of fully or partially paying.
- A valuer’s valuation of the offeree company's assets.
- Commitment by the offeror to the authority to pay full fees in relation to acquisition and merger
- The offeror and offeree company must submit am audited financial report for the last three years.
Furthermore, a notice of the process must be given to the Competition Protection and Anti-Monopoly Committee of the ministry of Economy and Commerce.
The type of documentation a buyer is required to produce is determined by whether the acquisition is structured as an all-cash deal or if the consideration will include stock. In an all-cash deal structured as a two-step transaction, the buyer is required to prepare an offer to purchase in connection with the tender offer. The offer to purchase contains very limited information about the target and acquirer, a summary of the negotiations leading up to the transaction, certain information about the acquirer’s plans for the target company and the source and amount of the funds the acquirer is using for the transaction (including a description of any financing arrangements). The target company must prepare and file a Schedule 14D-9, in which the target board provides its recommendation to shareholders with respect to the tender offer.
In a one-step, all-cash deal, the target company must prepare a proxy statement for delivery to its shareholders. The proxy statement contains much of the same information about the buyer as an offer to purchase.
In transactions involving stock consideration, the buyer is generally required to prepare and file with the SEC a registration statement containing a prospectus that includes information about both the buyer and the target company. That prospectus will also usually function as the proxy statement for the target company in a merger structure. Among other things, the proxy statement/prospectus must contain all the information (including buyer financial statement information) that would be included in a prospectus for the buyer, including, if the acquisition is material to the buyer, pro forma financial statements. In an exchange offer (which is not a common structure outside of the hostile bid context), the buyer’s prospectus will also contain the information that would be contained in an offer to purchase for cash, and the target company is required to file Schedule 14D-9. For acquirers which are not already reporting companies under the Exchange Act, the disclosure requirements associated with using stock consideration can be quite substantial and can involve significant time in order to comply.
Following the launch of an offer for a publicly listed company, the offeror must within four weeks of making the offer public through a press release (although in some cases, the Swedish Securities Council may grant an exemption from the four-week deadline if so requested by the offeror), and before the commencement of the acceptance period, prepare and publish an offer document. The offer document must be filed with the Swedish Financial Supervisory Authority. The Financial Instruments Trading Act and the Takeover Rules include detailed requirements on the contents of the offer document. Additionally, if the offer consideration consists of transferable securities issued or held by the offeror, the content of the EU Prospectus Regulation also needs to be adhered to.
Where a mandatory or compulsory offer is required, the buyer is required to prepare, submit to the SEC, PSE and the company, and publish, a tender offer report which sets out, among others, the terms of the acquisition and the plans of the buyer for the target. Copies of the pertinent agreements between the buyer, the company and the other shareholders are required to be annexed to the tender offer report.
Where the acquired shares will breach the thresholds provided by law, the buyer will have to submit to the SEC, the PSE and the company, reports in the forms prescribed by the SEC, disclosing, among others, the buyer’s percentage ownership in the company.
The requirements for public facing documentation will be determined by the rules of the stock exchange on which the target is listed.
Under the Takeover Code, the documents issued during an offer must satisfy the highest standards of accuracy and the information given must be adequately and fairly presented (Rule 19.1, Code).
The main documents received by the target's shareholders on a recommended bid are the:
- Circular summarising the terms and conditions of the offer;
- Offer document;
- Acceptance form; and
- Prospectus or equivalent document (if required).
The main documents received by the target's shareholders on a hostile bid are the:
- Circular summarising the terms and conditions of the offer;
- Offer document;
- Acceptance form;
- Prospectus or equivalent document (if required);
- Defence documents; and
- Revised offer document.
As we describe in more detail in our response to Question 25 below, an acquirer may be required to make a tender offer bid when acquiring the shares of a listed company. A tender offer is commenced by the tender offeror when it posts a public notice followed by its filing of a tender offer registration statement. In response, the target company must file its position statements. All these documents are available to the public on EDINET (Electronic Disclosure for Investors' NETwork), an electronic corporate disclosure system under the FIEA. The material portions of these documents are also disclosed in the press releases of the acquirer and the target company.
In addition, as we described in more detail in our response to Question 15 above, when an acquirer acquires more than 5% of the total outstanding shares of a listed company, the acquirer needs to prepare and file a large shareholding report.
In the case where an acquirer acquires a listed company by way of a statutory corporate reorganization (including the acquisition of only part of the businesses or assets of such listed company), the acquirer must prepare certain documents setting out certain information concerning such corporate restructuring and must make such documents available for inspection by the shareholders and creditors of each party.
Isle of Man
The requirements for public facing documentation will be determined by the rules of the stock exchange on which the target is listed.
- Offer document
- Acceptance form
- Prospectus or similar document (if required)
British Virgin Islands
There are no BVI laws or regulations requiring disclosure of discussions of acquisition decisions. The listing rules of the relevant stock exchange on which a BVI company may be listed will be relevant for such public documentary disclosure requirements.
This will be determined by the rules of the stock exchange upon which the target is listed but typically this will include:
- a circular setting out the terms and conditions of the offer;
- the offer document and/or prospectus; and
- an acceptance form.
If the share acquisition is subject to the approval of the Turkish Competition Authority, parties are required to provide a Turkish copy of the share purchase agreement to the authority.
Transaction documents in a typical share acquisition deal do not have to be disclosed in full; however, if there is a publicly traded company involved, for mandatory tender offers, the CMB regulations require that, along with their application, bidders submit the share purchase agreement that triggered the mandatory tender offer requirement and the agreement executed with the intermediary institution engaged for the tender offer to the CMB.
In addition, acquirers must file standard forms which disclose information on the shareholding structure of the target, board structure, transaction triggering the mandatory tender, price of the shares to be acquired, method of payment, any envisaged changes to the business and financial structure of the target company by the acquirer, tender procedure, timing, etc. These forms are disclosed to shareholders and the public.
The public facing documents include the Information Memorandum or Offer Document (as applicable). Both documents include information regarding the acquirer, directors’ circular, the acquirer’s intentions regarding the target and its employees, and the resources for funding the offer. Other documents will be as specified in the SEC Rules or The NSE Rules and this will include the various announcements that the law requires the buyer and the target to publish.
With a scheme of arrangement, the documentation will include a scheme document together with an explanatory statement and the notice convening meetings of shareholders instead of an oﬀer document with a directors’ circular. Save for these, the content of the scheme document and the offer document is largely same.
The main documentation requirements applicable to the acquisition of a listed company are set out in the Capital Market Act. As described under point 15 above, shareholders of a public company are required to notify the company and the Hungarian National Bank acting as supervisory authority if their participation in the votes in the company’s shareholders’ meeting reaches, exceeds or falls below the following ratios: 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 75, 80, 85, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99 %. Such notification shall be published by the target company.
If more than 33% of the votes, or, if no other shareholder owns more than 10% of the votes in the target company, more than 25% of the votes is acquired, the acquirer shall make a public takeover bid pursuant to the Capital Market Act.
For conducting a public takeover process pursuant to the Capital Market Act, the buyer must prepare and publish the public takeover bid, which needs to contain all material aspects of the offer as set forth by the law. The offer needs to have several attachments including the operation program and business report regarding the target company, proof of the offeror having sufficient funds available to cover the consideration payable for the shares, the agreement that stipulates the party empowered to submit the bid (if the takeover bid is submitted by persons acting in concert and it is not submitted by the parties jointly), contract for the purchase or repurchase option or for the call option on the forward purchase of shares (if applicable), and a statement for the exercise of the buy option (if applicable) where the bid is for acquiring up to 90% of the voting rights in the target company.
Following the approval of the public takeover bid by the Hungarian National Bank, the offeror shall publish the approval, the public takeover bid as well as the deadline for submitting declarations of acceptance.
Following the end of the deadline for submitting declarations of acceptance, the offeror is required to publish the result of the public takeover bid within two days.