UGANDA Law and Practice Contributed by: Onyango Owor, Miriam Babirye Kaggwa and Namugera Joel Peter, Onyango & Company Advocates
gas or hydropower developments. These mechanisms must comply with CMA disclosure requirements to ensure transparency. 4.5 Common Conditions for a Takeover Offer/ Tender Offer Takeover offers in Uganda’s energy and infrastruc- ture sector commonly include conditions such as a minimum acceptance threshold, approvals from the CMA and ERA (with respect to companies dealing in energy), no material adverse changes in the target’s operations, financing confirmation, and due diligence completion. The CMA does not explicitly restrict offer conditions but requires transparency and fairness in the offer document, while the Competition Act Chapter 66 may indirectly influence conditions through competi- tion reviews to prevent anti-competitive outcomes in energy and infrastructure deals. 4.6 Deal Documentation Transaction agreements are customary to takeover offers and business combinations, formalised through offer documents under Regulation 9 of the Capital Markets (Takeovers and Mergers) Regulations, 2012. Beyond the board’s recommendation (Regulation 10), the target company may undertake obligations such as providing due diligence information (Regulation 29), avoiding actions that frustrate the offer (Regula- tion 30), co-operating with regulatory approvals, and disclosing share dealings (Regulation 31). Extensive representations and warranties are not customary for public companies, with limited assurances on finan- cial accuracy or regulatory compliance considered sufficient, which reflects the market’s reliance on dis- closures and due diligence to mitigate risks. 4.7 Minimum Acceptance Conditions Ugandan laws do not prescribe any minimum accept-
ers. The process allows the offeror to purchase the remaining shares either at the same prices and terms as the tender offer or at the prevailing market price of the voting rights, whichever is higher. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer An offeror is required and expected to demonstrate financial capacity to complete a takeover offer. It is also a requirement that at the time of a cash-based offer, the offeror pays a 10% deposit of the total cash consideration into an escrow account with a licensed financial institution. The escrow account may be in the form of: • a cash deposit with a commercial bank; • a bank guarantee in favour of the offeree and pay- able on demand; or • a deposit of acceptable securities with the appro- priate margin, with a commercial banker. It is the buyer, not the financing banks, that makes the offer, with the bank’s role restricted to providing sup- porting evidence such as guarantees. It is permissible for the offer to be conditional on securing final financ- ing, provided this is disclosed in the offer document and approved by the CMA. 4.10 Types of Deal Protection Measures In Uganda’s energy and infrastructure sector, vari- ous deal protection measures are put in place by the Regulations. During the offer period: • the target company is not allowed to deal in any of its securities except with the CMA’s prior approval or after issuing a one-working-day notice to the USE (if the target company is listed); and • the target company is not allowed to deal in shares traded on the USE for which there is no cash alter- native. Even after discussions have been terminated or the offeror decides not to proceed with an offer after an announcement has been made that offer discussions are taking place or that an approach or offer is being contemplated, any person privy to such termination
able conditions for tender offers. 4.8 Squeeze-Out Mechanisms
Following a successful tender offer, the squeeze-out mechanism provided for under Regulation 13 of the 2012 Regulations permits an offeror who has acquired at least 90% ownership of the company to compul- sorily acquire the shares of the dissenting sharehold-
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