UGANDA Law and Practice Contributed by: Onyango Owor, Miriam Babirye Kaggwa and Namugera Joel Peter, Onyango & Company Advocates
or decision is not allowed to deal in the securities of the target company prior to an announcement of the position. After contacting the offeror, the target company is not allowed to take any actions seen as intended to frus- trate the offers made including: • issuing any authorised but unissued shares; • issuing or granting options in respect of any unis- sued shares; • creating or issuing or permitting the creation or subscription of any shares; • selling, disposing of or acquiring, or agreeing to sell, dispose of or acquire, its assets or any of its subsidiaries; or • entering into or allowing contracts for or on its behalf to be entered into, other than in the ordinary course of its business. Any entity or officer of an entity that violates these measures in a bid to frustrate a deal, or that for any other reason commits an offence, may be subjected to a civil penalty. 4.11 Additional Governance Rights There are no additional governance rights save for In Uganda, it is common to obtain irrevocable commit- ments from principal shareholders in takeover offers, as this is not legally restricted. It therefore allows intending offerors to enter written agreements with principal shareholders with commitments to tender shares or support a deal prior to formal offers. These undertakings typically include non-disclosure and non-compete clauses, but often provide an “out” for superior proposals, which balances bidder security with fiduciary duties to shareholders. Regardless of these agreements, the shareholders are not expected to engage in any act intended to frustrate any other offers made to the target company. 4.13 Securities Regulator’s or Stock Exchange Process Takeover offers require prior approval from the CMA before launch, involving the submission of the offer those negotiated between the parties. 4.12 Irrevocable Commitments
document for review. No approval is required from the USE; rather, the offeror is only required to notify the USE within ten days upon closure of the offer. The review of the offer document by the CMA typi- cally takes 14–30 days, focusing on compliance with the requirements set within the Capital Markets (Takeovers and Mergers) Regulations, 2012. During approval, the CMA approves the offer price and terms therein, including those meant to protect minorities. In its approval, it advises the offeree to seek advice from an independent adviser since the CMA’s approv- al cannot be interpreted as a recommendation of the offer by the CMA. The timeline is by default set in the regulations as 60 days and as such, it is not set by the CMA. How- ever, the CMA has the power to extend this timeline, depending on the circumstances. If a competing offer is announced, the timeline may be extended to allow fair evaluation, preventing share- holders from making rushed decisions. Such a com- peting offer must however have been made at least ten days before the closure of the offer, otherwise it does not count. 4.14 Timing of the Takeover Offer As noted in 4.13 Securities Regulator’s or Stock Exchange Process , a takeover offer can be extended by the CMA if regulatory or antitrust approvals are pending beyond the initial 60-day period, or for other reasons. 4.15 Privately Held Companies Privately held companies in Uganda are commonly acquired through share transfers or even asset pur- chases under the Companies Act Chapter 106, which requires board approval or shareholder resolutions, and filing a return of allotment or transfer with the URSB. Key considerations include due diligence on liabilities, tax implications, and foreign investment approvals from the UIA, if applicable.
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