BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR - Al Ruwayeh & Partners
7. Disclosure 7.1 Making a Bid Public
entirely in Arabic, while the other can be in either Eng - lish or Arabic. 7.2 Type of Disclosure Required Shareholders considering a business combination through a securities exchange offer need to be aware of disclosure requirements for two key areas: merger The offer document and the offeree board circular must clearly disclose the availability and location for inspection of key financial documents, including audited consolidated financial statements, covering the last two years. The specific accounting stand - ards used for preparing these statements depend on the nature of the companies involved. Islamic finan - cial institutions must adhere to the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards. For non-Islamic institutions or those following different standards, any accounting standards approved by the CBB are acceptable. There is no local GAAP in Bahrain. All companies incorporated in Bahrain prepare their financial state - ments according to the international accounting standards (IFRS) or AAOIFI, as applicable. In addi - tion, Appendix E specifies that all reports must be pre - pared in accordance with IFRS, with AAOIFI standards benefit statements and asset valuations. 7.3 Producing Financial Statements All transaction documents may not be disclosed in full. However, TMA regulations specify that certain documents must be readily available for shareholder inspection during a potential takeover offer in Bah - rain. The offer document and the offeree board circular need to specify clearly which documents are includ - ed and where they can be accessed, from the offer announcement until the offer period ends. The following documents are considered transaction documents and must be disclosed and made avail - able from the date the bid document is announced: • company documents – memorandum and articles of association (or equivalent documents) for both applying to Islamic institutions. 7.4 Transaction Documents
Takeover offers in Bahrain require CBB approval before a public announcement is made, except for MTOs that are triggered by regulation. The target company (offeree) board is obliged to promptly announce to the stock exchange, market participants and their shareholders whenever any of the following conditions arise: • the board receives a formal notification of a firm intention to make an offer, regardless of its own position on the matter; • following an initial approach by a potential acquirer, rumours or unusual trading activity begin to sur - round the possibility of an offer; • negotiations involving more than a limited group of individuals are about to begin regarding a potential offer; • the board becomes aware of discussions between a potential acquirer and a major shareholder hold - ing at least 30% of the voting rights; or • the company itself is actively seeking potential acquirers and this search coincides with rumours, unusual trading activity or the need to approach multiple potential buyers. Strict regulations govern the announcement of MTOs. Even before approaching the target company, a poten - tial acquirer must announce their intentions if rumours or speculation spread about a possible offer. Simi - larly, unusual trading activity suspected to be caused by the acquirer, or expanding negotiations beyond a select group, necessitate immediate public announce - ments. Finally, any acquisition that triggers the MTO threshold automatically requires an announcement without delay for additional information gathering. The TMA regulations mandate specific procedures for announcing an offer or possible offer. The announce - ment itself must adhere to the guidelines outlined in Appendix B of Part B within CBB Rulebook Volume 6. It needs to be disseminated through two channels: the licensed stock exchange and two local Bahraini daily newspapers. One of these publications must be
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