BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR - Al Ruwayeh & Partners
the offeror (acquiring company) and the offeree (target company); • financial statements – audited consolidated accounts for the last two financial years, prepared according to AAOIFI standards (for Islamic financial institutions) or other CBB-approved accounting standards; • management contracts – all service contracts of the offeree company’s directors; • referenced documents – any reports, letters, valua - tions or other documents used in materials issued by either company; • professional adviser consents – written consents from any professional advisers involved in the offer; • material contracts – all significant contracts related to the offer; • profit forecast documentation – if profit forecasts are included, reports from auditors, consultant accountants and professional advisers, along with their written consent to the use of their reports; • asset valuation documentation – if asset valuation is involved, the valuation certificate, associated report details and a letter confirming the valuer’s consent to their name being published; • commitment letters – any documents evidenc - ing irrevocable commitments or letters of intent obtained by either company or their associates; • dealings aggregation – a full list of all dealings if the CBB has approved aggregation; • financing arrangements – documents related to the offer’s financing or a detailed statement from the professional adviser confirming sufficient resources for implementing the offer; • inducement fees – documents related to any inducement fees or similar arrangements; and • agreements and arrangements – all agreements or arrangements disclosed in the offer document, including memorandums if not written down for - mally.
consideration before they enter into any commitment with an offeror that would restrict their freedom to advise their shareholders. Such commitments may give rise to conflicts of interest or result in a breach of the directors’ fiduciary duties. 8.2 Special or Ad Hoc Committees Establishing special or ad hoc committees normally depends on the internal corporate governance struc - ture of the company. However, a board member with an interest in an offer presented to the board would be precluded from voting with respect to that interest. 8.3 Business Judgement Rule Bahrain does not have a precedent system, so it is not possible to give a definitive answer as to whether courts in Bahrain defer to the judgement of the board. However, takeover issues do not appear to have been the subject of any significant litigation in Bahrain. 8.4 Independent Outside Advice Both the bidder and the target entity must procure a report from an independent investment adviser, who must provide their opinion on the offer and present it to the shareholders of the entity that retained the adviser. 8.5 Conflicts of Interest While Bahrain does not have a precedent system, the courts have handled a number of conflict of inter - est matters. The CBB has also handled a number of conflict of interest cases, through its disciplinary pro - cesses. Although Bahrain’s TMA regulations permit hostile takeovers, such takeovers are practically non-existent. 9.2 Directors’ Use of Defensive Measures Once a bona fide offer has been communicated to the board of the target or once the board of the target has reason to believe that a bona fide offer may be imminent, no action that could effectively result in an offer being frustrated may be taken by the board of the target in relation to the affairs of the company without 9. Defensive Measures 9.1 Hostile Tender Offers
8. Duties of Directors 8.1 Principal Directors’ Duties
Directors of an offeror and the offeree company must only consider the shareholders’ interests taken as a whole when they are giving advice to shareholders. Directors of the offeree company must give careful
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