SERBIA Law and Practice Contributed by: Nataša Lalović Marić, Jovan Mićović and Stefan Šilobad, Law Office Miroslav Stojanović in cooperation with Wolf Theiss
The funds must be secured in one of the following manners: • by depositing the relevant cash funds and securi - ties into a special bank account; • by concluding a loan agreement with a bank for this purpose; or • by obtaining an irrevocable first demand bank guaranty for the amount required for the payment of shares. If the bidder is a foreign (non-Serbian) person/entity, they are obliged to deposit the relevant funds into or obtain the relevant loan or guaranty from a Serbian bank. 6.7 Types of Deal Security Measures Parties have discretion to negotiate security meas - ures in private transactions, subject to the limitations provided under the law. As a rule, a target company is never permitted to provide, directly or indirectly, any security or financial assistance to a prospective bidder aimed at facilitating the acquisition of shares therein. In addition, a company’s representatives are generally obliged to act in the best interest of the relevant com - pany. The post-COVID-19 period triggered the more frequent inclusion of material adverse change (MAC) clauses in transaction documents. Agreements on deal security measures are less fea - sible in takeover bid processes, which are thoroughly regulated in the law. Bidders should be wary of any arrangements with third parties aimed at the acquisi - tion of shares in a target company, as this may qualify as “acting in concert”. Under the law, it is considered that persons are acting in concert when they co-oper - ate based on an agreement – express or tacit, oral or written – aimed at acquiring voting rights, exercising voting rights in concert or preventing another person from executing a takeover (see 4.1 Principal Stake- building Strategies ). In addition, a bidder’s rights in the course of the takeo - ver process are significantly limited, as follows: • in general, a bidder cannot amend its offer by decreasing the previously offered share purchase price, but can rather make the offer better by, for
example, increasing the offered price or eliminating the conditions contained in a conditional takeover bid; and • in the case of a conditional offer, it is prohibited for a bidder, its subsidiaries, persons that control the bidder and/or persons that provide takeover- related services to a bidder to affect the fulfilment of a takeover bid condition. Management reports on takeover bids, as well as employees’ reports, must contain true information, whereby management and the supervisory board can - not pass decisions from the scope of their compe - tencies (other than issuing management reports) that could unlawfully prevent or impede a takeover or have a detrimental effect on the operations of the company. 6.8 Additional Governance Rights A bidder that does not hold 100% ownership in a target may have a broad palette of shareholders’ rights, including the right to appoint a certain num - ber of board members, specific rights in case of a deadlock and quasi-veto rights on “reserved matters”. Such rights are often stipulated in the shareholders’ agreement, but due to the specific requirements of the Serbian Company Law are often also provided in the articles of incorporation or articles of association of a company. Aside from these, minority shareholders have specific rights provided under the law, which include but are not limited to: • the right to information; • the right to file individual and derivative actions; • the right to request convocation of the sharehold - ers’ meeting and/or to request amendments of the agenda for the shareholders’ meeting; • the right to request special purpose and/or extraor - dinary auditing of audited financial reports; • the right to request dissolution of the company, etc. While some minority shareholder rights pertain to all shareholders, most of them are linked to at least 5% or 10% shareholding in the company, and some require a higher shareholding therein (eg, 20%).
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