SERBIA Law and Practice Contributed by: Nataša Lalović Marić, Jovan Mićović and Stefan Šilobad, Law Office Miroslav Stojanović in cooperation with Wolf Theiss
While court precedents on conflicts of interest of directors, managers, shareholder and advisers are scarce, the topic has been subject to judicial scrutiny.
During the same period of time, a target company can - not include in its articles of incorporation or articles of association limitations as to the number of votes arising out of voting shares; if such limitations have already been envisaged, they may be cancelled by the shareholders’ assembly by a simple majority of votes. Other than the issuance of a management report, directors or supervisory board members cannot make decisions that could unlawfully impede or prevent the takeover or have a detrimental effect on the opera - tions of the target company over a longer period of time. 9.3 Common Defensive Measures A chase for a competing bid is the most common defensive measure. Depending on the circumstanc - es, a management report and the employees’ opinion may also serve as defensive measures. 9.4 Directors’ Duties Except as explained in 9.2 Directors’ Use of Defen- sive Measures , the Takeover Law does not stipulate specific duties of directors when enacting defensive measures. Therefore, directors must observe their statutory duties, which include acting in the best interest of the company (see 8.1 Principal Directors’ Duties ). 9.5 Directors’ Ability to “Just Say No” Directors do not have the right to “just say no” and prevent a business combination. A director or mem - bers of the supervisory board are obliged to issue the management report, stating therein whether they support or are against a takeover bid. Such stand is made taking into consideration the overall takeover bid, the price per share offered by a bidder and the bidder’s business plan. In addition, a director or mem - bers of the supervisory board are obliged to publish the employees’ opinion on the bid, if one is received.
9. Defensive Measures 9.1 Hostile Tender Offers
Within ten days from the date of a bid publication, the management of the target company must publish its opinion regarding the bid in the same newspaper in which the short-form takeover bid was published. If the target company’s management receives a sepa - rate employees’ opinion on the bid, it must publish it, together with its own opinion. However, sharehold - ers are not bound by these opinions – hence, hostile takeovers may take place. 9.2 Directors’ Use of Defensive Measures The use of defensive measures by directors against takeover bids is rather limited and generally amounts to a chase for competing bids. Pursuant to the Takeover Law, upon the publication of a takeover bid, all participants in the takeover pro - cess (including directors), as well as third parties, are prohibited from offering benefits to shareholders of a target company, directly or through public media, for the purpose of influencing their decision on the takeover bid. From the moment of publication of the Notification of the Takeover Intent until the completion of a takeo - ver process, directors or supervisory board members cannot do the following without obtaining prior con - sent from the shareholders’ assembly: • use their authority granted under the articles of association of a target company to increase the share capital therein through a share issuance; • decide on the execution of extraordinary actions or agreements that would significantly affect the estate or liabilities of the target company; • decide on the acquisition or disposal of treasury shares; or • publish a takeover bid for another company.
10. Litigation 10.1 Frequency of Litigation
Litigation is not common in connection with M&A deals in Serbia as most issues tend to be resolved
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