SIERRA LEONE Law and Practice Contributed by: Gelaga King, Eku Williams, Robert Koroma and Valentina Coker, GPKLegal
8.2 Special or Ad Hoc Committees It is common practice for boards to establish special or ad hoc committees during M&A transactions. These committees focus on overseeing negotiations, review - ing independent advice and ensuring that the interests of all shareholders are fairly represented, particularly in situations where conflicts of interest might other - wise arise. 8.3 Business Judgement Rule Sierra Leonean courts tend to defer to the judgement of the board of directors, subject to it being compat - ible with local laws and regulations, and subject to the court being satisfied that the board has acted in good faith and with due diligence, and has based its judgement on a rational business strategy supported by independent advice. 8.4 Independent Outside Advice Directors in Sierra Leone commonly seek independ - ent legal and financial advice in a business combi - nation. The advice typically covers compliance with the relevant regulations, notification requirements and labour laws, while financial advisers assess valuation, viability and risks. 8.5 Conflicts of Interest There has been very little judicial scrutiny of conflicts of interest in Sierra Leone. However, regulators expect full disclosure and independent review of any potential conflicts, reinforcing the need for directors to balance their duties to the company with their personal or affili - ated interests. Hostile tender offers are legally permitted in Sierra Leone, but they remain rare. Most companies are pri - vately held with concentrated ownership. The mar - ket’s relatively small size and a prevailing preference for negotiated, co-operative deals typically mean that aggressive takeover tactics are rarely deployed. 9.2 Directors’ Use of Defensive Measures Sierra Leone permits directors to use defensive meas - ures, provided they serve the company’s best interest. 9. Defensive Measures 9.1 Hostile Tender Offers
9.3 Common Defensive Measures Common defensive measures in Sierra Leone include issuing new shares to dilute a bidder’s stake, securing white knight investors and using contractual provi - sions that may delay or deter unsolicited offers. In private firms, shareholder agreements often block hostile moves. 9.4 Directors’ Duties When implementing defensive measures, directors have a duty to ensure that any defensive actions are justified, transparent and backed by independent advice, thereby protecting both the company and its shareholders from unnecessary or overly aggressive interventions. They have an overriding duty to act in the company’s best interests. 9.5 Directors’ Ability to “Just Say No” While directors do have the discretion to reject offers they believe are not in the best interests of the com - pany, such decisions must be supported by a clear, rational business basis and appropriate independent advice. A blanket “just say no” approach without thor - ough evaluation may expose directors to legal chal - lenges. Litigation in connection with M&A deals is not com - mon in Sierra Leone. This is due to several factors, including but not limited to a preference for negotia - tion, mediation or other ADR mechanisms. Parties also tend to be wary of litigating locally due to the unpredictability of the local courts. As a result, parties involved in disputes prefer settlement over litigation. 10.2 Stage of Deal In the few cases in which litigation arises, it is usually post-closing, and typically where parties disagree on the payment method. Litigation may be related to a broad range of issues, including shareholder griev - ances or employee challenges based on labour laws. 10.3 “Broken-Deal” Disputes There have not been any major “broken-deal” dis - putes in recent years. This is partly due to the low 10. Litigation 10.1 Frequency of Litigation
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