BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M. Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
A share purchase involves acquiring the target com - pany’s shares, while an asset purchase focuses on specific assets, avoiding unwanted liabilities. These company acquisitions are governed by the Compa - nies Act, Chapter 308. Mergers are governed by the Fair Competition Act (FCA), Chapter 326C and refer to a combination of two or more companies. Assets and liabilities are transferred to the surviving company, which acquires control over the other company. Merg - ers over 40% require the approval of the Fair Trading Commission (FTC). Takeover bids are governed by the Companies (Take- Over Bid) Regulations, 2002 and are defined as a direct offer to shareholders of a public company to acquire their shares. A mandatory takeover bid in Bar - bados is triggered when a person directly or indirectly acquires 25% or more of a company’s shares. 2.2 Primary Regulators The primary regulators for M&A activity in Barbados are as follows. • The Financial Services Commission (FSC): The FSC is responsible for supervising and regulating non-bank financial institutions in Barbados, par - ticularly those entities licensed or registered under a number of pieces of legislation including the Securities Act, Chapter 318A. The FSC regulates market conduct, ensuring fairness in M&A transac - tions and protecting shareholders’ interests. • The Barbados Stock Exchange (BSE): The BSE provides rules and guidelines concerning the list - ing, trading and public disclosures of securities for publicly listed companies. It also ensures that M&A transactions for publicly listed entities are in compliance with the stock exchange’s listing rules and regulations. • The FTC: The FTC may in some circumstances be involved if the M&A transaction potentially raises competition concerns. The FTC reviews and approves transactions that may significantly affect market competition under the FCA, Chapter 326C. 2.3 Restrictions on Foreign Investments Foreign investment is encouraged in Barbados, and restrictions are limited. The acquisition of securities in a Barbados entity by a non-national requires the
prior approval of the Exchange Control Authority of the Central Bank of Barbados. No industries are closed to private enterprise, although the government reserves the right to control how certain investments are effected. For example, activities in some sectors, such as telecommunications, utilities, broadcasting, franchises, banking and insurance, require a gov - ernment licence. It is not unusual for licences to be issued with conditions attached, such as requiring the prior approval of the government for a change in a significant shareholding in the licensee. Before grant - ing permission for a change in control, the regulator or government would need to be satisfied that the investor is compliant with all anti-money laundering requirements and that the directors are fit and proper to undertake their responsibilities. 2.4 Antitrust Regulations Within Barbados’ legal framework, the equivalent of what are referred to as “antitrust laws” are competi - tion laws. Regulations related to business combina - tions are primarily governed by the FCA. The FTC is responsible for enforcing these regulations to prevent anti-competitive practices that could harm the market. The FCA prohibits M&A transactions that would result in the substantial lessening of competition in any market in Barbados. It explicitly stipulates that only those mergers that control or are likely to control in excess of 40% of any market must be approved by the FTC. Parties involved in a merger will therefore need to engage with the FTC if the transaction meets this threshold. The FTC thereafter evaluates whether the merger would create or strengthen a dominant market posi - tion, reduce competition significantly in a given sec - tor or lead to other anti-competitive conduct, such as price fixing or monopolistic control. A merger may be authorised if the FTC determines that the benefits outweigh the anti-competitive effects and that it is likely to promote the public good. 2.5 Labour Law Regulations There are several key employment law regulations that must be adhered to by acquirers by way of mergers,
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