UAE Law and Practice Contributed by: Ahmed Ibrahim, Malack El Masry and Maryam Quadri, IN’P IBRAHIM .N. PARTNERS
9.4 Directors’ Duties See 9.2 Directors’ Use of Defensive Measures . Direc - tors must also abide by their duties to the company, the shareholders, and the stakeholders (wherever applicable). 9.5 Directors’ Ability to “Just Say No” Directors are entitled to say no and record such action in the minutes; however, they do not have the ability to prevent a transaction from taking place. In private M&A transactions, litigation is not common; however, it is relatively common when it comes to public M&A transactions. 10.2 Stage of Deal In a public M&A transaction, litigation is usually brought before the completion of the takeover, squeeze-out or merger. 10.3 “Broken-Deal” Disputes One of the most significant lessons from the COV - ID-19 pandemic, from an M&A perspective, has been the heightened focus on the clear and precise drafting of material adverse effect (MAE) or material adverse change (MAC) clauses in transaction documents, such as the SPA. Express references to pandemics, epidemics and public health emergencies are now commonly part of MAE/MAC definitions, together with carefully negotiated carve-outs and, in many cases, “disproportionate impact” qualifiers. Greater empha - sis is also now placed on what constitutes “ordinary course of business” by the target company, particular - ly where emergency measures or government restric - tions may affect its operations. As a result, MAE/ MAC clause drafting and negotiation have become deliberate rather than boilerplate, with practical and pragmatic assessment of how risks may affect the relevant industry or sector. Over time, these refined approaches in relation to the definition of MAE/MAC clause have also become market standard practice. There is also greater scrutiny on regulating and refining the interim covenants governing the target company’s conduct between signing and closing, particularly in 10. Litigation 10.1 Frequency of Litigation
offer or vote against it. If the offer is challenged before the courts, judges and court experts would likely take into consideration the recommendation of the board of directors. 8.4 Independent Outside Advice Independent advice is generally provided by appoint - ing counsel to carry out the following: a legal and financial due diligence on the target, an independent valuation issued by an independent valuer (not the auditor of the company) and a fairness opinion to be issued by an appointed financial adviser. 8.5 Conflicts of Interest Numerous clients have been assisted in relation to conflict-of-interest issues regarding resolutions passed by the general assembly related to takeovers. 9. Defensive Measures 9.1 Hostile Tender Offers Other than a competing offer, there are no hostile takeovers in the UAE. A competing offer can be announced but may not be submitted any later than 53 days after receipt of the primary offer. The competing offer must be on better terms for the shareholders than the primary offer. The offeror must seek approval from the CMA before sub - mitting the competing offer. The CMA may approve the offer where it contains material amendments in favour of the shareholders (including, but not limited to, price) or where the target company has recom - mended the offer (subject to the directors not being related to such competing offeror). 9.2 Directors’ Use of Defensive Measures A dissenting board member has the right to record their objection in the minutes of the board meeting on matters they do not recommend, and such record will clear them of any liability with regard to such decision. 9.3 Common Defensive Measures A dissenting board member has the right to record their objection in the minutes of the board meeting on matters they do not recommend, and such record will clear them of any liability with regard to such decision.
1335 CHAMBERS.COM
Powered by FlippingBook