UGANDA Law and Practice Contributed by: Arnold Lule Sekiwano, Ritah Nakalema, Evelyn Maria Nakigudde and Collette Melvina Awano, Engoru, Mutebi Advocates
In order to minimise legal risk, lawyers carry out due diligence on the merging companies, advise on the regulatory requirements applicable to the proposed transaction, review transaction documentation to ensure compliance with local law (in the event that the documentation is originated out of jurisdiction), and provide legal opinions on the enforceability of trans - action documents, material contracts and litigation. 5.4 Standstills or Exclusivity In Uganda, standstill agreements are not commonly used in transactions. Instead, it is more typical for a prospective acquirer to seek an exclusivity arrange - ment, which is often a point of negotiation between the parties. The target company, however, will usually aim to restrict the duration of this exclusivity to ensure that negotiations are not unnecessarily prolonged. 5.5 Definitive Agreements It is permissible under Ugandan laws for tender offer terms and conditions to be documented in definitive terms. 6. Structuring 6.1 Length of Process for Acquisition/Sale In the context of M&A transactions between private companies, there is no specified timeline under the law, and the parties may agree on the length of the merger or acquisition. The timeline will generally depend on the transaction structure, and the parties tend to typically agree to the transaction timetable. For transactions involving publicly listed companies, the acquirer will have to factor the statutory and reg - ulatory steps and timelines to execute the transac - tion into its timetable. Some of the factors that could impact the timeline for a transaction include internal approvals, regulatory filings and approvals, financing arrangements, the preparedness of the seller for due diligence and the complexity of the transaction. For mandatory takeovers, there are prescribed time - lines within which each required step must be com - pleted. Some of the times are as follows:
• the acquirer is required to announce its proposed offer within 24 hours from the resolution of its board to acquire effective control in the target; • the acquirer must serve on the target within ten days from the date of the notice of intention, the acquirer’s statement of the takeover scheme; • upon receipt of the acquirer’s statement, the target is required to inform the relevant stock exchange and the CMA of this receipt and make an announcement by press notice of the proposed takeover offer within 24 hours after receipt of the statement; • the acquirer shall, within 14 days from the date of service of the acquirer’s statement, submit the takeover offer document in relation to the takeover offer to the CMA for approval; • the CMA shall make a decision on the offer docu - ment within 30 days; • following the approval by the CMA, the acquirer is required to serve the target with the takeover docu - ment within five days from its date of approval; • upon receipt of the approved takeover document, the target is mandated to circulate the takeover document and the independent adviser’s circular to its shareholders within 14 days from receipt of the approved takeover document; • the takeover document shall remain open for acceptance by the target for 30 days from the date of service of the takeover document by the acquirer; and • the takeover offer shall be deemed to close on the last day of the offer period. On acceptance of the takeover offer, the acquirer shall notify the Ministry of the takeover. The Ministry shall, within 120 days, inquire into the takeover with the view to determining whether the takeover is likely to cause an adverse effect on competition within the market. 6.2 Mandatory Offer Threshold Under the Takeovers and Mergers Regulations, per - sons shall be required to make a mandatory offer under the following circumstances: • where a person holds more than 15% but less than 50% of the voting rights of a listed company and acquires in any one year more than 5% of the vot - ing rights of such company;
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