UGANDA Law and Practice Contributed by: Arnold Lule Sekiwano, Ritah Nakalema, Evelyn Maria Nakigudde and Collette Melvina Awano, Engoru, Mutebi Advocates
6.6 Requirement to Obtain Financing In private companies, parties to an M&A transaction are at liberty to agree to any financial arrangement. For public M&A transactions, the Takeovers and Merg - ers Regulations require the acquirer to deposit 10% of the total consideration in an escrow account as security for fulfilling its obligations. This ensures the acquirer’s financial capacity to complete the takeover. Additionally, the full purchase consideration must be deposited in a designated account with a commercial bank within 21 days. Additionally, although regulators generally do not block deals solely because they are conditional on financing, but they require that all conditions be lawful and not anti-competitive. 6.7 Types of Deal Security Measures The Takeovers and Mergers Regulations do not restrict the implementation of measures to ensure the safety of a deal. However, such measures must be disclosed in the takeover document and the notice of intention. 6.8 Additional Governance Rights The Takeovers and Mergers Regulations do not restrict the implementation of measures to ensure the safety of shareholder agreements. Particularly in pri - vate equity transactions or situations where the buyer does not seek full ownership, buyers often negotiate governance rights. These may include the attainment of board representation and veto powers over cer - tain decisions, including the entrenchment of founder member rights. For public M&A transactions, the CMA Corporate Governance Guidelines mandate the fair treatment of all shareholders, including minority and foreign investors. 6.9 Voting by Proxy Under the Companies Act, a shareholder is entitled to appoint a proxy to attend a meeting on behalf of the shareholder, speak and even vote. Such sharehold - er must give notice of the appointment of the proxy before the meeting is held, and the proxy need not be a member.
• where a person holds 50% or more of the voting rights of a listed company and acquires additional voting rights in the listed company; • where a person acquires a company that holds effective control in the listed company or together with the voting rights already held by an associated person or related company, resulting in acquiring effective control; or • where a person acquires any shareholding of 20% or more in a subsidiary of a listed company that has contributed 50% or more to the average annual turnover in the latest three financial years of the listed company preceding the acquisition. 6.3 Consideration The consideration in most M&A transactions is either cash or a mixture of cash and shares. In respect of an amalgamation, the consideration is shares in a newly incorporated entity. In relation to an M&A transaction in listed companies, there are special rules which apply if the considera - tion is cash in whole or in part. The takeover docu - ment must state the period within which the payment will be made and the method of payment, in addi - tion to a confirmation obtained from the purchaser’s financial adviser indicating sufficient funds to carry out the takeover offer in full. Further, the purchaser is obligated to deposit in an escrow account 10% of the total consideration payable as a security for the performance of its obligations. The escrow account takes the form of either a cash deposit in a commer - cial bank or a bank guarantee in favour of the target that is payable on demand. 6.4 Common Conditions for a Takeover Offer In Uganda, the terms of a takeover offer are typically outlined in a contractual agreement between the con - templated parties to the transaction. Common con - ditions often include securing necessary corporate approvals and obtaining regulatory clearance. In the case of public M&A transactions, the acquirer must specify the conditions under which the shares will be acquired, along with other relevant details. 6.5 Minimum Acceptance Conditions There are no statutorily prescribed minimum accept - ance conditions under Ugandan law.
1354 CHAMBERS.COM
Powered by FlippingBook