BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M. Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
• Employment due diligence includes (i) reviewing employment contracts, pension plans, collective bargaining agreements and employee benefits; (ii) ensuring compliance with the Employment Rights Act of Barbados as it relates to severance pay, redundancy rules and the transfer of employees; and (iii) checking whether there are any employee disputes or pending claims. 5.4 Standstills or Exclusivity In Barbados, it would not be unusual for parties to a proposed merger to enter into a letter of intent, which would include provision for the potential seller to refrain from offering its interest in the target for a specified period of time or to grant the potential buyer exclusivity in negotiations for a specified period. 5.5 Definitive Agreements It is common practice for the parties to enter into a definitive agreement setting out the agreed terms and conditions. 6. Structuring 6.1 Length of Process for Acquisition/Sale The length of time that it takes to acquire or sell a busi - ness in Barbados varies depending on the complexity of the transaction, the regulatory approvals required and due diligence processes. Generally, the process can take between three and 12 months, with larger or more regulated transactions taking even longer. 6.2 Mandatory Offer Threshold As indicated in 2.1 Acquiring a Company , in Barba - dos, where a person directly or indirectly acquires 25% or more of the equity of a company (intended for a public company), that person must deliver – by registered mail – a written statement containing rel - evant information to be included in an offer to the shareholders, both to the FSC and to the company at its registered office or principal place of business within 24 hours of the acquisition. 6.3 Consideration Cash consideration is generally more common in Bar - bados as it relates to M&A transactions, as it provides immediate value to purchasers and cash transactions
tend to be easier to structure from a regulatory stand - point. Furthermore, given that Barbados has a rela - tively small capital market, there is a higher possibility that shares of private companies are illiquid; as such, cash is more attractive for these types of transactions. 6.4 Common Conditions for a Takeover Offer In Barbados, pursuant to the regulations, a takeover bid must be made without conditions, except the con - dition that it may be withdrawn where: • a specified percentage of the shares that are out - standing and not already owned is not tendered; • a government or government agency moves to prevent it from proceeding or to alter the status of the offeree company materially; or • a natural disaster or the directors of the offeree company intervene between the making of the offer and the closing date to materially change the value or nature of the offeree company. 6.5 Minimum Acceptance Conditions The offeror has the flexibility to add the condition to its offer that completion is subject to the tender of a specified percentage of shares outstanding and not already owned. Where a bidder holds more than 50% of the voting shares, the bidder is allowed to pass an ordinary resolution at shareholder meetings that gives them control over corporate decisions, including the appointment of directors. As it relates to the approval of special resolutions, which may include actions such as amendments to the articles of incorporation of the company, approval or mergers, a two-thirds majority is required. These percentages will provide some guidance to a pro - posed offeror on the minimum acceptance condition that should be included in the offer if desired. As identified earlier, where the acquisition results in the control of 40% or more of a market for goods or services in Barbados, FTC approval will be required. 6.6 Requirement to Obtain Financing A business combination in Barbados can be con - ditional on the bidder obtaining financing; however, such conditions must be carefully structured to ensure compliance with regulatory requirements and market
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