BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M. Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
which include a fiduciary out clause. This clause per - mits the shareholder to withdraw their commitment, though usually with a penalty, if a superior compet - ing offer is made, provided the initial bidder does not match or exceed the new offer within a specified period. While Barbados does not have a strict legal framework governing lock-up agreements at this time, they are used in negotiated business combinations to minimise execution risk and ensure a successful transaction. A bid is made public upon the mailing or delivering of the takeover bid circular to all registered shareholders of the offeree company. The circular should be mailed no less than 28 days before the date on which the takeover bid will close. 7.2 Type of Disclosure Required Regarding the type of disclosure required for the issu - ance of shares in a business combination, please see 4.2 Material Shareholding Disclosure Threshold . 7.3 Producing Financial Statements International Financial Reporting Standards (IFRS) are usually used for companies incorporated in Barbados. Bidders are required to produce financial statements in their disclosure documents with certain conditions. Where all or part of the consideration being offered consists of securities of the offeror, the takeover bid circular must include pro forma financial statements of the offeror reflecting the impact of the acquisition. Additionally, the circular must contain a description of the offeree company’s relied-upon financial state - ments, earnings per share figures prepared in accord - ance with international accounting standards and a summary of the offeror’s plans for the offeree com - pany, including consolidated financial results on a fully diluted basis. 7.4 Transaction Documents In Barbados, the Regulations require certain disclo - sures but do not mandate full disclosure of all transac - tion documents. However, there are key documents 7. Disclosure 7.1 Making a Bid Public
that must be made available to regulators and share - holders, including:
• the takeover bid circular; • the directors’ circular; and • material agreements.
While it is not typical for full transaction documents to be disclosed to the public, the FSC has the author - ity to request additional information as it may deem necessary.
8. Duties of Directors 8.1 Principal Directors’ Duties
The directors of a company have a duty to direct the management of its business and affairs. Directors must also act honestly and in good faith, with a view to the best interests of the company, exercising the care, diligence and skill that a reasonably prudent per - son would exercise in comparable circumstances. In determining the company’s best interests, the direc - tors must consider the interests of the company’s employees and shareholders. The directors owe these duties solely to the company. Generally, no fiduciary duty is owed by a director to shareholders. 8.2 Special or Ad Hoc Committees In Barbados, boards of directors often establish an independent directors’ committee, especially in cir - cumstances where conflicts of interest arise. This is especially so where directors may have personal stakes in the bid. For example, as it relates to takeover bids, the com - mittee’s primary role is to prepare the directors’ circu - lar, which provides shareholders with key information including the terms of the transaction, recommenda - tions, fairness opinions and any alternative strategies. This independent committee ensures transparency, fairness and compliance with legal requirements, protecting shareholders’ interests throughout the process. 8.3 Business Judgement Rule Although the term “business judgement rule” does not exist in Barbados law, the underlying principles of that
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