USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang, Gregory Gewirtz and Vinita Sithapathy, Linklaters
7.3 Producing Financial Statements Whether a bidder needs to produce financial state - ments in its disclosure documents is determined on a case-by-case basis. For example, there may be situ - ations – eg, an all-cash offer that is not conditioned on the bidder obtaining financing – where the financial condition of the bidder may not be material to the target company’s shareholders. In a registered exchange offer or merger in which all or a portion of the merger consideration consists of securities, financial statement issues can add signifi - cant time and expense to the process to the extent that financial statements, both of the acquired busi - ness and pro forma for the combined company, may be necessary, depending on the magnitude of the transaction to the acquirer, and the requirement that financial statements filed with the SEC be prepared in accordance with US generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) as promulgated by the International Accounting Standards Board (or, failing those, with a reconciliation to GAAP). 7.4 Transaction Documents Parties generally may omit transaction agreement schedules, exhibits or attachments that do not have material transaction terms or information that would otherwise be material to the shareholders’ invest - ment decision, or can otherwise request confiden - tial treatment for portions of filed transaction docu - ments. Nonetheless, the SEC may still request that such materials be submitted to it confidentially. See 7.1 Making a Bid Public .
bleness review in light of the directors’ duties; see discussion of Revlon under 8.3 Business Judgement Rule .
7. Disclosure 7.1 Making a Bid Public
For a tender offer, the SEC rules require that the acquirer file a Schedule TO (including an offer to purchase and related documents, such as a letter of transmittal). If the deal is only for cash consideration, the Schedule TO is relatively straightforward and, assuming advance preparation, is often filed on the day of (or shortly following) the announcement of the bid for the target. For a merger, the parties will generally jointly announce the transaction when the definitive merger agreement has been entered into between the target and the acquirer. A publicly traded target company must dis - close the material terms of the transaction, in a filing made with the SEC, within four business days of entry into the definitive transaction documents. Such mate - rial terms include, among others, price, break fees and conditions precedent to closing. To solicit a required shareholder vote for a merger, the target must prepare and file a detailed “proxy state - ment” with the SEC that complies with the SEC’s proxy rules. Following the SEC’s review, the target then files the final version with the SEC and mails the finalised proxy statement to its shareholders. 7.2 Type of Disclosure Required To offer securities to the target company shareholders as consideration for the acquisition, those securities will need to be registered under the US Securities Act of 1933 (the “Securities Act”), unless an exemption applies. A registration statement for registering the securities would include (among other information) risk factors, business descriptions, financial state - ments, management’s discussion and analysis of financial conditions as well as transaction-specific information that would be required in a proxy state - ment or a Schedule TO, as applicable.
8. Duties of Directors 8.1 Principal Directors’ Duties
Directors of a Delaware corporation owe two core fiduciary duties to the corporation and to its stock - holders: the duty of care and the duty of loyalty. In Delaware, the obligation of good faith underlies these two core fiduciary duties. The duty of care requires directors to act in an informed and considered manner. Accordingly, directors must inform themselves, prior to making a business deci -
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