BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M. Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
assess whether the price offered to shareholders in the takeover bid is a fair and reasonable price. Also, the directors of the target company, upon receiving the takeover bid circular, can seek a valuation of the company’s shares and obtain a “fairness opinion” from a financial expert. 8.5 Conflicts of Interest The interests of the directors and the shareholders were in conflict in Ansa McAL (Barbados) Limited v Banks Holdings Limited and Slu Beverages Ltd BB 2016 CA 13, as the directors acted in the manage - ment of BHL’s business and affairs by entering into a loan agreement for the purpose of modernising the machinery and plant operations, and upgrading the brewery production capabilities, to increase BHL’s competitiveness. ANSA, a shareholder, argued that the directors con - ducted BHL’s business and affairs in a manner that unfairly disregarded and conflicted with the interests of shareholders who held common shares, where the agreement would negatively affect the marketability and value of their shares if a takeover occurred. Hostile tender offers have occurred in Barbados. Once the tender documents comply with the requirements of the legislative framework for takeover bids, hostile tender offers are likely to be permitted. 9.2 Directors’ Use of Defensive Measures Directors are permitted to use defensive measures contingent upon their actions complying with their fiduciary duties to the company. A director’s main defensive measure is the use of the directors’ circu - lar, which the directors of the offeree company are required to provide to the shareholders following the shareholders’ receipt of the takeover bid. In the circular, the directors are required to provide the following, which can be used as defensive measures in hostile takeovers: 9. Defensive Measures 9.1 Hostile Tender Offers
• up-to-date information regarding the company and the position of the directors; • recommendations to the shareholders regarding the acceptance of the takeover bid and reasons for their recommendations; • disclosure of the directors’ intended course of action; • a price range of the shares sought to be acquired; and • any information known by the directors pertaining to material changes in the prospects of the offeree company. Also, if the directors find a legal challenge regarding the takeover, they can seek a remedy through litigation to have the courts decide on the matter. Steps can also be pursued to protect the interests of certain key employees should the offer be successful. 9.3 Common Defensive Measures The offeree company’s defensive measures are typi - cally the measures undertaken by directors through the directors’ circular and any contractual arrange - ments that can be pursued and disclosed prior to the completion of the offer. Please also see 9.2 Directors’ Use of Defensive Measures . 9.4 Directors’ Duties When enacting defensive measures, the directors’ actions are subject to their fiduciary duties to the com - pany. Please also see 8.1 Principal Directors’ Duties . 9.5 Directors’ Ability to “Just Say No” Directors are unable to mandate that the sharehold - ers of the offeree company refuse to accept a takeo - ver bid. Rather, the directors are required to circulate the director’s circular among the shareholders and perform their duties. Directors are permitted to rec - ommend to the shareholders as to whether the offer should be accepted. Please also see 9.2 Directors’ Use of Defensive Measures and 8.1 Principal Direc- tors’ Duties .
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