ZAMBIA Law and Practice Contributed by: Emmanuel Manda, Simon Kapampa, Innocent Mung’omba and Kaluwe Libeleki, Musa Dudhia & Co.
bidders getting involved in the acquisition process and all bidders providing their preferred terms and also putting in their proposed bid for the acquisition. 6.8 Additional Governance Rights If a bidder in Zambia does not acquire 100% owner - ship of a target, it can still seek additional govern - ance rights beyond its shareholding (such as board representation, reserved matters/veto rights, manage - ment and operational control rights and rights of first refusal) which would grant the entity the ability to exert control or influence over the company. These rights can be negotiated through shareholders’ agreements or articles of association. If governance rights effectively grant de facto control, the deal may trigger competition approval require - ments, even if the bidder owns less than 50% of the issued share capital of the target. 6.9 Voting by Proxy The Companies Act allows shareholders entitled to attend and vote at a meeting of the company to appoint another person as a proxy. The appointment of a proxy is made in writing, in the prescribed form. Once appointed, a proxy will have, in relation to the meeting and subject to any instructions in the document appointing the proxy, all the rights and powers of the appointing shareholder. 6.10 Squeeze-Out Mechanisms In terms of the Companies Act, a transferee company (acquiring company) can compulsorily acquire shares from the remaining shareholders in a transferor com - pany (target company) if: • the offer is made to all shareholders, except those already holding shares for the acquiring company; • the consideration includes either shares in the acquiring company or cash (at the shareholder’s option); • all shareholders of the same class receive identical terms; • the offer notice includes a description of the acquiring company’s power to effect the takeover, the acquiring company’s intention to use it, and the right of shareholders to object in court; and
• within four months, at least 90% of shares in each class have been tendered (including previously held shares). If 90% acceptance is reached, the acquiring company will have 60 days to issue a compulsory acquisition notice to non-tendering shareholders, informing them that their shares will be acquired andif they do not act, the acquisition will proceed automatically. If multiple consideration options were offered, the default option applies unless the shareholder specifies otherwise. Shareholders can challenge the acquisition in court within 90 days of reaching the 90% threshold, seeking either a prohibition of the acquisition, or a modification of the offer terms. 6.11 Irrevocable Commitments It is common for bidders in Zambia to seek irrevocable commitments from principal shareholders of the tar - get company, especially in public M&A transactions or where a controlling stake is crucial to the deal. These commitments provide deal certainty and reduce the risk of competing bids. In private deals, principal shareholders may sign sale and purchase agreements (SPAs) early in the process. In public transactions, irrevocable undertakings are sought before or at the time of announcing the tender offer. For private companies, there are currently no manda - tory requirements to make a bid public and parties usually keep the bid details confidential. However, if the bid meets the prescribed merger and financial thresholds under the Competition Act, the bid would need to be disclosed to and approval obtained from the CCPC or the COMESA Competition Tribunal, as the case may be. The disclosure requirements set out in 5.1 Requirement to Disclose a Deal apply to public companies. 7. Disclosure 7.1 Making a Bid Public
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