BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale, Hannah Tildesley and Marah Smith, Walkers
of the buyer’s shares). It is possible for the merger consideration to comprise cash and/or shares in the surviving company or its parent. The directors of each amalgamating or merging com - pany must submit the Agreement for approval to a general meeting of the shareholders. A notice of the meeting must be sent in writing to each shareholder and include a copy of the Agreement, a statement of the fair value of the shares as determined by each amalgamating or merging company, and a statement that a dissenting shareholder is entitled to be paid the fair value of his or her shares. Unless the company’s bye-laws state otherwise, the Companies Act requires that notice must be given at least five days before the meeting and that the reso - lutions of the shareholders must be approved by a majority of 75% of shareholders voting at the meeting, and the quorum must be at least two persons holding or representing by proxy more than one-third of the shares of the company. Tender Offer (Section 102) and Compulsory Acquisition (Section 103) Where an offer is made by a company for shares (or any class of shares) in a Bermuda company and, within four months of the offer, the holders of not less than 90% of the shares that are the subject of that offer accept it, the bidder can, at any time within two months after the date on which the approval is obtained, by notice, require the remaining sharehold - ers to transfer their shares on the terms of the offer, under Section 102 of the Companies Act (compulsory acquisition of minority shareholders). As a result, the bidder may wish to include a precondi - tion that the offer is subject to receiving acceptances for at least 90% of the shares, so that it is in a posi - tion to forcibly acquire the remaining 10%. Dissenting shareholders can apply to the court, within one month of the notice, objecting to the transfer, but they must prove unfairness and not merely that the scheme is open to criticism. Section 103 of the Companies Act also provides that holders of 95% or more of the shares of a company may compulsorily acquire the remainder. The principal
difference between Section 103 and Section 102 is that, under Section 103, a dissenting shareholder can only apply to court to appraise the value of its shares and cannot apply to vitiate the compulsory acquisi - tion. Scheme of Arrangement (Section 99) In this case, where an application is made by a com - pany or any of its members, the Supreme Court of Bermuda can sanction the convening of a members’ meeting to consider a proposed arrangement or com - promise between a company and its members (or any class of them) (Section 99 (1) of the Companies Act). If a meeting of members is convened by the court in accordance with Section 99 (1), the notice of meeting sent to members must include a statement explaining the effect of the proposed scheme (and, in particular, giving details of any material interests that the direc - tors of the company may have, either as directors or as members of the company). If the proposed scheme is then approved by a major - ity of the members (or class of members) in a number representing 75% of the value of shares held by those members present and voting at the meeting (either in person or by proxy), it is binding on the members (or class of members) and the company if it is subse - quently sanctioned by the court (and the order sanc - tioning the proposed scheme is delivered to the Ber - muda Registrar of Companies (ROC) for registration). In exercising its discretion whether to sanction the scheme, the court must be satisfied (among other things) that: • the approval of the scheme was reasonable; • a majority of shareholders acted bona fide; and • the statutory provisions have been complied with. The court also considers whether the scheme is nec - essary. The sanctioning of a scheme is not merely a rubber-stamping exercise by the court once the req - uisite majorities have been obtained; rather, the court exercises genuine discretion.
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