BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale, Hannah Tildesley and Marah Smith, Walkers
outside of Bermuda. GAAP and IFRS are commonly accepted international standards. 7.4 Transaction Documents In some circumstances, particular information may be required to be disclosed, as set out in 4.2 Mate- rial Shareholding Disclosure Threshold , 4.5 Filing/ Reporting Obligations , 5.1 Requirement to Disclose a Deal and 7.1 Making a Bid Public . However, there is no specific requirement under Bermuda law to dis - close the transaction documents in full. Where a board of directors decides to make any dis - closure concerning a transaction or the terms of any transaction documents, it should take care to ensure that it does so fairly and on the same basis to all shareholders, to ensure that it is not open to allega - tions of breach of fiduciary duty. In the case of an amalgamation or merger, the notice of general meetings of the shareholders of any Ber - muda amalgamating or merging companies must be accompanied by a copy or a summary of the amal - gamation or merger agreement. This does not nec - essarily mean that the agreement or plan of merger or amalgamation that contains the commercial terms must be submitted in full for approval. Where there are sensitivities about disclosure of all of the commercial terms, it is common to prepare a short-form “statutory merger or amalgamation agreement”, which contains only the following information that must be included in the agreement by Section 105 of the Companies Act: • the provisions to be included in the constitutional documents of the amalgamated or surviving com - pany; • the name and address of the directors of the amal - gamated or surviving company; • the manner in which the shares of each amalgam - ating or merging company are to be converted into shares or other securities of the amalgamated or surviving company; • if any shares are not converting, the amount of money or securities that the holders will receive; and • details of any perfection requirements necessary to effect the amalgamation or merger and for the subsequent operation of the company.
However, where the shares of the target are listed, the terms of the plan of merger or amalgamation are often required to be fully laid out in the circular or other communication to the target’s shareholders, which means that a separate “statutory” agreement is redundant. In addition, the notice of the general meeting of share - holders of each company must include: • 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 enti - tled to be paid the fair value for his or her shares. It is very likely that the target company’s sharehold - ers will be provided with a “fairness opinion” (or a summary of its contents) confirming the basis for the valuation of the shares and the price being offered. Section 97 of the Companies Act sets out the statu - tory duties of a director of a Bermuda company and provides that every officer of a company shall do the following in exercising his or her powers and discharg - ing his or her duties: • act honestly and in good faith with a view to the best interests of the company; and • exercise the care, diligence and skill that a reason - ably prudent person would exercise in comparable circumstances. Officers must also comply with the Companies Act, regulations and the bye-laws of the company. In addition, Bermuda law is based on English com - mon law, and Bermuda courts are very likely to be persuaded by the decisions of the English courts with respect to directors’ fiduciary duties. 8. Duties of Directors 8.1 Principal Directors’ Duties The directors owe fiduciary duties to the company and not to the shareholders individually. These duties can be summarised as follows:
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