BOSNIA & HERZEGOVINA Law and Practice Contributed by: Bojana Bošnjak-London and Nebojša Marić, Marić & Co Ltd
5.3 Scope of Due Diligence Due diligence in a negotiated business combination is typically comprehensive, covering financial, legal, operational, environmental, and human resources aspects. Financial due diligence involves a detailed review of audited financial statements, tax compli - ance, and asset verification to assess the target company’s financial health and potential liabilities. Legal due diligence focuses on corporate structure, key contracts, and regulatory compliance to ensure that the company operates within the legal framework and does not pose any legal risks. Operational due diligence examines management capabilities, supply chain stability, and IT infrastructure to evaluate the company’s efficiency and growth potential. Environ - mental due diligence is conducted to verify compli - ance with environmental regulations and assess any potential risks related to company-owned properties. Human resources due diligence includes a review of employment contracts, benefits, compensation struc - tures, and labour relations to identify any existing or Standstill and exclusivity arrangements are governed by general contract law principles. In practice, exclu - sivity provisions are commonly used in privately nego - tiated transactions to protect transaction certainty during due diligence and documentation phases. Standstill arrangements may arise in transactions involving public companies or strategic investors seeking to regulate market conduct during negotia - tions. 5.5 Definitive Agreements The legal framework governing tender offers is primar - ily based on securities regulations and competition laws, both of which are highly regulated and overseen by the regulators. Parties must exercise caution when agreeing to terms outside the standard regulatory pro - cess. potential workforce-related risks. 5.4 Standstills or Exclusivity 6. Structuring 6.1 Length of Process for Acquisition/Sale The process for acquiring or selling a business in Bos - nia and Herzegovina typically takes between three to
twelve months, depending on the complexity of the transaction, regulatory requirements, and due dili - gence procedures. For smaller transactions with minimal regulatory hur - dles, the process can be completed within three to six months. This includes negotiations, due diligence, drafting agreements, and closing. However, for larger or more complex deals – especially those involving regulatory approvals, or competition authority clear - ance – the timeline can extend to nine to twelve months or more. Key factors influencing the timeline include due dili - gence scope, financing arrangements, shareholder approvals, and regulatory reviews. Transactions requiring merger control clearance or sector-specific approvals, such as in banking or telecommunications, may take longer due to additional regulatory scrutiny. 6.2 Mandatory Offer Threshold All three applicable takeover laws set a mandatory offer threshold: 25% in the Federation of Bosnia and Herzegovina and Brčko District, and 30% in Republika Srpska. 6.3 Consideration Cash is the most commonly used method of consid - eration in takeover bids. Although the law provides for an option to deposit shares to be used as considera - tion, this is rarely used in practice. 6.4 Common Conditions for a Takeover Offer The offeror cannot condition the obligation to purchase shares that are the subject of a mandatory takeover offer, except that the shares that are encumbered will not be purchased. A voluntary takeover offer can be conditioned on reaching a specific success threshold, which cannot be lower than the controlling threshold. 6.5 Minimum Acceptance Conditions Mandatory takeover offers are not subject to minimum acceptance conditions, and the bidder must purchase all shares validly tendered in accordance with appli - cable takeover rules. Voluntary takeover offers may include success thresholds, provided these are struc - tured in compliance with statutory requirements. This
187 CHAMBERS.COM
Powered by FlippingBook