EGYPT Law and Practice Contributed by: Mohamed Hashish, Heba El Abd and Mariam Rabie, Soliman, Hashish & Partners
6.3 Consideration Cash consideration is most commonly used as the form of consideration in Egypt. However, a considera - tion may be cash, a share swap, or a combination of cash and share swap. In practice, if the acquisition is carried out by way of open-market transactions, the consideration must be cash. Furthermore, in the case of a mandatory tender offer, the shareholders of the target company must be able to choose cash instead of shares as consideration. 6.4 Common Conditions for a Takeover Offer Voluntary Tender Offers In a voluntary tender offer, a bidder is free to make a tender offer to acquire the target company’s share capital and voting rights, as long as such share capital or voting rights do not exceed more than one-third of the capital or voting rights of the target company, or do not result in reaching a percentage that requires a mandatory tender offer. In the event that the number of shares offered exceeds the voluntary tender offer threshold, the shares must be purchased from all shareholders that responded to the offer in proportion to what is offered by each of them to the total shares required to be purchased, taking into account rounding up fractions in favour of minority shareholders. Mandatory Tender Offers As highlighted in 6.2 Mandatory Offer Threshold , a mandatory tender offer obligation is fulfilled when a person, whether directly or through its related parties: • acquires one-third or more of the share capital or voting rights of the target company; • holds more than one-third but not more than half of the share capital or the voting rights of the target company, and within 12 consecutive months, its ownership exceeds 5% above its existing stake; • exceeds half of the share capital or voting rights of the target company at any given time; • holds more than half but not more than two-thirds of the share capital or voting rights of the target company, and within 12 consecutive months, its ownership exceeds 5% above its existing stake; • holds more than two-thirds but not more than three-quarters of the share capital or voting rights
Exceptions The FRA may exempt the following cases from the obligation to submit a mandatory tender offer, pro - vided that the FRA is notified and does not object within 15 days from the date of notification: • assignment of shares between parents and chil - dren; • cases of inheritance, will and gift; • transfer of ownership of securities pledged to Egyptian and foreign banks and financial institu - tions in settlement of their dues; • if the acquisition is made by one of the financial institutions licensed to guarantee subscription operations in implementation of its obligation to guarantee subscription coverage; • in the event that all shareholders of the company approve the sale; • cases of transfer of ownership of all shares owned by the union of workers who are shareholders in subsidiaries of state-owned holding companies to restructure these companies and pump additional investments into them; • implementation of mergers; • restructuring of capital between related persons and/or a group of related companies; • cases of purchasing treasury shares or reducing capital by cancelling treasury shares or distributing treasury shares as free shares; • cases of increasing the capital of the company targeted by the offer, provided that this does not result from purchasing subscription rights in the capital increase; • cases that result in a shareholder owning shares or controlling voting rights in one of the companies subject to the provisions of the Capital Markets Law, when this is done without their desire or will; and • cases that result in a person, alone or with their related persons, owning part or all of the shares or voting rights owned by a major shareholder, alone or with their related persons, according to the eco - nomic considerations or necessities approved by the Council of Ministers, with a maximum of 50% of the shares or voting rights in the company.
455 CHAMBERS.COM
Powered by FlippingBook