ETHIOPIA Law and Practice Contributed by: Getu Shiferaw, Mehrteab Leul, Michael Sebsibe and Debora Belachew, Mehrteab & Getu Advocates LLP (MLA)
6.5 Minimum Acceptance Conditions In Ethiopia, there is no regulation that provides mini - mum acceptance conditions obliging the bidder to acquire a certain number of voting rights in the target company. 6.6 Requirement to Obtain Financing The bidder is not required to obtain finance for a busi - ness combination. However, the target can contractu - ally require the bidder to obtain finance for the trans - action. For legal purposes, as far as the necessary permits and approvals are secured for the transaction, the bidder is not required to obtain finance for com - pleting a business combination. 6.7 Types of Deal Security Measures Parties typically include some deal-protective meas - ures in their definitive agreement. A break-up fees clause, lock-up agreement and no-shop clause are common deal security measures that a bidder may seek. There are no changes to the regulatory envi - ronment that have impacted the length of the interim period. 6.8 Additional Governance Rights If the bidder does not want to acquire 100% owner - ship of the target company, it can try to acquire other governance rights, such as decision-making power in some reserved matters in shareholders’ general meet - ings and board meetings. It can also seek better board and/or management representation in the agreement. However, governance rights that a bidder may seek in the agreement are effective only after the sharehold - ers’ general meeting and entry into the commercial registry. 6.9 Voting by Proxy Shareholders who are unable to be present at a meet - ing may take part therein, and vote through a proxy, by filling out and depositing a form prepared by the per - son calling the meeting. The proxy authority does not require authentication or registration. A shareholder who appointed a proxy neither participates nor votes in person. 6.10 Squeeze-Out Mechanisms In Ethiopia, a majority shareholder with 90% or more of the capital of a company has the right to squeeze
out minority shareholders. A majority shareholder who wants to buy the shares of minority sharehold- ers during the bid for takeover of the company should notify them in general meetings, require them to trans - fer their shares to the shareholder within five weeks and specify the price in the request. If no agreement is reached on the requested price for squeeze out, the court appoints an expert upon application by the
shareholder who makes the request. 6.11 Irrevocable Commitments
Obtaining irrevocable commitments from the majority shareholder of the target company to tender or vote is not common in Ethiopia.
7. Disclosure 7.1 Making a Bid Public
Private M&A are typically undertaken through personal and private negotiations, in which bidding is not com - mon. In public M&A, any person who wants to sub - mit an acquisition offer (an offer, solicitation to offer or request to own a majority percentage of the listed company that enables the offeror, directly or indirect - ly, to control the board of directors of the company) is required to submit copies of the offer documents along with the relevant information to the ECMA, the security exchange and the target company. The bidder cannot take any further steps without obtaining the ECMA’s approval. Existing sharehold - ers of the listed company being offered a takeover or acquisition shall also be provided with adequate infor - mation to assess the merits of the proposal. Currently, except for the aforementioned disclosure, there is no requirement to advertise a takeover bid or acquisition offer to the public 7.2 Type of Disclosure Required In private M&A, there is no disclosure obligation on the issuer for the issuance of shares. In public M&A, the issuer is required to disclose all documents required for the registration of securities. The docu - ments required for the registration of securities include (i) a letter signed by a duly authorised officer or the transaction advisor; (ii) a prospectus or any other offer
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