GHANA Law and Practice Contributed by: Victoria Bright and Justice Oteng, Addison Bright Sloane
• Staggered board – a structure that prevents the acquiring company from immediately gaining con - trol of the board. • Poison pill – a mechanism that enables existing shareholders, other than the bidder, to purchase additional shares at a significant discount once the hostile bidder crosses a specified ownership threshold. • Golden parachute – this involves executives receiv - ing substantial financial compensation if they are terminated following a takeover, which increases the cost of the transaction. • Crown jewel – this involves selling or transferring the company’s most valuable assets in order to reduce its attractiveness to the hostile bidder. The target board can also issue formal advice to its shareholders to reject the offer on the basis that it undervalues the company. 9.4 Directors’ Duties When directors take defensive actions on behalf of a company, they must act in their fiduciary capacity and in the best interests of the company. Directors must act in good faith, meaning they should make honest decisions that benefit the company and not act solely to protect their own positions. They are also required to avoid conflicts of interest or to disclose them where they arise, and they should not allow personal inter - ests to influence their decisions. In addition, directors must comply with all applicable laws and regulations governing their actions. 9.5 Directors’ Ability to “Just Say No” Directors cannot just say no to a business combina - tion. They have a fiduciary duty which requires them to make decisions in the best interest of the com - pany and act carefully. However, the decisions must be well-reasoned. If directors reject a deal without rea - sonable justification, the shareholders can challenge the decision.
oppression, disclosure breaches, disputes over pre- emptive rights and squeeze outs. 10.2 Stage of Deal Litigation often occurs after a deal is signed but before completion, particularly where there is a challenge to a squeeze-out or allegations of inadequate disclosures. Litigation is also common at the post-closing stage, where disputes arise concerning the accuracy of, and compliance with, representations and warranties. At closing, litigation may arise in relation to a decision by the relevant regulatory body. For example, in the upstream oil and gas industry, M&A transactions are governed by the Petroleum (Exploration and Produc - tion) Act, 2016 (Act 919) (the Petroleum E&P Act). The Act requires the approval of the minister responsible for the energy sector for any transfer of shares in a contractor, whether to affiliates or third parties, where the transaction involves the acquisition of 5% or more of the shares in the contractor or results in a change of control of the contractor. Any delay in obtaining these approvals, or any inaccuracy regarding responsibil - ity for securing them, may give rise to a dispute that The key lessons learned from COVID-19 and its impact on M&A deals in Ghana include the following. • Parties were required to pay close attention to Material Adverse Change (MAC) provisions. Poorly drafted MAC clauses led to disputes over whether the pandemic constituted a MAC, resulting in rene - gotiations or, in some cases, termination of deals. • The scope of financial due diligence expanded to include detailed scrutiny of cash flows, rather than focusing solely on balance-sheet strength. • Force majeure provisions proved to be signifi - cant and had practical consequences for parties involved in M&A transactions. could ultimately lead to litigation. 10.3 “Broken-Deal” Disputes • There were notable effects on timing and regulatory risk. Regulatory approvals were delayed, and par - ties were compelled to extend condition precedent periods to accommodate longer approval timelines. • Parties generally avoided litigation and instead opted to renegotiate fundamental terms and adopt more flexible completion mechanisms.
10. Litigation 10.1 Frequency of Litigation
In Ghana, litigation is not the common dispute resolu - tion mechanism for M&A transactions. Where litiga - tion is resorted to, it usually centres on shareholder
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