AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
4.6 Transparency Section 7 of the Austrian Takeover Act requires that the offer document include, inter alia, the terms of the offer and information about the bidder. In addition, details of the bidder’s intention regarding the future business operations of the target company and the extent to which it is affected by the offer of the bidder company must be disclosed. Furthermore, informa - tion regarding the continued employment of employ - ees and management must also be provided. In the event of a voluntary takeover offer to acquire control, the bidder’s intention will be obvious, as the offer aims to acquire a controlling interest in the target by exceeding the minimum acceptance threshold of 50% of the permanent voting shares. If, however, the material shareholding disclosure thresholds of Sec - tion 130 of the Austrian Stock Exchange Act 2018 are exceeded, the disclosed information does not have to include the bidder’s intention or the rationale behind the acquisition. In the case of extended circumstances, not only the transaction’s realisation but also each intermediate step is subject to the principles of ad hoc disclosure in accordance with Article 17 of the Market Abuse Regulation (Regulation (EU) 596/2014). The existence of inside information can be assumed if either of the following criteria is fulfilled. • The occurrence of the final result is: (a) sufficiently likely; (b) price-specific; and (c) price-relevant. • The intermediate step: (a) has already occurred or its occurrence is suf - ficiently likely; (b) is price-specific; and (c) is price-relevant. Intermediate steps that derive their price relevance from the final result are to be regarded as price- relevant if the occurrence of the final result can be expected. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal
Generally, the information is not precise enough to constitute inside information when the target is first approached or the negotiations commence. A non- binding letter constitutes an ad hoc notification obli - gation if it is price-specific and price-relevant. The question of how likely the final result will occur plays a crucial role in this respect. In general, the signing of definitive agreements triggers an obligation to issue an ad hoc notification. 5.2 Market Practice on Timing The issuer is required to publish inside information without undue delay. Therefore, market practice regarding the regular timing of disclosure does not and should not differ from legal requirements to avoid consequences for violating the disclosure obligations. 5.3 Scope of Due Diligence During takeovers, due diligence is rather the excep - tion than the rule. In such cases, the scope of due diligence can be limited to publicly available informa - tion about the target. Pursuant to the Austrian Stock Corporation Act, members of the management board of a stock corporation are exercising the diligence of a responsible and conscientious corporate executive when making business decisions if they do not allow themselves to be guided by extraneous interests and if it may be reasonably assumed based on adequate information that they are acting in the best interest of the company (Business Judgement Rule). Defining the scope of the due diligence to be carried out is, in particular, a commercial decision based pri - marily on the Business Judgment Rule, knowledge of the relevant market and the target. When determining the scope of due diligence, it always comes down to the transaction’s relevance, with transaction volume playing a significant role. Due diligence can be con - ducted in a two-step process where: • due diligence is carried out with certain restric - tions; and • comprehensive and unrestricted due diligence may be performed. 5.4 Standstills or Exclusivity Generally, exclusivity is not often required in public transactions, while standstill obligations are the rule.
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