KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha and Brian Muchiri, Cliffe Dekker Hofmeyr (Kieti Law LLP)
attaining pre-agreed performance targets. In some cases, a locked-box structure may also be used to fix the purchase price as of a certain date, providing certainty on value while still allowing for contingent future payments. 6.4 Common Conditions for a Takeover Offer Common conditions for a takeover offer include the minimum number of issued voting shares of the listed company to be offered by the target’s shareholders, regulatory approvals, and the maintenance of a mini - mum percentage of shareholding by the general pub - lic to satisfy the continuing eligibility requirements for listing. 6.5 Minimum Acceptance Conditions According to the Takeover Regulations, the takeover offer must state whether the offer is conditional upon acceptance by a certain number of shareholders, and a deadline for acceptance that is no more than 30 days from the date the offer is made subject to CMA approving an extension of the offer period. The acquir - er must declare that the offer is no longer dependent on that condition by the specified deadline. Furthermore, the Takeover Regulations prohibit any takeover agreements that do not offer the same con - ditions to all shareholders who are being offered the opportunity to sell their shares. The acquirer must also disclose the identity of the ultimate acquirer and all related entities or persons acting in concert with the acquirer. 6.6 Requirement to Obtain Financing Under the Takeover Regulations, an acquirer is not allowed to announce an intention to make an offer if there are no reasonable grounds to believe that the acquirer will be able to fulfil its obligations once the offer is accepted. The acquirer is also required to demonstrate to its financial adviser that it has enough funds to ensure the takeover offer will not fail. This is typically evidenced through a cash confirmation let - ter from a bank or financial institution confirming the availability of the required funds. Additionally, when presenting the takeover offer document, the acquirer must include a statement that assures all sharehold - ers who wish to accept the offer that the acquirer has
sufficient funds to complete the takeover and that they will be paid in full. 6.7 Types of Deal Security Measures With respect to listed companies, the Takeover Regu - lations do not prohibit the implementation of meas - ures to ensure the safety of a deal. However, any such measures must be revealed in both the takeover offer document and the notice of intention. Common deal security measures include exclusivity, break fees, and non-solicitation provisions. These deal security meas - ures are also employable by private companies. 6.8 Additional Governance Rights Typically, in shareholder agreements related to certain transactions such as private equity or cases where the buyer does not want full ownership, the buyers usually request governance rights, such as the right to have representation on the company’s board and the power to veto certain decisions. When it comes to public M&A transactions, the CMA’s Code of Corporate Governance Practices for Issuers of Securities to the Public, 2015 (the “CMA Govern - ance Code”), requires companies to treat all share - holders fairly, including minority and foreign share - holders. Listed companies are required to comply with the CMA Governance Code and any non-compliance should be disclosed in the annual report together with a statement of the directors as to the steps being tak - en to ensure compliance. 6.9 Voting by Proxy Under the Companies Act, a shareholder is entitled to appoint a proxy to attend a meeting on its behalf, speak, and even vote. Such shareholders must give notice of the appointment of the proxy before the meeting is held. 6.10 Squeeze-Out Mechanisms Under the Takeover Regulations, if an acquirer pur - chases 90% of a company’s voting shares, they must make an offer to the remaining shareholders to buy their shares at the current market value or the price offered to the other shareholders, whichever is higher. The sale and purchase process follows the rules out - lined in the Companies Act, which explain the proce - dures for acquiring minority shares including issuing
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