LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
among other matters, the purpose and conditions of the transaction, the valuation of assets and liabilities, and the exchange ratio. This publication requirement does not concern the intentions of an investor but ensures that shareholders and creditors are informed of the proposed corporate reorganisation. Accordingly, Lebanese law does not generally require investors to justify why they acquire shares. Disclo - sure of intentions becomes mandatory only when the acquisition may affect control of a listed company, while corporate reorganisations are made transpar - ent through publication of the merger documentation. A company is not required to disclose a potential transaction during preliminary negotiations or at first approach. Initial approaches by a potential investor, discussions, due diligence and even the execution of a non-binding memorandum of understanding may remain confidential. For listed companies, disclosure obligations arise only once the transaction constitutes material information likely to affect the price of the company’s securities under the CML and the regulations of the CMA. As issuer of traded securities, the company must inform the CMA and the public when the transaction becomes sufficiently definite and price-sensitive, typically at the point of board approval, execution of binding agree - ments or when the parties have reached a firm com - mitment to proceed. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal For private companies, there is no public disclosure requirement at the negotiation or signing stage. The transaction becomes public only upon registration of the relevant corporate acts with the Commercial Reg - ister following completion. Separately, a filing obligation may arise under Com - petition Law. Where the transaction constitutes an economic concentration and the parties’ combined market share in the relevant market exceeds 30% over the preceding three financial years, the parties must
notify the NCA before implementation and may not complete the transaction prior to clearance. 5.2 Market Practice on Timing Although Lebanese law requires disclosure only once a transaction becomes material and price-sensitive, market practice may lead to earlier announcements in certain circumstances. In principle, companies seek to maintain confidential - ity and will typically wait until a binding agreement is executed. However, this approach is contingent on the ability to preserve confidentiality. If negotiations become public, rumours circulate, or unusual trad - ing activity suggests information leakage, issuers will generally disclose the transaction earlier to ensure equal access to information and avoid misleading the market. This approach remains consistent with the legal dis - closure framework. The law sets the minimum dis - closure threshold but, in practice, the timing of the announcement depends on the degree of certainty and the company’s ability to safeguard confidentiality. 5.3 Scope of Due Diligence In Lebanon, due diligence in a negotiated business combination is directed less at the mechanics of the transfer and more at the consequences of taking con - trol of the company and continuing its operations. The exercise typically begins with a review of corpo - rate documentation to confirm the company’s own - ership structure and the authority of its governing bodies. This includes examining filings at the Com - mercial Register and verifying that the shares are val - idly issued and transferable. The review then moves to the company’s contractual position. Lawyers examine principal commercial contracts and financing arrange - ments, with particular attention to provisions that may be affected by a change of control. The investigation then focuses on liabilities that will survive the transaction. Counsel commonly reviews pending litigation, employment matters and the com - pany’s tax situation, since these obligations remain with the company after completion. In practice, spe - cial attention is typically given to tax compliance,
741 CHAMBERS.COM
Powered by FlippingBook