LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
6.7 Types of Deal Security Measures Bidders commonly seek contractual protections to preserve the transaction during negotiations and the approval process. The most frequent measures are exclusivity or non-solicitation undertakings, under which the seller or key shareholders agree not to negotiate with competing bidders for a specified period. Bidders may also obtain shareholder support or tender undertakings to secure the votes necessary to complete the transaction. Additional protections are sometimes agreed. Match - ing rights may give the bidder an opportunity to match a competing offer, and break-up fees may be pay - able if the seller withdraws from the transaction or accepts a third-party proposal after negotiations have advanced. These mechanisms are not specifi - cally regulated and operate under general contractual principles. Certain measures seen in other jurisdictions are less common. Because many Lebanese companies are closely held and controlling shareholders typically determine the outcome of shareholder approvals, provisions such as force-the-vote arrangements rarely play a practical role. There have been no significant legislative changes introducing a formal takeover timetable. However, transactions involving regulated financial institutions have become more procedurally demanding. Addi - tional regulatory and prudential approvals may be required before completion, which, in practice, can lengthen the interim period between signing and clos - ing. 6.8 Additional Governance Rights If the bidder does not seek 100% ownership, it may still obtain influence through contractual governance rights agreed with the other shareholders and reflect - ed in a shareholders’ agreement and, where needed, the articles of association. These typically include the right to appoint board members or observers, veto (reserved-matter) rights over major decisions (such as amendments to the articles, capital increases, major transactions or borrowing), access to financial and operational information, approval of budgets or
Under the Beirut Stock Exchange rules, the offer document must state the minimum and maximum number of securities or voting rights sought. The offer becomes effective only if the bidder’s stated minimum level of acceptances is reached. Regulatory review by the CMA and the Stock Exchange Committee (SEC) relates to the admissibil - ity and transparency of the offer rather than to the number of shares tendered. Decisions of the SEC may be challenged before the Civil Chamber of the Beirut Court of Appeal within 15 days of notification. For private companies, acceptance levels are deter - mined by the articles of association and any contrac - tual transfer restrictions between shareholders. 6.6 Requirement to Obtain Financing In private transactions, it is common for a deal to be conditional on the bidder securing financing. The par - ties may agree that completion will only take place once funding is in place. If the bidder fails to obtain financing, the transaction simply does not close. This is largely a matter of negotiation and risk allocation between the parties. The situation is different for listed companies. A public tender offer is not treated as a tentative proposal but as a serious and executable commitment. Before the offer is made public, the bidder must submit it to the BSE together with evidence of financial capacity and appropriate guarantees. In practice, this means that financing must already be secured at the time the offer is launched. A bidder cannot realistically announce an offer and later withdraw on the basis that funding was not obtained. In regulated sectors such as banking, the approach is even stricter. The acquirer must demonstrate finan - cial strength and source of funds in order to obtain regulatory approval. As a result, transactions in these sectors are expected to be fully funded before they are formally pursued. In short, while financing conditions are acceptable in private deals, public offers in Lebanon are expected to be backed by committed funds from the outset.
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