LIECHTENSTEIN Law and Practice Contributed by: Alexander Appel and Hemma Kohlfürst, Schurti Partners Attorneys at Law Ltd
5.3 Scope of Due Diligence If the target is a Liechtenstein company, the scope of the legal due diligence is usually extensive. Mere red-flag due diligence exercises used to be less com - mon but have become more frequent, for instance, for Liechtenstein companies that are material subsidiar - ies of a foreign target. Such red flag due diligence is frequently confined to a few areas (such as corporate/ title due diligence or tax due diligence). A broad legal due diligence exercise covers corporate law issues, material agreements (change of control clauses), employment law issues, litigation issues, compliance and KYC issues, regulatory issues (to the extent applicable to the target), data protection issues, IT and IP issues, commercial contracts, real estate issues, data protection issues, increasingly ESG issues, etc. Depending on the industry in which the target is active, environmental law issues have also become increasingly important. 5.4 Standstills or Exclusivity Granting a bidder exclusivity during the negotiation phase is quite common. Standstill agreements are less common, considering that hostile takeovers are not very frequent in Liechtenstein. 5.5 Definitive Agreements It is permissible for tender offer terms and conditions to be documented in a definitive agreement if said agreement clearly demonstrates the will of all parties to accept such terms and conditions. However, the documenting of such tender offer terms and condi - tions in a definitive transaction agreement does not occur very frequently. 6. Structuring 6.1 Length of Process for Acquisition/Sale The length of the process for acquiring or selling a business depends on the specific transaction struc - ture. It goes without saying that the process takes longer if regulatory approvals and consents are required to be issued between signing and closing. This is particularly relevant in view of the implemen - tation of Directive (EU) 2019/2121 for cross-border conversions, mergers and spin-offs. It is expected
that future cross-border conversions into EEA mem - ber states will become technically more complex and also more time-consuming. In the absence of such approval or consent require - ments, it is quite common to close smaller transac - tions on the same day as the signing takes place. This can considerably abbreviate the length of the transac - tion process. The flexibility of the Liechtenstein legislature to introduce the possibility to hold virtual and hybrid shareholder and board meetings has contributed to the avoidance of such delays or impediments. The upcoming digitalisation measures will also have a positive impact on and accelerate the process. 6.2 Mandatory Offer Threshold Outside of regulated business areas and industries, there is no mandatory offer threshold for private com - panies. However, for public companies the thresholds under the Liechtenstein Disclosure Act must be com - plied with. In addition, according to the Liechtenstein Takeover Act, certain price rules must be observed for both mandatory and voluntary bids. Accordingly, the price offered in a mandatory bid must not be lower than the last price that was granted or agreed to be paid for the same security during the 12 months preceding the notification of the bid. Furthermore, the price must be at least equal to the average market value of the security in question over the six months preceding the date of the announcement of the intention to bid. Further requirements pursuant to foreign listing rules may also be applicable. 6.3 Consideration Cash is more common than shares as a considera - tion type. Several tools are used to bridge value gaps between the parties, ranging from performing several staged closings to agreeing on escrow arrangements. Earn-out structures are also quite popular. In some transactions, the introduction of targeted incentive bonus plans for the target’s management team has been chosen as an additional measure.
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