LIECHTENSTEIN Law and Practice Contributed by: Alexander Appel and Hemma Kohlfürst, Schurti Partners Attorneys at Law Ltd
9.2 Directors’ Use of Defensive Measures Directors are allowed to use defensive measures; see 9.1 Hostile Tender Offers . 9.3 Common Defensive Measures In addition to the defensive measures permitted by the Takeover Act, the board of directors of a Liech - tenstein company frequently benefits from a clause in the articles/by-laws that permits the board to refuse approval of a new shareholder in certain events and if such approval is not in the best interest of the com - pany. For instance, the board of directors can do so if a competitor of the company tries to enter the circle of shareholders. 9.4 Directors’ Duties The duties mentioned in 8.1 Principal Directors’ Duties also apply if the directors enact defensive measures: when doing so, they must also act in the best interest of the (target) company. 9.5 Directors’ Ability to “Just Say No” The directors must always act in the best interest of the company and base their decisions on justified rea - sons. When resolving on a business combination or the prevention thereof, the directors are well advised not to “just say no” (to the extent this would be per - missible under the specific articles or by-laws) but to carefully document the reasoning of their decision in adequate minutes of their board meeting. Litigation before the courts in connection with M&A transactions is not very common in Liechtenstein. However, it is possible for shareholder resolutions to be challenged and for board resolutions to be scru - tinised before the Liechtenstein courts. On the other hand, it is quite common for disputes in relation to M&A transactions to be resolved in arbitration pro - ceedings. Obtaining an arbitration award also has the advantage of (increased) enforceability in other juris - dictions. In contrast, Liechtenstein has only entered into bilater - al treaties regarding the recognition and enforcement 10. Litigation 10.1 Frequency of Litigation
members and other officers of a company, including in situations involving business combinations. The resulting settled case law regularly requires that the board members pass their decisions on an informed basis and free of any conflicts of interest. 8.4 Independent Outside Advice Directors regularly obtain legal opinions on the target company or on the other parties in a business combi - nation, and sometimes also on tax rulings, in order to safeguard their duty of care. If companies or targets outside of Liechtenstein are involved, a foreign law firm is usually commissioned to issue an adequate capacity opinion for the transaction. Depending on the transaction structure, it is also com - mon for independent outside advice to be solicited from other experts. 8.5 Conflicts of Interest Conflicts of interest of directors, managers, share - holders or advisers have been the subject of judicial or other scrutiny in Liechtenstein. However, it is not pos - sible to quantify these court/regulatory cases since only a limited number of court cases and regulatory orders are published in Liechtenstein. Liechtenstein law only contains specific provisions for public/listed Liechtenstein companies. The Takeover Act sets forth rules for such companies in the event of a voluntary takeover bid or a mandatory takeover bid. As long as these rules (to the extent applicable) and any provisions in the articles/by-laws of the Liech - tenstein target company in relation to the issuance or the transfer of shares are complied with, tender offers are permitted. Hostile tender offers are not very common in Liech - tenstein. One of the reasons may be that the shares of only a very small number of Liechtenstein compa - nies are listed, which reduces the scope of options for hostile tender offers. 9. Defensive Measures 9.1 Hostile Tender Offers
767 CHAMBERS.COM
Powered by FlippingBook