MALTA Law and Practice Contributed by: George Bugeja, Stuart Firman, Nicholas Curmi and Luke Hili, Ganado Advocates
In the context of a takeover bid for a publicly listed company, there is no express prohibition upon the takeover being conditional on the bidder obtaining financing, although there is a requirement for the expert’s report (to be appended to the offer document) to confirm that the bidder has sufficient resources to meet its obligations on full acceptance of the offer, which in practice means that any financing must be obtained in advance of the offer. 6.7 Types of Deal Security Measures Typical deal security measures employed in M&A transactions involving a Maltese target include entry into non-disclosure agreements, non-compete pro- visions and (in the context of a takeover offer) the negotiation of conditional irrevocable undertakings from the key shareholders of the target company to accept the offer if certain predetermined conditions to the deal are met. Break fees may also be agreed to, although due care will need to be taken when drafting the language/ mechanics of the relevant clause(s). In the context of a takeover involving a Maltese target that is listed in another jurisdiction, regard should also be had to how such break fees (and other deal security measures) may be viewed in the context of the relevant rules gov- erning offers in that jurisdiction and how the relevant takeover authority/panel would view this. In the context of a Maltese target with an EU cross- border listing, an analysis of both the Maltese rules as well as the rules of the jurisdiction in which the tar- get is listed should always be undertaken, whether in relation to deal security measures or otherwise. Apart from the fact that each market (trading venue) will have its own rules that may be relevant to the trans- action, the Takeover Directive expressly provides (in the context of a listing on an EU “regulated market”) that rules of the EU member state where the securities are listed will apply to certain matters, while the rules of the member states where the company is registered will apply to certain others. Indeed, in cases where the Maltese target is listed on a regulated market situ- ated in another member state, matters relating to the consideration offered in the case of a bid, in particular the price, and matters relating to the bid procedure, in particular the information on the offeror’s decision
to make a bid, the contents of the offer document and the disclosure of the bid, shall be dealt with in accordance with the rules of the member state where the regulated market is situated (and the information contained in this practice guide should be considered with this in mind). Bidders in a transaction involving a private target com- pany in Malta are at liberty to negotiate and agree any deal security measures, provided that such measures are not inconsistent with Maltese law. Non-solicita- tion provisions are generally standard in any Maltese acquisition deal. 6.8 Additional Governance Rights Subject to the obligation to launch a mandatory bid upon the acquisition of a “controlling interest” as described in 6.2 Mandatory Offer Threshold , a bid- der that does not seek to own 100% of the voting rights within the target (which is not typically the case) would generally look to negotiate additional govern- ance rights as part of a separate shareholders’ agree - ment to this effect, or otherwise via the introduction of tailored control rights (connected to the holding of a specified percentage of voting rights) in the target’s memorandum and articles of association. It is common for such acquirer to seek (i) the right to appoint one or more directors on the board of direc- tors, (ii) the inclusion of reserved matters requiring the shareholder’s (whether minority or not) approval, (iii) higher quotas for certain board decisions, (iv) anti- dilution rights and (v) restrictions on transfers of the other shareholders’ ownership. Bidders in a transaction involving a private target company in Malta are free to negotiate similar rights A shareholder of a Maltese company is, by law, enti- tled to appoint another person as its proxy to attend and vote instead of it at a general meeting of the com- pany. This is true notwithstanding anything contained in the memorandum and articles of association of the company. to those set out above. 6.9 Voting by Proxy
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