NORWAY Law and Practice Contributed by: Fredrik Lykke, Christian P. N. Fenner and Magnus Brox, Advokatfirma DLA Piper AS Norway
prior to launch of the offer. In Norway, even if there is no financing condition, a bidder issuing a voluntary offer does not need to prove certain funds, although this often is a prerequisite for the issuer’s board to recommend the transaction. In the voluntary tender offer document it is customary to provide certain infor - mation concerning the contemplated financing of the offer. A mandatory tender offer requires certain funds in the form of a bank guarantee. There are detailed legal reg - ulations concerning the content and wording of such guarantees and the guarantee must be pre-approved by the takeover authority. 6.7 Types of Deal Security Measures In a friendly transaction process, the parties typically enter into a transaction agreement prior to launch of the offer by the bidder. It is quite customary that such transaction agreement includes various deal security measures, but the target board is always considering its fiduciary duties with respect to securing the best possible transaction terms from the current bidder or any alternative bidder which may surface during the tender offer period. The legal framework for tender offers in Norway makes “force the vote” provisions superfluous, as the target company as such does not have any power as to whether the offer is accepted or not. The deci - sion lies fully with the shareholders. The transaction agreement, however, typically includes provisions in which the board commits to recommending the offer to its shareholders. The background for this is partly that under the takeover rules the board has a duty to provide a statement as to the offer. In not-so-friendly bid situations, it often occurs that the board in its statement to the shareholders recommends that the shareholders do not accept the offer. Matching rights are quite common, while break fees are not often a part of such agreements. One signifi - cant reason for which break fees are not commonly used is that the Oslo Stock Exchange has issued guidelines only allowing, in practice, for break fees, which cover bidders’ reasonable costs and expens - es in connection with the transaction process. Even though such amounts may be significant, it typically
does not serve as a deterrent for competing bids. The target board is typically also concerned about com - plying with its fiduciary duties if agreeing to significant break fees. 6.8 Additional Governance Rights In Norway it is very uncommon to have specific gov - ernance rights provided to certain shareholders in listed companies, as this typically also conflicts with the equal treatment of the shareholders doctrine. As stated in 6.5 Minimum Acceptance Conditions , a bid- der having more than 50% can appoint the directors, and correspondingly a shareholder with less than 50% may not require a board seat. In a friendly situation, however, it is fairly common for a material minority shareholder to be offered a board seat or board observer role via discussions with other significant shareholders or via proposal by the nomi - nation committee. All shareholder-elected directors are elected by the general meeting of shareholders. In some larger companies the shareholder-elected directors are appointed by a “corporate assembly” ( bedriftsforsamling ) and this body’s shareholder-elect - ed members are in such cases elected by the general meeting. 6.9 Voting by Proxy Shareholders may vote by proxy and issuers have, in the last few years, made significant efforts to make this as easy as possible. A proxy can, under Norwe - gian company law, always be withdrawn up to the A shareholder owning in excess of 90% of the shares may initiate a squeeze-out process and thus immedi - ately become owner of all shares in the company. The process is initiated by a board resolution in the bid - der and notice sent to all other shareholders concern - ing the squeeze-out. There is a requirement that the bidder must have provided a bank guarantee for the total squeeze-out amount (share price times number of shares subject to the squeeze-out) by the time the notice is submitted. The minority shareholders have a two-month period in which to dispute the squeeze-out price. It is important time of the actual general meeting. 6.10 Squeeze-Out Mechanisms
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