BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR - Al Ruwayeh & Partners
rities on BHB. In addition, the CBB has prescribed certain disclosure requirements for offerings and initial listings (the CBB Disclosure Standards). Furthermore, the Listing Rules of BHB provide for certain disclo - sures in relation to changes in the interests of sub - stantial shareholders. 4.4 Dealings in Derivatives In general, dealings in derivatives related to the target company’s securities are allowed, except for people who are privy to confidential takeover information relating to the takeover. These insiders are restricted from trading the target company’s securities (including derivatives) during a specific window surrounding the takeover announcement. This period typically starts when there is a reason to believe a takeover is being considered, and ends when the takeover is officially announced (or when the discussions fall through and are made public). Equity derivatives, however, would likely be deemed unlawful if used to circumvent dis - closure standards – for example, by using cash-set - tled equity derivatives to hide corporate ownership interests. 4.5 Filing/Reporting Obligations There is no specific disclosure requirement for deriva - tives under securities disclosure. However, if a deriva - tive would give a person control of the proprietary and administrative rights over a listed company in excess of the material threshold indicated in 4.2 Material Shareholding Disclosure Threshold , then this would likely be subject to disclosure. Bahrain’s TMA regulations mandate that acquir - ers disclose details of all existing derivatives held by themselves or any associated parties on the tar - get company’s securities when making a firm offer announcement. Bahrain’s competition laws do not create filing/report - ing obligations for derivatives. However, there is a general prohibition on mergers that create a monopoly in any economic activity, commodity or product. 4.6 Transparency Generally, shareholders do not have to disclose the purpose of their acquisition or their intention regarding control of the company. However, there are disclosure
requirements in certain circumstances, such as when a shareholder acquires a significant stake in a com - pany (eg, more than 5% of the shares). In Bahrain, potential acquirers (offerors) or those con - sidering an offer (potential offerors) have a responsi - bility to make public announcements under certain conditions. One such instance is when rumours or speculation about a possible takeover of the target company (offeree company) circulate before any for - mal approach has been made. The target is required to make an announcement when there are negotiations or discussions between a potential offeror and the holder, or group of holders, of shares carrying 30% or more of the voting rights of the company and the company is subject to rumour or speculation about a possible offer or there is unu - sual movement in its share price or in the volume of share turnover, and there are reasonable grounds for concluding that it is the potential vendor’s actions that have led to the situation. 5.2 Market Practice on Timing Announcements are sometimes deferred subject to Under Bahrain’s TMA regulations, the target is not required to provide due diligence information to a potential bidder; however, where a target’s board chooses to disclose information or grant access to management to a potential or actual bidder, it must, on request, provide equal information access to rival bidders. Caution must be exercised in respect to the nature of the information provided, as the company cannot disclose material information that is not pub - licly available. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal receiving the CBB’s approval. 5.3 Scope of Due Diligence In case of a necessity to disclose such information, an exemption may be sought from the regulator. Any such disclosure would have to take place within the framework of a non-disclosure agreement, which should also place restrictions on the ability to trade
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