JERSEY Law and Practice Contributed by: Paul Burton and David Allen, Maples Group
about any proposal to include (in an announcement) any pre-condition to which the bid will be subject. As a general rule, the Panel will not consent to the inclusion of a pre-condition if it depends solely on subjective judgements by the directors of the bidder or the target. Except with the consent of the Panel, a bid must not be announced subject to a pre-condition unless the pre-condition relates to a decision that there will be no reference to the competition authority or initiation of proceedings by the European Commission, or it involves another material official authorisation or regu - latory clearance relating to the bid. No conditions are permitted in the case of a mandatory bid, except with the consent of the Panel (other than that the bidder obtains acceptances that give it more than 50% of the Jersey company law gives private equity bidders the legal right to compulsorily acquire shares in a target that it does not seek or ultimately obtain as a part of its offer (known as a “squeeze-out right”). In a takeo - ver offer, if the bidder has acquired or contracted to acquire 90% in nominal value of the shares to which the offer relates, they can acquire the remaining 10% by giving notice to the relevant shareholders. No compulsory acquisition notice can be given unless a bidder has acquired or contracted to acquire 90% of the target’s shares to which the offer relates within four months of an offer. The shareholder notice must be served within two months of the bidder acquir - ing or contracting to acquire the 90%. A copy of the notice must be sent to the target. Bidders are bound to acquire the remaining shares on the terms of the original offer. voting rights of the target company). 7.6 Acquiring Less Than 100% Six weeks after the date of the notice, a bidder must pay the target for the remaining shares it wishes to compulsorily acquire. A share transfer form execut - ed on behalf of the non-selling shareholder by the bidder must be sent to the company with payment; upon receipt, the company must register the bidder as shareholder. Inverted rights of non-selling (minority) shareholders also exist to require their shares to be acquired by a bidder who has acquired (or contracted
to acquire) 90%. The Jersey court has general juris - diction to hear relevant applications about compulsory acquisition matters. There are no particular threshold acquisition levels or mechanisms that are typically required for a private equity-backed bidder to achieve a debt push-down into the target following a successful offer. 7.7 Irrevocable Commitments In situations where an offer is recommended by the board of directors of the target, it is common for a private equity bidder to obtain irrevocable undertak - ings or commitments from the main shareholder(s). Irrevocable undertakings/commitments and letters of intent are permitted by the Takeover Code and must comply with the rules therein. Achieving a certain level of irrevocable commitments in the pre-bid stage is often key to the private equity bidders advancing offers. Irrevocable commitments customarily oblige a shareholder making such a commitment to accept the private equity bidder’s offer by a certain time. 8. Management Incentives 8.1 Equity Incentivisation and Ownership Unsurprisingly, the incentivisation of management teams is a key feature of private equity transactions in Jersey and those that involve Jersey-registered vehicles. Different drivers and expectations from both the private equity sponsors and the management team come into focus where the market is moving to a more “patient capital” model, compared to the shorter hold periods typically associated with private equity (ie, in the seller-friendly landscape of the last five or six years). Up to 10% of equity participation by management is common, but certain more entrepre - neurial management teams have been able to com - mand a higher proportionate equity ownership share. On primary investment transactions, founders gener - ally retain more substantial equity ownership interests. 8.2 Management Participation There are a number of different ways of structuring management participation in private equity transac - tions in Jersey. It is common for managers to sub - scribe for sweet equity on primary investments and
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