USA LAW AND PRACTICE Contributed by: George Casey, Heiko Schiwek, Elena Rubinov, Vinita Sithapathy, Kristina Trauger, Pierre-Emmanuel Perais, Clara Pang and Gregory Gewirtz, Linklaters
directors may allow. However, the board of directors must remain mindful of its fiduciary duties when deter- mining the level of sensitive technology information to be shared during due diligence. The board must balance the need to provide sufficient information for bidders to make informed offers with protecting com- pany assets and its competitive position, particularly if such disclosure could harm the company were no Legal and contractual limitations can restrict the due diligence information that a technology company in the USA can provide. Prior to releasing due diligence information, a company should review which federal, state and international data privacy laws are applica- ble to its business operations. Regulations such as the EU General Data Protection Regulation (GDPR), the UK GDPR and US state privacy laws may limit a company’s ability to share certain personal data with a potential counterparty or their advisers. transaction to occur. 9.3 Data Privacy Additionally, the company must align with its publicly stated privacy policies and any agreements with third parties that include privacy-related stipulations. The USA lacks a comprehensive legislative privacy frame- work. Nevertheless, the US government has applied Section 5 of the FTC Act – which prohibits unfair or deceptive acts or practices – against companies that fail to protect personal data or adhere to their pub- lished privacy policies. For a tender offer, the SEC rules require that the acquirer file a Schedule TO (including an offer to purchase and related documents, such as a letter of transmittal). If the deal is only for cash consideration, the Schedule TO is relatively straightforward and, assuming advance preparation, is often filed on the day of (or shortly following) the announcement of the bid for the target. For a merger, generally the parties will jointly announce the transaction when the definitive merger agreement has been entered into between the target and the 10. Disclosure 10.1 Making a Bid Public
acquirer. A publicly traded target company must dis- close the material terms of the transaction in a filing made with the SEC within four business days of entry into the definitive transaction documents. See 6.13 Securities Regulator’s or Stock Exchange Process . 10.2 Prospectus Requirements The offer and sale of securities to the target share- holders as consideration for the acquisition will need to be registered under the US Securities Act of 1933 (the “Securities Act”), unless an exemption applies. A registration statement would include (among other • business descriptions; • financial statements; • management’s discussion and analysis of financial conditions; and • transaction-specific information that would be required in a proxy statement or a Schedule TO, as applicable. information): • risk factors; In addition, SEC staff must approve (or “declare effec- tive”) the registration statement, and typically make many comments before granting such approval. Before the acquirer’s shares may be traded on a US national securities exchange, the acquirer must com- plete a listing application with the relevant exchange, unless the acquirer’s shares are already listed on the relevant exchange. 10.3 Producing Financial Statements In a registered exchange offer or merger in which all or a portion of the merger consideration consists of securities, financial statement issues can add signifi- cant time and expense to the process, to the extent that financial statements – both of the acquired busi- ness and pro forma for the combined company – may be necessary. This depends on the magnitude of the transaction for the acquirer, and the requirement that financial statements filed with the SEC be prepared in accordance with US generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) as promulgated by the International
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