BULGARIA Law and Practice Contributed by: Nikolay Zisov, Svetlina Kortenska, Deyan Terziev and Teodora Peycheva, BOYANOV & Co.
Pricing rules exist for the determination of the tender offer prices in the POSA and in a special FSC Ordi- nance. The price or the exchange value of the shares in the mandatory tender offer cannot be lower than the highest value among: • the fair value of shares determined in the substan - tiation made in accordance with FSC Ordinance; • the average weighing market value for the last six months before registration of the tender offer; and • the highest value per share paid by the offeror and/ or the parties related to the offeror during the last six months before registration of the offer. The mandatory tender offer price cannot be lower than the average weighing market value for the last six months, or – absent such value – of the highest value per share paid by the offeror or parties related to it during the last six months before registration of the offer with the FSC. The offeror is obliged to substan- tiate the mandatory tender offer price. With respect to the substantiation of the price, the provisions of a special FSC Ordinance shall apply. 6.5 Common Conditions for a Takeover Offer/ Tender Offer Tender offers are subject to registration with the FSC and may be published where the FSC does not issue a temporary prohibition within 20 business days of submission. On the day of the registration of the offer with the FSC, the offeror shall submit the offer to the management body of the company and to its employ- ee representatives, with an express note that the FSC has not yet considered the mandatory offer. The man- agement body shall on its behalf notify the employees or their representatives of the substantial conditions of the offer. The substantial conditions shall be: • information about the offeror; • the price per share offered or the exchange ratio for the shares; • the number of voting right shares owned by the offeror and those it is obliged to or wants to acquire; and • information on the future intents and strategic plans of the offeror with respect to the public com- pany, along with a summary of the substantiation/ reasoning of the price.
Based on the foregoing, the management body shall file an opinion with the FSC within seven days of receipt of the offeror’s notification in relation to the proposal. The opinion shall also include: • information on the existence of contractual arrangements on the exercise of voting rights, to the extent known to management; • information on the number of shares owned by members of management; and • an indication of their intent to accept the offer or not. The employees’ opinion is attached to the one pre- pared by the management body. From the receipt of the offer until publication of the result of the offer, the management body cannot undertake actions aimed at preventing the offer, impeding or increasing the cost of the offeror, such as the issue of shares or entry into transactions which might result in material change in the estate of the company, unless such actions are approved by the general meeting of the shareholders, except in the case of a competitive tender offer. The general meet- ing of shareholders shall also approve any decision of the management body for the actions above adopted prior to the receipt of the tender offer outside the ordi- nary course of business. A competitive tender offer may also be registered. 6.6 Deal Documentation While it is possible for an offeror to enter into a trans- action agreement in connection with the takeover offer or business combination, it is not customary. In any event, strict adherence to EU Market Abuse Regulation (MAR) requirements is essential, especially regarding insider information and disclosure restric- tions for management members. In purely domestic transactions governed by Bulgar- ian law, very detailed representations and warranties are not typical for public companies. Such clauses are more common in international transactions or those governed by legal systems where detailed representa- tions and warranties are standard contractual provi- sions.
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