UKRAINE Law and Practice Contributed by: Illya Tkachuk, Igor Krasovskiy and Inna Kostrytska, INTEGRITES
a controlling stake is inherited, or acquired in the course of the establishment or the liquidation of a legal entity, or where all shares of the com- pany are acquired (including the shares already owned by the acquirer(s) and their affiliates). 6.3 Transaction Structures Shares in a public joint stock company are typi- cally acquired in a number of different ways, including: • during the placement of newly issued shares (with or without public offering); • by acquiring shares earlier redeemed by the company; The most popular way, however, is straightfor- ward acquisition based on bilateral negotiations with the seller. In this case, intermediation of an investment firm providing brokerage services is mandatory. “Merger” is not a common transaction structure, owing to the complexity of the procedure and how long it takes. • on a stock exchange; or • through corporate merger. 6.4 Consideration and Minimum Price There is no particular market for public tech- nology companies in Ukraine. However, based on common trends in the acquisition of public companies, cash is the predominant form of consideration. Occasionally, the conversion of debt into equity or stock exchange can be used by the parties involved in the sale transaction. For some spe- cific acquisitions, the form of settlement is pre- scribed by the law – for example, cash, securi- ties or a combination of cash and securities are
allowed as forms of consideration in mandatory offers. In the case of mergers, it is unusual (albeit not prohibited) to use any form of consideration. As such, shareholders tend to just convert their shares to the shares of the successor company. Generally, the parties are free to determine the sale price. However, a specific requirement has been established in order to determine the sale price in certain share acquisitions – for exam- ple, the purchase of newly issued or redeemed shares, or the acquisition of squeeze-out and sell-out rights, or in mandatory offers. In all such cases, the sale price cannot be lower than the market value of the shares and/or some addi- tionally established criteria. 6.5 Common Conditions for a Takeover Offer/Tender Offer Certain legal requirements are in place only for mandatory offers or some other specific share acquisitions. In mandatory offers, for example, there are statutory requirements with regard to: • how the purchase price is determined; • forms of consideration (cash, securities or a combination of cash and securities); • the term within which minority shareholders can accept the offer; and • the deadline for payment of the purchase price by the offeror. In all other aspects, the parties are free to deter- mine the takeover/tender offer conditions. 6.6 Deal Documentation Typically, takeover and business combination transactions imply entering into an agreement. However, it is unusual for the target company to undertake the obligation and give representa-
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