BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR – Al Ruwayeh & Partners
5. Negotiation Phase 5.1 Requirement to Disclose a Deal The target is required to make an announce - ment 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 com - pany is subject to rumour or speculation about a possible offer or there is unusual 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 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 infor - mation access to rival bidders. Caution must be exercised in respect to the nature of the informa - tion provided, as the company cannot disclose material information that is not publicly available. In case of a necessity to disclose such informa - tion, an exemption may be sought from the regu - lator. Any such disclosure would have to take place within the framework of a non-disclosure agreement, which should also place restrictions on the ability of trading by any party that receives confidential, non-publicly available information, along with advisers and consultants. to receiving the CBB’s approval. 5.3 Scope of Due Diligence
5.4 Standstills or Exclusivity Standstills are somewhat unusual, probably due to the fact that hostile takeovers were tra - ditionally unusual if not altogether non-existent, although things are changing in this respect. Standstills – in certain forms at least – could also give rise to an issue of validity under local law. Exclusivity is more commonly demanded and granted. 5.5 Definitive Agreements It is permissible to document the agreements reached between the buyer and the target in the terms of a framework agreement defining the roadmap of the deal, although the exact terms and conditions of the offer would, of course, have to be included in the offer document to be addressed to the shareholders of the target, noting that the board of the target has no power to bind shareholders but can influence their vote by issuing a board circular with its opinion on the offer. 6. Structuring 6.1 Length of Process for Acquisition/ Sale Each transaction is different, and different con - siderations arise depending on the circumstanc - es of each transaction. Governmental depart - ments are now operating at full capacity, and transaction timelines have returned to the pre- pandemic transaction timelines. With regard to private transactions, the timeline for completing the acquisition process differs from one case to another, depending on the nature of the business to be acquired. While the process of closing non-regulated business acquisitions could be completed within two to three weeks from all required documents
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