BAHRAIN Law and Practice Contributed by: David Walker, Simone Del Nevo, Sherif Saadeldin and Rahul Sud, ASAR – Al Ruwayeh & Partners
6.5 Minimum Acceptance Conditions In Bahrain, mandatory takeover offers (MTOs) must be unconditional. However, there is one exception that is subject to CBB approval, whereby the offer can be contingent on the offeror (and those acting together) acquiring over 50% of the voting rights. The squeeze-out provisions are triggered on reaching the 90% threshold. 6.6 Requirement to Obtain Financing As a general rule with limited exceptions, financ - ing for an offer must be fully committed when the announcement of the firm intention to make an offer is made. A voluntary offer must not be made subject to conditions the fulfilment of which depends on the subjective interpretation or judgement of the bidder, or lies in the bidder’s hands. Once a firm intention to make an offer is formally announced, the bidder is committed to proceed. Scope to withdraw by invoking the conditions to the offer is limited. To the extent that the bidder intends to attach conditions other than normal conditions, the CBB must have previously been consulted. 6.7 Types of Deal Security Measures The validity of deal security measures is highly questionable, as the board of the target would not normally have the power to agree on such measures that would affect the company’s shareholders exercising their lawful rights in respect thereto. 6.8 Additional Governance Rights It is the prevailing view that a shareholders’ agreement purporting to give special govern - ance rights outside of the generally applicable governance rules is not permissible for listed companies. For this reason, any arrangement between the bidder and the target aimed at giv -
ing the bidder special governance rights might be held to be unenforceable. 6.9 Voting by Proxy Shareholders may vote by proxy and/or a special power of attorney. 6.10 Squeeze-Out Mechanisms In Bahrain, after a successful takeover offer exceeding 90% acceptance (excluding the acquirer’s existing stake), a squeeze-out mech - anism allows the acquirer to buy the remaining shares from dissenting shareholders. The acquir - er must issue a formal notice within 15 days and complete the purchase at the original offer price within three months. Dissenting shareholders have 60 days to challenge the process in court, but are still entitled to receive payment during the dispute. 6.11 Irrevocable Commitments Irrevocable commitments are permitted by the TMA regulations. However, these have not yet been extensively used in Bahrain so the practice in relation to them continues to evolve. Any per - son proposing to contact a private individual or a corporate shareholder with the aim of obtaining an irrevocable commitment should consult the CBB in advance. As irrevocable commitments could be viewed as offering an advantage to cer - tain shareholders over others, negotiations are typically undertaken after consulting the CBB. The irrevocable commitments are drawn up as unilateral undertakings and, generally, do not provide a way out for the principal shareholder.
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