BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
“proposed” material change, early disclosure is expected. Material change disclosure to the FSC is also required. 5.2 Market Practice on Timing Market practice on the timing of disclosure in Barbados can differ from legal requirements, especially as it relates to publicly listed compa - nies. While the BSE Listing Rules and the Securi - ties Act, Cap 318A set out disclosure obligations, market practice may lead to earlier disclosures, so as to provide a sense of transparency or to reassure investors, or to more detailed disclo - sures in certain cases. 5.3 Scope of Due Diligence In Barbados, due diligence usually encompass - es the following aspects, among others, and is dependent on the structure of the deal. • Legal due diligence involves (i) reviewing the corporate structure and governance of a company, including the articles of incorpora - tion, by-laws, and shareholder agreements (if any); (ii) reviewing key contracts and identify - ing whether there are any related party trans - actions and potential conflicts of interests; (iii) verifying the litigation status of the company, including whether there are any ongoing or potential legal disputes, by conducting court searches and obtaining legal opinions con - firming the status of the company if neces - sary; and (iv) confirming that the company is in good standing with the Corporate Affairs and Intellectual Property Office by obtaining a certificate of good standing and an insol - vency certificate. • Financial due diligence encompasses (i) examining the audited financial statements of the company, typically within the past three years; (ii) assessing the debt obligations of the company; and (iii) confirming that there
are no outstanding tax obligations by review - ing a Barbados Revenue Authority tax clear - ance certificate. • Regulatory due diligence involves reviewing the relevant licences, permits or government approvals of the company if applicable. • Employment due diligence includes (i) reviewing employment contracts, pension plans, collective bargaining agreements and employee benefits; (ii) ensuring compliance with the Employment Rights Act of Barbados as it relates to severance pay, redundancy rules and the transfer of employees; and (iii) checking whether there are any employee disputes or pending claims. 5.4 Standstills or Exclusivity In Barbados, it would not be unusual for par - ties to a proposed merger to enter into a letter of intent, which would include provision for the potential seller to refrain from offering its interest in the target for a specified period of time or to grant the potential buyer exclusivity in negotia - It is common practice for the parties to enter into a definitive agreement setting out the agreed terms and conditions. 6. Structuring 6.1 Length of Process for Acquisition/ Sale The length of time that it takes to acquire or sell a business in Barbados varies depending on the complexity of the transaction, the regulatory approvals required and due diligence processes. Generally, the process can take between three and 12 months, with larger or more regulated transactions taking even longer. tions for a specified period. 5.5 Definitive Agreements
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