BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
The parties will need to be mindful of disclosure obligations under the applicable rules and regu - lations during the negotiations. The nature of these undertakings is often formal - ised through lock-up agreements, which legally bind principal shareholders to support the trans - action in case of both hard lock-up agreements, which restrict withdrawal by shareholders, and soft lock-up agreements, which include a fidu - ciary out clause. This clause permits the share - holder to withdraw their commitment, though usually with a penalty, if a superior competing offer is made, provided the initial bidder does not match or exceed the new offer within a specified period. While Barbados does not have a strict legal framework governing lock-up agreements at this time, they are used in negotiated business com - binations to minimise execution risk and ensure a successful transaction. A bid is made public upon the mailing or deliver - ing of the takeover bid circular to all registered shareholders of the offeree company. The circu - lar should be mailed no less than 28 days before the date on which the takeover bid will close. 7.2 Type of Disclosure Required Regarding the type of disclosure required for the issuance of shares in a business combination, please see 4.2 Material Shareholding Disclo- sure Threshold . 7.3 Producing Financial Statements The International Financial Reporting Standards (IFRS) are usually used for companies incor - 7. Disclosure 7.1 Making a Bid Public
porated in Barbados. Bidders are required to produce financial statements in their disclosure documents with certain conditions. Where all or part of the consideration being offered con - sists of securities of the offeror, the takeover bid circular must include pro forma financial statements of the offeror reflecting the impact of the acquisition. Additionally, the circular must contain a description of the offeree company’s relied-upon financial statements, earnings per share figures prepared in accordance with inter - national accounting standards and a summary of the offeror’s plans for the offeree company, including consolidated financial results on a fully diluted basis. 7.4 Transaction Documents In Barbados, the Regulations require certain dis - closures but do not mandate full disclosure of all transaction documents. However, there are key documents that must be made available to regulators and shareholders, including:
• the takeover bid circular; • the directors’ circular; and • material agreements.
While it is not typical for full transaction docu - ments to be disclosed to the public, the FSC has the authority to request additional information as it may deem necessary.
8. Duties of Directors 8.1 Principal Directors’ Duties
The directors of a company have a duty to direct the management of its business and affairs. Directors must also act honestly and in good faith, with a view to the best interests of the com - pany, exercising the care, diligence and skill that a reasonably prudent person would exercise in
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