BARBADOS Law and Practice Contributed by: Debbie Fraser, Joanna M Austin, Makela Harrison-Yarde and Jael Smith, Fraser Law
8.4 Independent Outside Advice The board of directors usually relies on advice from external counsel on the most cost-effective structure to use for the transaction, cost assess - ment and settlement of the transaction docu - ments. In takeover transactions, the board can create a committee, comprising the independent directors, with a mandate to assess whether the price offered to shareholders in the takeover bid is a fair and a reasonable price. Also, the direc - tors of the target company, upon receiving the takeover bid circular, can seek a valuation of the company’s shares and obtain “fairness opinion” from a financial expert. 8.5 Conflicts of Interest The interests of the directors and the share - holders were in conflict in Ansa McAl (Barba - dos) Limited v Banks Holdings Limited and Slu Beverages Ltd BB 2016 CA 13, as the directors acted in the management of BHL’s business and affairs by entering into a loan agreement for the purpose of modernising the machinery and plant operations, and upgrading the brewery produc - tion capabilities, to increase BHL’s competitive - ness. ANSA, a shareholder, argued that the directors conducted BHL’s business and affairs in a man - ner that unfairly disregarded and conflicted with the interests of shareholders who held common shares, where the agreement would negatively affect the marketability and value of their shares if a takeover occurred.
Alternatively, in Kenneth Went v Cable & Wireless BB 2018 HC 26, the court ruled in favour of the directors’ decision and denied the sharehold - ers’ action for an interim injunction. However, the court made this decision because it disa - greed with the claimant’s views and not solely based on whether the directors acted to carry out their duties. The claimant shareholders alleged that the amalgamation of Cable & Wireless (Barbados) Ltd and CWB Ltd (NEWCO) was a takeover dis - guised as an amalgamation to avoid compliance with the Take-Over Code. They also proposed that the amalgamation would lead to the delist - ing of Cable and Wireless from the exchange, which would eradicate the public market for their shares and result in an unfair squeeze out of the minority shareholders, thereby forcing the minor - ity shareholders to sell their shares. This sub - stantive matter is presently before the Supreme Court of Barbados. A shareholder in this matter sought an interim injunction to prevent the direc - tors from cancelling the shares held by them, and to prevent the directors from delisting the company from the BSE. The court ruled in favour of the directors. Although the court acknowledged that there was a serious issue to be tried on whether the amal- gamation was oppressive and acknowledged the claimants’ arguments that the amalgama - tion functioned like a takeover, they decided in the defendants’ favour as there was a significant delay in the filing of the claim for interim injunc - tive relief, and they disagreed with the claim - ants’ view that damages were not an appropriate remedy to fairly compensate the minority share - holders. Additionally, as the amalgamation was completed and over BBD61 million was paid to minority shareholders, the granting of an injunc - tion would cause further issues.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile tender offers have occurred in Barba - dos. Once the tender documents comply with the requirements of the legislative framework for
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