BERMUDA Law and Practice Contributed by: Natalie Neto, Rachel Nightingale and Marah Smith, Walkers
11. Activism 11.1 Shareholder Activism
There is generally no objection to a target com - pany’s board seeking an alternative offer for the target company from a third-party “white knight” . 9.4 Directors’ Duties See 8.1 Principal Directors’ Duties . 9.5 Directors’ Ability to “Just Say No” If the target has not adopted defence mecha - nisms already, then it will be difficult for the board of directors to “just say no” in the face of a determined bidder. Directors will be required to discharge their fiduciary duties by acting honest - ly and in good faith, with the best interests of the company in mind. This does not prevent direc - tors from sharing their views with shareholders; however, the advice must be based on full infor - mation, fairly presented and not influenced by personal interests. The Bermuda courts will not interfere with the judgement of the directors of a company unless it is proven that the directors have breached their fiduciary duty. Litigation in Bermuda with respect to M&A trans - actions tends to be rare and would be most likely to involve derivative claims from shareholders. See 3.1 Significant Court Decisions or Legal Developments for the most recent legal devel - opments regarding M&A deals in Bermuda. 10.2 Stage of Deal Litigation for breach of fiduciary duties under common law or statutory duties under Section 97 of the Companies Act may be brought at any stage of the transaction. 10. Litigation 10.1 Frequency of Litigation
When shareholders disapprove of the actions of directors, they may seek to change the com - position of the board. Shareholder activism has become more frequent, especially with listed companies. Under Section 74 of the Companies Act, shareholders who hold not less than one- tenth of the paid-up share capital of a company carrying the right to vote at a general meeting can requisition a special general meeting to pass resolutions, which may include a resolution to remove a director or directors from the board. This is a powerful tool that may be used by activ - ists. 11.2 Aims of Activists Generally speaking, shareholder activists can work to effect social, governance and environ - mental change in the management of a company. A change in leadership can result in increased shareholder returns and an improvement in the overall performance of the company. 11.3 Interference With Completion An example of interference with completion would be in the context of the acquisition by EXOR S.p.A. of PartnerRe Ltd., a Bermuda insurance company. PartnerRe had previously announced its intention to amalgamate in a stock-for-stock merger transaction with AXIS Capital Holdings Ltd. However, EXOR, which acquired a 9.9% stake in PartnerRe, announced an unsolicited offer for PartnerRe in April 2015, which culminated in a contested proxy solici - tation; following the recommendations of two major proxy solicitation firms against the AXIS transaction, EXOR eventually succeeded in negotiating terms with a previously hostile board and closed the transaction in 2016.
10.3 “Broken-Deal” Disputes This is not relevant to Bermuda.
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