BOSNIA & HERZEGOVINA Law and Practice Contributed by: Bojana Bošnjak-London and Ezmana Turković, Marić & Co
5. Negotiation Phase 5.1 Requirement to Disclose a Deal The regulatory framework does not explicitly mandate the disclosure of a potential merger or acquisition at the initial approach or during pre - liminary negotiations. However, certain obliga - tions arise as the transaction progresses, such as merger notification, mandatory takeover bid notification, and regulatory procedures, among others. 5.2 Market Practice on Timing The rules and deadlines for disclosure are pre - scribed by the law and should be strictly adhered to. Fines may be applicable for non-compliance. 5.3 Scope of Due Diligence Due diligence in a negotiated business com - bination is typically comprehensive, covering financial, legal, operational, environmental, and human resources aspects. Financial due diligence involves a detailed review of audited financial statements, tax compliance, and asset verification to assess the target company’s financial health and potential liabilities. Legal due diligence focuses on corporate structure, key contracts, and regulatory compliance to ensure that the company operates within the legal framework and does not pose any legal risks. Operational due diligence examines man - agement capabilities, supply chain stability, and IT infrastructure to evaluate the company’s efficiency and growth potential. Environmental due diligence is conducted to verify compliance with environmental regulations and assess any potential risks related to company-owned prop - erties. Human resources due diligence includes a review of employment contracts, benefits, compensation structures, and labour relations to identify any existing or potential workforce- related risks.
5.4 Standstills or Exclusivity Neither standstills nor exclusivity clauses are legally regulated in Bosnia and Herzegovina and are not very often used in negotiated transac - tions. 5.5 Definitive Agreements The legal framework governing tender offers is primarily based on securities regulations and competition laws, both of which are highly reg - ulated and overseen by the regulators. Parties must exercise caution when agreeing to terms outside the standard regulatory process. 6. Structuring 6.1 Length of Process for Acquisition/ Sale The process for acquiring or selling a business in Bosnia and Herzegovina typically takes between three to twelve months, depending on the com - plexity of the transaction, regulatory require - ments, and due diligence procedures. For smaller transactions with minimal regulatory hurdles, the process can be completed within three to six months. This includes negotiations, due diligence, drafting agreements, and closing. However, for larger or more complex deals – especially those involving regulatory approvals, or competition authority clearance – the timeline can extend to nine to twelve months or more. Key factors influencing the timeline include due diligence scope, financing arrangements, shareholder approvals, and regulatory reviews. Transactions requiring merger control clearance or sector-specific approvals, such as in banking or telecommunications, may take longer due to additional regulatory scrutiny.
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