CROATIA Law and Practice Contributed by: Iva Basarić, Marija Gregorić and Matija Skender, Babic & Partners
6.4 Common Conditions for a Takeover Offer In principle, mandatory takeover bids are not allowed to be made subject to the fulfilment of particular conditions (other than those mandated under the law, such as merger clearance). By way of exception, the acquirer is allowed to pro - vide in the takeover offer that any encumbered shares would not be subject to the takeover bid. 6.5 Minimum Acceptance Conditions The voluntary takeover bid may be subject to the minimum acceptance threshold, which cannot be lower than the controlling threshold. Where the Croatian Takeover Act is not appli - cable (ie, in private M&A deals), no minimum acceptance conditions are prescribed under the law, but the acquirers are typically interested in acquiring either the entire shareholding or either 95%, 90%, 75% or above 50% shareholding. This is because the default rule is that the share - holders’ meeting shall adopt decisions by simple majority (above 50%) of the votes cast, where the law or the Articles of Association do not provide for a higher majority. A vast number of shareholders’ meeting decisions require a sim - ple majority, including most notably the adoption of annual financial statements, the distribution of profits, and the appointment and revocation of management board members. Decisions requiring a 75% majority of either the votes cast or capital represented at the share - holders’ meeting include a number of decisions that might be classified as material in running the company’s operations, and most notably includ - ing decisions on each of the following: • amendments to the Articles of Association;
• dissolution/liquidation of the company; • merger; and • transformation of corporate form. Finally, only a handful of decisions require a majority above 75% – usually 90%, 95% or 100% under law – notably including decisions related to: • imposing additional obligations on the shareholder(s); • the company’s waiver of damage claims against its founders; and • the company’s waiver of damage claims against management board members. 6.6 Requirement to Obtain Financing Private M&A deals are somewhat frequently financed by way of debt financing, and there is nothing preventing the transaction being con - ditional on the acquirer obtaining financing, but in practice it is generally expected that such financing will be obtained (or that the acquirer already has the necessary funds and as a conse - quence the deals rarely include an exit possibility where financing would not be obtained). Takeover offers subject to the Croatian Takeover Act cannot be conditional on obtaining financing since the acquirer is mandated under the law to deposit the required cash or alternatively provide a first call bank guarantee, in the amount equal to the amount required for payment for all the shares subject to the takeover offer. 6.7 Types of Deal Security Measures In principle, there are no restrictions on deal security measures in private M&A deals, pro - vided that the parties agree on such mecha - nisms. In practice, the parties most commonly agree on contractual penalties for the party that fails to close the deal for a reason not specifi -
• share capital increase; • share capital reduction;
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