CROATIA Law and Practice Contributed by: Iva Basarić, Marija Gregorić and Matija Skender, Babic & Partners
9. Defensive Measures 9.1 Hostile Tender Offers
corporate laws expressly provide for such a pos - sibility). 8.3 Business Judgement Rule The Croatian equivalent of the business judge - ment rule is the obligation for the management of the company to act as prudent business people and to keep the business secrets of the company confidential. The management will not be in breach of this statutory duty if they reason - ably believe that they are acting for the benefit and in the interest of the company, on the basis of appropriate information. This rule applies to any and all activities of the company and is not related exclusively to takeover situations. 8.4 Independent Outside Advice In Croatian practice, in a business combination scenario, directors usually seek financial and legal advice on various directors’ duties as well as the obligations for the company and directors stemming from the particular business combina - tion. 8.5 Conflicts of Interest Court decisions on conflicts of interest of direc - tors and shareholders (as well as advisers) are rather scarce in Croatia and fail to provide clear guidance on the interpretation of laws in this respect. Croatian corporate laws do contain provisions on conflicts of interest, primarily with respect to the company’s management, where the law requires the directors/management to obtain prior approval from the supervisory board of the company (or from the shareholders if there is no supervisory board) for particular conflicting activities.
Hostile tender offers are generally permitted under the Croatian Takeover Act but are not common, seeing as takeovers are rather scarce in general. The majority of deals are private deals, where hostile tender offers are not pos - sible. 9.2 Directors’ Use of Defensive Measures In principle, directors are prohibited from using defensive measures under the Croatian Takeover Act. In this regard, unless they have the approv - al of the shareholders’ meeting, the directors of public target companies are not allowed to undertake the following activities in the period between the publishing of the notification that the obligation to undertake the takeover has arisen and the publishing of the takeover offer: • increase the share capital of the target com - pany; • conclude transactions outside of the target company’s regular scope of business; • act in a way that might significantly jeopard - ise the future business of the target company; • decide on the acquisition or disposal of treas - ury shares; or • act with the aim of obstructing or preventing the takeover offer. 9.3 Common Defensive Measures Considering the limitations listed in 9.2 Directors’ Use of Defensive Measures , the most common defensive measures would be limitations on the transfer of shares or limitations regarding vot - ing rights that may be included in the Articles of Association. This is especially relevant for pri - vate deals involving limited liability companies, where the transfer of shares is often made sub-
535 CHAMBERS.COM
Powered by FlippingBook