Mergers and Acquisitions
The primary source of legislation relating to public M&A transactions in the Republic of Cyprus is the Law to Make Provision for Public Takeover Bids for the Acquisition of Securities of Companies and Related Matters, Law 41(I)/2009 (“Takeover Law”).
The competent authority responsible for the supervision and application of the provisions of the Takeover Law is the Cyprus Securities and Exchange Commission (CySEC).
CySEC also retains the authority to issue directives for supplementing and/or clarifying any provisions of the Takeover Law. To the present date, CySEC has issued four directives, which complement the provisions of the Takeover Law.
In addition to the Takeover Law and the directives, the array of the legislative arsenal in relation to M&A transactions comprises of the following legislative instruments:
- Companies Laws of Cyprus, Cap. 113 as amended (“Companies Law”).
- Cyprus Securities and Stock Exchange Law, Law 14(I) of 1993 as amended.
- Market Abuse Law, Law 102(I)2016.
- Transparency Requirements in relation to information about issuers whose securities are admitted to trading on a regulated market Law, Law 190(I) of 2007 as amended. M&A transactions are clearly on the rise in the Republic of Cyprus the last few years. This increased activity is clearly reflective of the vast changes that the international landscape is experiencing in relatively short time intervals both from a business as well as from a legal/regulatory perspective. As stated in the introduction of this analysis, the regulatory body responsible for the implementation of the Takeover Law is CySEC. Accordingly, CySEC is empowered and entrusted with the authority of supervising the implementation of any takeover bid whereby, the company’s registered office is in the Republic of Cyprus and its securities are admitted to trading on a regulated market in the Republic of Cyprus.
- For companies registered outside the Republic of Cyprus, CySEC retains the authority to oversee a takeover bid if any of the following requirements apply:
- Does the Takeover Law apply in my respective case scenario?
- the securities of the target company are admitted to trading on a regulated market only in the Republic of Cyprus; or
- the securities of the target company have been admitted to trading first in a regulated market in the Republic of Cyprus and subsequently on a regulated market of another member state, other than where the target company has its registered office; or
- the securities of the target company have been simultaneously admitted to trading on a regulated market in the Republic of Cyprus and on a regulated market in another member state, other than the one where the target company has its registered office, and the target company has determined that it will be under the supervision of CySEC for the bid and has notified CySEC on the first day of trading and has published that fact immediately.
In case where CySEC retains authority then, all matters concerning the consideration price of the bid as well as all matters concerning the procedure of making the bid, the notification procedure and the content of the offer document, are regulated in accordance with the Takeover Law.
Furthermore, matters such as the notification of the target’s company personnel, general matters of corporate law as well as general corporate governance matters fall under the law and authority of the member state which the target company has its registered office.
A potential bidder must, prior to taking any action in an M&A transaction, seek and obtain legal guidance to the question posed above as it will determine the manner that the transaction will unfold. As the present analysis will try to highlight, M&A transactions are widely considered as transactions involving great risks and dangers both for the target company as well as for the bidder. A prudent bidder must always make sure that he has collected as much as intelligence possible in order to demystify all shadowy aspects of a prospective transaction and take an informed decision. The aphorism “knowledge is power” applies to the fullest extent possible in this type of transactions and as the reader appreciates, it is the gathering of all relevant information that will most certainly place the bidder in a better and more advantageous position in an M&A transaction rather than any other “tool” of such transaction.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.