The Delaware Court of Chancery recently held that the best evidence of a company's fair value was its 30-day average unaffected (pre-announcement) market price. The case potentially represents a significant shift in how appraisal cases are decided. It may also be useful in understanding how the Delaware courts will apply two recent Supreme Court judgments which gave significant weight to the deal price as the best measure of fair value where it results from a third-party, arm's-length transaction.
The Court of Appeal recently confirmed that a company was entitled to use and benefit from the EU cross-border merger regime for its corporate reorganisation, even though the only cross-border element was the inclusion of a single, dormant foreign entity solely to allow the otherwise domestic reorganisation to benefit from the cross-border rules. The court's purposive approach to the interpretation of the rules may be relevant in a broader context when determining the effectiveness of corporate actions.
Ordinance 2017-1674 of December 8 2017 introduced into French law the legal framework for the use of a blockchain in order to record the ownership and transfer of unlisted securities. This groundbreaking reform is an essential step towards the modernisation of the existing rules governing the transfer of unlisted securities. Blockchain technology will considerably facilitate and secure the transfer of securities and will undoubtedly have an impact on private M&A deals.
The existing framework for the regulation of statements governing a bidder's intentions for a target and its business was introduced to the City Code on Takeovers and Mergers in January 2015. The panel recently published Response Statement 2017/2 to its September 2017 consultation on statements of intention and post-offer undertakings. The resulting amendments to the code set out in this response statement took effect on January 8 2018.
The Takeover Panel recently published Response Statement 2017/1 to its July 2017 consultation on the sale of a target's assets in competition with a takeover offer and related matters. The amendments to the Takeover Code set out in the response statement took effect on January 8 2018 and include measures to prevent a bidder from circumventing the application of the Takeover Code by purchasing a target's significant assets and a target's board from taking any action which may result in an offer being frustrated.
The Indonesian Investment Coordinating Board (BKPM) recently issued the Regulation concerning Guidelines and Procedures for Investment Licensing and Facilities. The regulation enables companies investing in a specific business field to apply for a business licence directly without obtaining an investment registration in certain circumstances. Further, it is relatively more lenient than the previous regulation with regard to the divestment obligation imposed on foreign companies.
The Delaware Supreme Court recently reversed and remanded the Court of Chancery's valuation of Dell in an appraisal case arising from the 2013 management buyout of Dell by Michael Dell and Silver Lake Partners. The Delaware Supreme Court unanimously held that the Court of Chancery had abused its discretion by failing to give weight to market-based measures of Dell's fair value, including the company's stock price and the deal price.
Switzerland recently decided to facilitate the financing activities of groups operating in or out of Switzerland by easing some restrictions under the Withholding Tax Ordinance. The amendment of the ordinance is meant to strengthen the establishment of headquarter activities with further central corporate functions, as well as treasury activities, particularly those performed outside Switzerland.
Following the introduction of Ordinance 2016-1635 and Decree 2017-1094, non-listed companies which previously were not required to disclose the identity of their shareholders and maintained confidentiality through shareholders' agreements must now disclose their beneficial owners not only when a company is set up, but also on a continuous basis. However, the definition of a 'beneficial owner' remains unclear.
Regulatory approval plays an important role in the transfer of assets or lines of business. In general, where permits are issued in consideration of assets being sold, the transfer will entail a new authorisation procedure to be undertaken by investors. This is also the case for environmental authorisation; however, as local authorities do not consistently deal with the applicability of the various regulations in this regard, mitigating potential hurdles will generally require coordination with the respective authorities involved.
The Department for Business, Energy and Industrial Strategy recently published a green paper setting out the government's proposals to reform and strengthen its powers to scrutinise investments in critical businesses and infrastructure which could provide opportunities for foreign investors to "undertake espionage, sabotage or exert inappropriate leverage". The proposals aim to ensure that any national security issues can be considered in a clear, consistent and proportionate way.
The European Union has proposed a new EU framework for screening foreign investment that raises security and public order concerns for the European Union and its member states. The commission intends to launch, and possibly complete, the proposed framework by the end of 2018. Opposition by several member states means that it is unclear whether the proposal will be approved by the Council of the European Union.
Following the economic crisis, Cyprus witnessed the merging of several cooperative societies, mainly cooperative credit institutions. These mergers reduced the number of cooperative credit institutions from over 300 to just 18. However, in July 2017 a second merger took place which saw the 18 institutions merged into a single entity. Although cooperative societies are limited liability companies, the procedure that must be followed for merging such companies varies significantly.
Shareholder activism has grown in popularity in recent decades due to leading law firms specialising in the implementation of available shareholder activism strategies, and the role of hedge funds and related services constitutes a significant niche in the legal services market. Under Polish legislation, various forms of shareholder activism can be applied.
The foreign investment rules provided under the Monetary and Financial Code were recently amended. M&A practitioners have welcomed the reform of the foreign investment rules, as it reduces the paperwork for foreign investments not falling within the scope of the prior authorisation regime. In addition, this reform has removed a cumbersome administrative procedure considered redundant.
As a result of the economy experiencing an upswing over the past year, there was an increase in transactions and deal values in the first half of 2017. Further, because the United Arab Emirates put its plans to diversify its economy away from a dependency on oil into action, M&A activity outside the oil sector has been bolstered. In particular, there has been growth in the healthcare, education and retail sectors.
By assumption, the process of merging capital companies is advantageous from the point of view of the merging companies and their shareholders. However, sometimes a shareholder may receive fewer shares in the acquiring company than he or she should have. In such a context, the question that arises is whether the protection of shareholders' interests against an unfavourable share exchange rate is possible under Polish law and, if so, how it can be accomplished.
UK groups with members in at least two member states of the European Economic Area can use Societas Europaea or cross-border mergers to redomicile to another European jurisdiction. Both regimes may be helpful to a group looking to redomicile entities to other parts of Europe in the context of Brexit, although both have been the subject of recent judicial decisions regarding the form of transactions which are considered permissible.
In order to revolutionise its economy, Nigeria must formulate policies dedicated to industrial growth, as such growth can attract foreign investment. It is hoped that the existing wave of industrialisation in Nigeria will be accompanied by a political will to implement clearly defined policies to industrialise the country and increase the number of M&A transactions.
The EU Directive on Cross-Border Mergers of Limited Liability Companies, implemented by the Companies (Cross-Border Mergers) Regulations 2007 (as amended), has proven to be a popular means of reorganising European group structures and has been occasionally used in arm's-length cross-border transactions. However, recent transactions have tested the boundaries of the sorts of structure that may be permitted under the regulations, which could reduce the popularity of the procedure.