Corporate Finance/M&A updates

Austria

Contributed by Schoenherr
New FDI screening act
  • Austria
  • 30 September 2020

In July 2020 a new foreign direct investment (FDI) screening act, the Investment Control Act (ICA), entered into force. The ICA, which largely transposes the requirements of the EU Foreign Investment Screening Regula­tion, is in line with the general EU trend of tightening or enacting FDI screening instruments, which has been fuelled by concerns of buy-outs of critical European infrastructure by foreign investors due to the COVID-19 pandemic.

Transaction price mechanisms in times of COVID-19
  • Austria
  • 12 August 2020

In times like these, parties should consider the key parameters of a contemplated transaction even more carefully. In addition to factors such as pricing, process timelines and contractual undertakings, parties must properly consider the COVID-19 pandemic's potential economic effects on targets when structuring a deal. This article outlines the differences between the two main purchase price mechanisms that can help to alleviate such economic effects and the pros and cons of each.

Supreme Court facilitates financing companies with cross-border business
  • Austria
  • 15 May 2019

For the first time, the Supreme Court has upheld a security right granted under German law, even though the asset had been transferred to Austria. Previously, such rights were terminated once the asset was moved from Germany to Austria. The decision will substantially facilitate the financing of companies with cross-border business.

Constitutional Court rules on Squeeze-Out Act's compatibility with Constitution
  • Austria
  • 31 October 2018

The Constitutional Court recently ruled on whether the Squeeze-Out Act is compatible with the Constitution. The plaintiff argued that certain provisions of the Squeeze-Out Act violate the Constitution because they restrict shareholders' property rights and the principle of equality (rights enshrined in both the Constitution and the European Convention on Human Rights). However, the Constitutional Court held that this was not the case.

Privacy-related representations in M&A agreements
  • Austria
  • 09 May 2018

Companies regularly store information about their customers, clients, employees, investors, partners and vendors. Privacy and data security are therefore important aspects of most M&A transactions. Although the risk of non-compliance with privacy laws may result in severe negative consequences, many M&A agreements still lack adequate privacy-related representations and warranties.


Brazil

Contributed by Freitas Ferraz Advogados
Court ruling highlights importance of indemnity clauses in M&A transactions
  • Brazil
  • 10 March 2021

A commonly negotiated rule in M&A transactions is the clause that provides for the buyer's indemnity right. This clause aims to limit the liability of the parties involved in the transaction for losses relating to the company or the asset traded and can be structured in several ways. The Sao Paulo Court of Justice recently highlighted the importance of expressly regulating this type of clause in M&A contracts.

Hostile dispute between Stone and TOTVS over merger with Linx
  • Brazil
  • 25 November 2020

The recent dispute between StoneCo Ltd and TOTVS SA over the acquisition of Linx SA has brought to light many important matters, especially directors' responsibility for damages caused to a company or its shareholders. TOTVS presented a hostile takeover offer, something which the Brazilian market is not used to since most companies have a controller group which owns 50% or more of the voting shares.


Cayman Islands

Contributed by Ogier
Deadline extended for first filing of audited accounts and associated FAR form by private funds
  • Cayman Islands
  • 26 May 2021

The Cayman Islands Monetary Authority recently issued an industry notice regarding fund annual return (FAR) filings for private funds registered under the Private Funds Act (Revised) (private funds). The notice confirms that the deadline for the first filing of audited accounts and the associated FAR form by all private funds has been extended to 30 September 2021.

Short-form mergers: Changyou.com judgment confirms appraisal rights
  • Cayman Islands
  • 07 April 2021

The Grand Court has confirmed that shareholders of companies that effect a short-form merger pursuant to Section 233(7) of Part XVI of the Companies Act (2021 Revision) are entitled to be paid the fair value of their shares on dissenting from the merger under Section 238 of the act. The eagerly awaited judgment in Changyou.com clarifies an issue which was previously the subject of extensive debate and provides welcome certainty to minority shareholders of Cayman companies.

Snapshot: private fund registration – what have we learnt?
  • Cayman Islands
  • 13 January 2021

For the best part of 20 years, private equity sponsors and their global advisers have been attracted by the Cayman Islands' neutrality, efficiency, quality and flexibility – but also by its predictability. So, when the Cayman Islands announced in early 2020 that all Cayman-domiciled closed-ended funds (including private equity and real estate funds) would be required to register with the Cayman Islands Monetary Authority by August 2020, this seemed like a shake-up.

Court of Appeal re-examines master-feeder redemption procedures
  • Cayman Islands
  • 26 August 2020

The Court of Appeal recently reiterated the importance of following the natural and ordinary meaning of a fund's articles in order to ensure that redemptions are effective. This is particularly important in the context of a master-feeder fund structure. Although the decision is consistent with longstanding authority, it does highlight the importance of ensuring that the redemption procedures set out in a master fund's articles are strictly adhered to as a matter of practice.

Standard directions in Section 238 appraisal proceedings confirmed
  • Cayman Islands
  • 24 June 2020

In a decision that provides additional certainty to dissenting shareholders, the Grand Court has rejected a company's efforts to recast the procedural framework for appraisal proceedings brought under Section 238 of the Companies Law (as revised). This decision follows the significant 2019 ruling of Chief Justice Smellie in JA Solar, which has become the touchstone for directions orders in Section 238 proceedings.


Croatia

Has Croatia implemented FDI screening mechanism?
Schoenherr
  • Croatia
  • 04 November 2020

The Regulation on the Implementation of the EU Foreign Direct Investment (FDI) Screening Regulation (the Implementing Regulation) recently entered into force. The foreign investment clearance concept has not been regulated under Croatian law before and, even with the Implementation Regulation's entry into force, little has changed. This article examines FDI in Croatia.


European Union

M&A market trends in 2020
CMS Albiñana & Suárez de Lezo
  • European Union
  • 21 April 2021

This article – which is based on a recent study – provides insight into the legal provisions of M&A agreements across the European Union in 2020 and identifies key market trends. The study indicates a return to more 'buyer-friendly' positions on certain deal points, which may be a result of a more risk-averse environment prevailing due to the COVID-19 pandemic. For example, liability caps increased, limitation periods were longer and the application of de minimis and basket clauses flattened out.

The perfect time to be a buyer?
Schoenherr
  • European Union
  • 24 February 2021

During economic downturns, valuations drop and dealmakers rightly expect a shift from a sellers' to a buyers' market. It is uncertain whether this will prove to be true for the COVID-19 recession. This article highlights how in-house M&A strategists can navigate present acquisition challenges and looks ahead to what the European M&A market may look like in the years to come.