Cyprus Squeeze-out Guide IBA Corporate and M&A Law Committee 2010

Transcription

1 Cyprus Squeeze-ut Guide IBA Crprate and M&A Law Cmmittee 2010 Cntact Spyrs Evangelu S.A. Evangelu LLC Landwell

2 Cntents Page INTRODUCTION 2 MARKET SQUEEZE-OUT 2 OFF-MARKET SQUEEZE-OUT 3 MARKET SQUEEZE-OUT vs. OFF-MARKET SQUEEZE-OUT 4 THE LIFECYCLE OF THE RIGHT OF SQUEEZE-OUT 4 Page 1

3 INTRODUCTION This guide sets ut an verview f the legislatin dealing with the cncept f squeeze-ut in Cyprus, fllwing the implementatin f Directive 2004/25/EC f the Eurpean Parliament and f the Cuncil f 21 April 2004, transpsed in Cyprus under the Takever Bids Law f 2007 as subsequently amended (hereinafter, the Law ). The Law intrduces, fr the first time in Cyprus, a right f squeeze-ut fr Cyprus cmpanies. This right applies when: (a) the fferee (target) cmpany is registered in the Republic f Cyprus and the ttal r part f its securities are admitted t trading n a regulated market in the Republic f Cyprus nly; r (b) the fferee cmpany is nt registered in the Republic f Cyprus but: (i) (ii) (iii) its securities are admitted t trading n a regulated market nly in the Republic f Cyprus; r its securities have been admitted t trading first in a regulated market in the Republic f Cyprus and subsequently n a regulated market f anther member state f the EU, ther than the ne where the fferee cmpany has its registered ffice; r its securities have been simultaneusly admitted t trading n a regulated market in the Republic f Cyprus and n a regulated market in anther member state f the EU, ther than the ne where the fferee cmpany has its registered ffice, and the latter has determined the Cyprus Securities and Exchange Cmmissin ( CYSEC ) as the cmpetent authrity fr the supervisin f the takever bid, has ntified the Cyprus Securities and Exchange Cmmissin n the first day f trading and has published the fact immediately. MARKET SQUEEZE-OUT In accrdance with sectin 36(1) f the Law, in case an fferr makes a bid t all the hlders f securities f the fferee cmpany fr the ttal f their hlding, he is able t require all the hlders f the remaining securities t sell t the fferr thse securities, fr a cnsideratin which is at least equal t the ne ffered in the bid in the fllwing situatins: Right f squeeze-ut - Under what circumstances can it be exercised? (a) when the fferr hlds securities in the fferee cmpany representing nt less than 90% f the capital carrying vting rights and nt less than 90% f the vting rights in the fferee cmpany; r (b) when the fferr has acquired r has irrevcably agreed t acquire, fllwing the acceptance f a takever bid, securities in the fferee cmpany representing nt less than 90% f the capital carrying vting rights and nt less than 90% f the vting rights included in the takever bid. Prcedure fr the exercise f the squeeze-ut right Steps & Perids: The squeeze-ut right can be exercised at any time during the three mnths that fllw the date f the deadline set fr acceptance f the initial takever bid. The fferr must submit an applicatin t CYSEC, cntaining the amunt and the frm f the cnsideratin ffered, and must cmmunicate this als t the fferee cmpany. Page 2

4 Tgether with the applicatin, the fferr submits a cnfirmatin by ne r mre credit institutins r ther rganizatins (having the necessary slvency), which will state that the cash the fferr will be called t pay t the hlders f securities f the fferee cmpany is available and will remain available with the credit institutin r t the rganizatin until cmpletin f the prcedure. The business day that fllws submissin f the said applicatin, the fferr must make a relevant annuncement (as prescribed by the Law). When CYSEC ascertains that the fferr actually hlds securities representing nt less than 90% f the fferee cmpany s share capital carrying vting rights and has presented the abvementined credit cnfirmatin, it will issue a decisin creating an bligatin upn the fferr: t ntify in writing the hlders f securities f the fferee cmpany which will be affected; t pay the said hlders the ttal amunt f the cnsideratin ffered; and t take all necessary actins t transfer the securities in its name. Payment f cnsideratin and transfer f securities must be annunced (as prescribed by the Law) by the fferr wh must als ntify the fferee cmpany. The hlders f securities f the fferee cmpany which are the subject f exercise f the squeeze-ut right, may initiate legal prceedings against the fferr within six mnths frm the date f the abve annuncement t dispute the amunt f the cnsideratin ffered. It shuld be nted hwever that such legal prceedings will nt prevent cmpletin f the transfer f shares. Expenses The fferr will bear all expenses resulting frm the transfer f securities. Cnsequences f the exercise f a right f squeeze-ut Implementatin f the squeeze-ut right will eventually result in the delisting f the relevant securities. OFF - MARKET SQUEEZE-OUT Under Cyprus law, the right f squeeze-ut in nn-listed cmpanies is nt cntemplated by any specific legislatin. Withut prejudice t the abve, it is pssible t prvide fr a squeeze-ut mechanism in a cmpany s Articles f Assciatin r sharehlders agreement. Hwever this will have the frm f a cntractual right and nt a statutry right. Finally, the Cyprus Cmpanies Law Cap 113, as subsequently amended, prvides that a minrity sharehlder wh cmplains that the cmpany s affairs are cnducted in an ppressive manner, may apply t Curt, and under certain circumstances the Curt may rder the majrity sharehlder t buy ut the shares f the minrity sharehlder at a fair price. Page 3

5 MARKET SQUEEZE-OUT vs. OFF - MARKET SQUEEZE-OUT The enactment f the Law has made market squeeze-ut pssible under certain circumstances. Befre the enactment f the Law, rights f squeeze-ut were nt cntemplated under Cyprus law, either fr public r private cmpanies. In any case, under Cyprus law squeeze-ut remains a pssibility nly fr listed cmpanies and under prescribed circumstances nly. THE LIFECYCLE OF THE RIGHT OF SQUEEZE-OUT The maximum perid fr the fferr t exercise a right f squeeze-ut and t apply t CYSEC fr the exercise f such right is 3 mnths after the deadline fr acceptance f the bid. The business day that fllws submissin f the said applicatin, the fferr is bliged t make a relevant annuncement f its intentin. As sn as CYSEC issues its decisin, the fferr must prceed t pay the cnsideratin t the hlders f securities and arranges fr the transfer f the securities t its name. Page 4