Very important that that the resulting company should

This preview shows page 2 - 4 out of 8 pages.

Very important that that the resulting company should satisfy the Act’s solvency and liquidity requirements - View table 4.1 on page 91 of textbook to see requirements Elements of a business combination - 3 stages that should be followed when combining businesses: 1.) Parties should enter into a merger agreement 2.) Shareholders of the participating companies should vote on the approval of the transaction 3.) Parties should implement the transaction Stage 1: Entering into a merger agreement Provides shareholders of prospective companies with most important info for proposed transaction Written agreement should included information about: o the proposed structure of the combined entity (A+B=C, A+B=A , A+B=B) o the way in which the shares in the combine entity will be distributed or exchanged o the manner in which the deal will be financed (more detail in chapter 6) o the way in which the participating companies’ assets and liabilities will be distributed o the strategy that will be followed to ensure that the combined entity will be managed successfully if the participating companies agree that the amalgamated company will meet the solvency and liquidity requirements they can submit the agreement to be discussed at the shareholders meeting each shareholder should receive a copy of the merger agreement the shareholders should receive independent advice and have all the info to make a good decision Stage 2: Shareholders of the participating companies should vote on the approval of the transaction the shareholders must vote on the approval of the transaction a special resolution should be passed: o there should be a quorum of at least 25% of ordinary shareholders at the meeting (Preference shares don’t have a vote) o of these votes, approval by 75% of the participating vote is required o if the acquirer is also a subsidiary – the parent must also approve the transaction If shareholders who own 15% or more in any of the participating companies vote against the proposal, any opposing shareholder could require the company first obtain court approval before the deal can go through. The board of directors of the relevant party then decide what to do (usually agree with court) If 90% or more of the shareholders are in favour then the minorities can be “ squeezed out” – this is where they are forced to accept the deal The minority will receive the same offer and terms as the other 90% 2 | P a g e
Image of page 2

Subscribe to view the full document.

M&A Minority Protection The Companies Act also introduced a range of measures to protect the minority shareholders in three fundamental transactions: The disposal of all or the greater part of the assets or the undertaking of a company (typically the sale of the company’s business or the majority of its assets ) The conclusion by a company of a transaction of amalgamation or merger ; being a statutory form of the transfer of assets and liabilities of the company introduced into the Act and which, in itself, constitutes a new innovation as to the manner in which merger & acquisition transactions may enter into A scheme of arrangement
Image of page 3
Image of page 4
  • Fall '19
  • Competition Commission

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes