The Laws Of Mergers & Acquisitions In The Uae - Part 8

November 22, 2023 by
Ahmed Hatem

In part 7 of this series, we highlighted the conditions on how to submit an offer to acquire the target company. 

But how you can get SCA’s approval on this offer? The following lines will give you the answer. 

In the beginning, you need to know that Prior submitting the offer to SCA for approval, the acquirer should obtain the required approvals from any relevant concerned bodies, e.g., the central bank if the acquirer is a bank or financial institution, the insurance authority in case of if the acquirer is insurance company, generally speaking, the bodies which license the activities of a special nature, while abiding by any rules or instructions specified by such entities in this regard.

What is the time frame to submit the offer to SCA?

In the event the acquirer announces its intent to make the offer, he/she shall file an application for offer to SCA no later than (21) days from the date of delivering the intent of acquisition to the target company. If the acquirer fails to make the offer within this period or pronounces that it is backing down off the offer, the acquirer shall be prohibited from making any offer to the target company within the (6) months following such period. It shall also be prohibited during the said period from making any buying transactions which would apply the provisions of the mandatory offer. SCA may extend the period upon a reasoned request by the Acquirer. The acquirer shall apply to SCA for approval on the offer in accordance with the procedures and using the forms applicable in SCA.

How SCA dealing with the submitted offer?

SCA shall consider the offer application and may request any clarifications, guarantee, or additional information it sees necessary to consider the application. SCA shall issue its decision approving or rejecting the application within (7) days from the date of filing a complete application. SCA may link its approval with the conditions or restrictions it decides based on the requirements of the public interest. In the event SCA rejects the Offer application, the acquirer may appeal the decision no later than (14) days from the date of being notified of SCA’s decision.

As well as the acquirer shall notify the security market and the target company of the draft offer and draft offer document once SCA issues its approval. The target company shall, regardless of whether its board of directors endorses the offer or not, publish a press release in this regard unless the acquirer publishes such release.

Are the securities’ holders should be notified of the decision of acquisition?

The board of directors of the target company shall notify the securities’ holders with the following documents, using the form and technical requirements applicable in SCA, within a period of no more than (14) days from the date of receiving the offer approved by SCA:

  • The draft offer and draft offer document.
  • The target company’s board of directors’ recommendation concerning the offer, and the reasons of recommendation.
  • A written copy of the recommendation of the consultants involved in the acquisition

It worth to be mentioned that in the event the offer is extended, the second closing date shall be announced before the trading session on the next day after the first closing date.

In which cases the acquirer can’t submit a new offer?

The acquirer shall be prohibited from making a new offer to the target company for (6) months in any of the following cases:

  • Rejection of the application for acquisition by SCA.
  • Withdrawing of the offer by the acquirer.
  • Failure to meet the conditions for accepting the offer.

SCA may approve the submission of a new offer by the acquirer during the said ban period.

After clarifying the necessary steps to get SCA’s approval on the acquisition offer, some questions need to be answered, e.g., how the acquirer may withdraw or amend his offer? how securities’ holders may withdraw their acceptance of the offer and how? and finally how assets evaluation takes place?  stay tuned for the final part of this series to get the answers.

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