Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • CapitaLand Limited
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • Bank of America Merrill Lynch
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek Holdings
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • China Ocean Shipping Group Company (COSCO)
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • Royal Ahold (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • Nishimura & Asahi (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Mannheimer Swartling (Stockholm)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Rolf Watter
  • Bär & Karrer AG (Zürich)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

Europe

EUROPEAN UPDATE – Guide to Public Takeovers in Europe 2016-2017

Editors’ Note: This guide summarises the main characteristics of the French, Dutch, German, Italian, Spanish and UK laws and regulations applying to public takeover offers as they stood at June 2016.

Executive Summary: The guide has been updated to reflect legal and regulatory changes made to the national takeover regimes since it was last published in April 2013. The Takeover Directive has been implemented in all of the countries which are covered. Its aim is to provide equivalent protection throughout the EU for minority shareholders of companies listed on an EU regulated stock exchange in the event of a change of control, and to provide for minimum guidelines on the conduct of takeover bids.

However, the Takeover Directive makes some of its provisions – relating to defensive measures and voting rights/restrictions – optional, which means that, even after implementation, different regimes exist in different countries.

Against this background, the intention is that this guide will not only be of practical use for users, but also that an understanding of how particular jurisdictions have changed their legal/regulatory systems and practices will be of additional help to users of this guide in understanding the ongoing implications of the Takeover Directive.

Click here to read the full report.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

DUTCH UPDATE – AkzoNobel v. Elliott: landmark case on board conduct in takeover situations

Editors’ Note: Contributed by Geert Potjewijd, managing partner at De Brauw Blackstone Westbroek, and a member of XBMA’s Legal Roundtable, and Arne Grimme and Reinier Kleipool, partners at De Brauw Blackstone Westbroek. De Brauw Blackstone Westbroek is a leading Dutch law firm with broad expertise in M&A and governance matters.

The Enterprise Chamber has ruled that a company’s response to an unsolicited takeover proposal falls within the board’s authority to determine the company’s strategy. The board does not have to consult with shareholders first, but remains accountable to shareholders for the company’s actions. The ruling sets out important viewpoints for board conduct and other aspects of corporate governance in takeover situations.

Background

Akzo Nobel N.V. recently received three unsolicited takeover proposals from PPG Industries, Inc. The AkzoNobel management and supervisory boards have unanimously rejected these proposals, in each case after an extensive and careful decision-making process. On 1 June 2017 PPG announced the withdrawal of its takeover proposal for AkzoNobel.

In response to the proposals by PPG, activist hedge fund Elliott International, L.P. demanded from AkzoNobel that it enter into discussions with PPG. After AkzoNobel rejected PPG’s third proposal, Elliott filed a petition with the Enterprise Chamber in Amsterdam requesting a corporate inquiry into AkzoNobel’s conduct and policies, and certain interim measures, including an extraordinary general meeting to vote on the dismissal of the chairman of AkzoNobel’s supervisory board.

Corporate governance in takeover situations

In its judgment of 29 May 2017, the Enterprise Chamber denied the requests by Elliott and others to order interim measures, as it did not see sufficient reason to order any such measures. The Enterprise Chamber will rule on the request for a corporate inquiry at a later date.

The ruling by the Enterprise Chamber sets out important viewpoints for corporate governance in takeover situations.

Authority and accountability of the board

  • A company’s response to an unsolicited takeover proposal falls under the authority of the management board to determine the company’s strategy, under supervision of the supervisory board.
  • Shareholders do not have to be consulted prior to the company’s response to an unsolicited takeover proposal, but the management and supervisory boards remain accountable to shareholders for the company’s actions.
  • In assessing an unsolicited takeover proposal, the board must be guided by the interests of the company and its stakeholders with a view to long term value creation. As a logical consequence, an unsolicited proposal could be reasonably rejected even against the will of (a majority of) shareholders.
  • While the Enterprise Chamber does not test the validity of the grounds for rejecting an unsolicited takeover proposal, it is important that the company show it has seriously considered the proposal by following a careful decision-making process. Relevant factors are:
    • the intensity and frequency of management and supervisory board meetings;
    • the assistance from respected external financial and legal advisers;
    • the range of topics considered when rejecting the proposal (e.g. value, timing, certainty and stakeholder considerations).

Duty to negotiate

  • There is no general obligation for a target company to enter into substantive discussions or negotiations with a bidder that has made an unsolicited takeover proposal, not even in the case of a serious bidder making a serious bid.
  • The obligation of managing and supervising directors to properly perform their duties may lead to a requirement to enter into discussions or negotiations with a bidder. Whether substantive discussions or negotiations with a bidder are required depends on the actual circumstances, which may include:
    • whether the company has decided to abandon its standalone strategy;
    • the bidder’s strategic intentions;
    • to what extent the company can assess the proposal without substantive discussions;
    • other interactions between the company and the bidder, including whether the company has given the bidder sufficient insight into the reasons for its rejection as to enable the bidder to improve on its proposal;
    • whether the company can realistically withdraw from such discussions or negotiations, especially if there are reasons to anticipate a breach of confidentiality, which could impact the company’s share price and shareholder base.

Relationship with shareholders

  • Shareholders are entitled to adequate information about the considerations underpinning those policies, not only with a view to exercising their rights as a shareholder, but also to determine their own investment policies.
  • A continued lack of confidence of a substantial number of shareholders in the company’s strategy as determined by the management and supervisory boards is harmful to the company and its stakeholders. It is in principle up to the boards of the company to consider how the company can normalise its relationship with shareholders.

With this ruling, the Enterprise Chamber confirmed that it is the exclusive authority of the boards of a Dutch company to determine the response to an unsolicited takeover proposal. The boards do not have a duty to consult with shareholders prior to responding to an unsolicited takeover proposal. In such a situation, the boards need to carefully take into account the interests of all stakeholders of the company and they remain accountable to shareholders on the position taken in response to an unsolicited takeover proposal.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

The Dutch Corporate Governance Code and The New Paradigm

Editors’ Note: This article was co-authored by Martin Lipton, Steven A. Rosenblum, Karessa L. Cain, Sabastian V. Niles and Sara J. Lewis of Wachtell, Lipton, Rosen & Katz.

Executive Summary/Highlights:

The new Dutch Corporate Governance Code, issued December 8, 2016, provides an interesting analog to The New Paradigm, A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth, issued September 2, 2016, by the International Business Council of the World Economic Forum. The new Dutch Code is applicable to the typical two-tier Dutch company with a management board and a supervisory board. The similarities between the Dutch Code and the New Paradigm demonstrate that the principles of The New Paradigm, which are to a large extent based on the U.S. and U.K. corporate governance structure with single-tier boards, are relevant and readily adaptable to the European two-tier board structure.

Both the New Paradigm and the Dutch Code fundamentally envision a company as a long-term alliance between its shareholders and other stakeholders. They are both based on the notions that a company should and will be effectively managed for long-term growth and increased value, pursue thoughtful ESG and CSR policies, be transparent, be appropriately responsive to shareholder interests and engage with shareholders and other stakeholders.

Like The New Paradigm, the Dutch Code is fundamentally designed to promote long-term growth and value creation. The management board is tasked with achieving this goal and the supervisory board is tasked with monitoring the management board’s efforts to achieve it.

Click here to read the full article.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

EU UPDATE – Jumping the Gun: Marine Harvest Fined and Electrabel Appeal Rejected

Editors’ Note: Contributed by Nigel Boardman, a partner at Slaughter and May and a founding director of XBMA. Mr. Boardman is one of the leading M&A lawyers in the UK with broad experience in a wide range of cross-border transactions. Authored by Ingrid Lauwers and Nele Dhondt of Slaughter and May.

Executive Summary:   The European Commission has fined Marine Harvest, a Norwegian seafood company and salmon processor, €20 million for acquiring Morpol without prior clearance and not long before, the Court of Justice rejected an appeal against a General Court judgment which upheld a fine imposed, also €20 million, on Electrabel for its acquisition of Compagnie Nationale du Rhône. The recent fines indicate that the Commission takes the notification obligation and the ‘stand-still’ obligation very seriously and will penalise parties who fail to comply, even if failure to do so is due to negligence.

Main Article:

INTRODUCTION

The European Commission has fined Marine Harvest, a Norwegian seafood company and salmon processor, €20 million for acquiring Morpol without prior clearance.[1] The decision comes in the wake of the Court of Justice (“ECJ”) rejecting an appeal against a General Court judgment which upheld a fine imposed on Electrabel for its acquisition of Compagnie Nationale du Rhône (“CNR”).[2] The Electrabel fine also amounted to €20 million.

THE LAW

Under Article 4(1) EUMR, a concentration which falls within the scope of the EUMR must be notified to the Commission before completion.[3] This requirement is reinforced and completed by Article 7(1) which prohibits a concentration from being implemented until it has been declared compatible with the internal market. Implementing a merger before obtaining clearance is known as ‘gun-jumping’, and the prohibition on completion before clearance is often referred to as the ‘suspensory’ or ‘stand-still’ obligation.

The Commission can impose fines of up to 10% of the concerned undertakings’ aggregated turnover if these requirements are breached intentionally or negligently.[4] In setting the level of the fine, the Commission takes into account the nature, the gravity and the duration of the infringement.

On 18 December 2012, Marine Harvest acquired a 48.5% stake in Morpol, one of the largest salmon processors in the EEA. Marine Harvest only notified the acquisition to the Commission on 9 August 2013. On 30 September 2013, the Commission gave clearance on condition that Marine Harvest divest a number of Morpol’s assets, including salmon farming operations in Scotland.[5] The acquisition was therefore implemented eight months before the Commission was notified and nine months before clearance had been given.

Fining decision

On 23 July 2014, the Commission imposed a fine of €20 million on Marine Harvest for breach of the ‘stand-still’ obligation, which constitutes a serious infringement of the merger control rules. By acquiring a 48.5% stake in Morpol, it found that Marine Harvest had acquired de facto sole control. The Commission concluded that Marine Harvest had a stable majority at shareholders’ meetings due to the wide dispersion of the remaining shares and previous attendance rates. As Marine Harvest had completed the acquisition before notifying the Commission (and before the Commission gave clearance) it was found to have breached both Article 4(1) and Article 7(1) EUMR.

The Commission stated that, as a large company, Marine Harvest should have been aware of its notification obligations, and so it had been negligent by not seeking prior clearance. Further, Marine Harvest’s breach was deemed serious as the acquisition raised such concerns as to require significant divestment conditions. As such, completion of the acquisition before its conditional clearance could have given rise to competition problems.

The Commission also considered mitigating circumstances, which included the fact that Marine Harvest had not exercised voting rights in Morpol after acquiring control. In addition, the Commission recognised that Marine Harvest had informed it through pre-notification contacts shortly after completion of the acquisition.

The Commission clarified that its conditional clearance decision was not impacted as the breach related only to the ‘stand-still’ obligation and did not alter the Commission’s market analysis.

ELECTRABEL Facts

On 23 December 2003, Electrabel, a producer of electricity, natural gas and other energy services, acquired approximately 50% of CNR, another electricity producer. The acquisition gave Electrabel around 48% of the voting rights in CNR. Electrabel notified the Commission of the acquisition on 26 March 2008, some four years after completion had occurred.[6]

On 10 June 2009, the Commission decided that a serious breach of the ‘stand-still’ obligation had been committed and fined Electrabel €20 million.[7] The Commission found that Electrabel had become CNR’s main shareholder on 23 December 2003 and so had acquired de facto sole control which required prior clearance.

Electrabel appealed the Commission’s decision to the General Court. The appeal was dismissed on 12 December 2012,[8] and was made on grounds that the Commission had incorrectly characterised the acquisition as a concentration. Electrabel also alleged that the Commission had made a number of errors in its finding of sole control, and that the proposed penalty was time-barred.

In dismissing the appeal, the General Court held that breach of the ‘stand-still’ obligation was not merely procedural, and that, although the acquisition raised no competition concerns, this was not relevant to determining the gravity of the breach. Although the breach occurred through negligence, this did not reduce the penalty.

On 21 February 2013, Electrabel appealed to the ECJ.[9]

Judgment

On 3 July 2014, the ECJ also rejected Electrabel’s appeal, stating that Electrabel had submitted new arguments which the ECJ did not have jurisdiction to consider.

Electrabel’s further appeal had several grounds which included the allegation that the duration of its breach should not have been relevant to the General Court’s or Commission’s assessment. Further, Electrabel alleged that the General Court and Commission had applied the law retroactively in that it had erroneously applied the provisions of the EUMR, Regulation 139/2004, before it had come into force. Electrabel submitted that the EUMR’s predecessor, Regulation 4064/89, should have been applied instead.

Dismissing the appeal, the ECJ affirmed settled case law which establishes that it is not permitted to introduce new arguments in an appeal since this would inappropriately seize the appeal court of a wider ambit than had existed in lower tribunals.

CONCLUSION

The recent €20 million fines indicate that the Commission takes the notification obligation and the ‘stand-still’ obligation very seriously and will penalise parties who fail to comply, even if failure to do so is due to negligence. The Commission expects commercial entities to be aware of the notification obligations and will further expect the diligent performance of them.


[1]     Case M.7184, 23.07.2014.

[2]     Case C-84/13 P, judgment of 03.07.2014.

[3]     Concentrations will fall within the EUMR if they have an EU dimension, i.e. if they meet certain turnover thresholds (per EUMR, Article 1(2)).

[4]     EUMR, Article 14(2).

[5]     Case M.6850, 09.08.2013.

[6]     Case M.4994, 26.03.2014.

[7]     Ibid.

[8]     Case T-332/09, 12.12.2012

[9]     Case C-84/13 P, above.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

POLISH UPDATE – M&A in Poland: Eastern Gateway to the European Union

Editor’s Note: This update comes from Tomasz Wardyński, founding partner of Wardyński & Partners and a member of XBMA’s Legal Roundtable.  The author of this article is Weronika Pelc, partner, member of Wardyński & Partners Mergers & Acquisitions Practice and head of Energy Law Practice.

Executive Summary: Poland’s developing economy and entrepreneurial society with investor-friendly government policies create many interesting M&A opportunities.  There is a wide variety of companies which are directly or indirectly controlled by the state, or part of global corporations as well as small and medium firms owned by local or European entrepreneurs.  Except for privatisations, which are regulated separately and entail such requirements as concluding agreements guaranteeing employment to workers, M&A transactions generally follow accepted world standards.  Due diligences carried out on companies that have been in existence in Poland for more than 25 years, or have operated before the fall of the Iron Curtain, require an assessment of the risks associated with the change of the system.  The article below is a brief description of specific legal requirements and the typical procedure in a Polish M&A transaction.

Main Article:

M&A in Poland: Eastern Gateway to the European Union

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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