In the case of real property owned by an Austrian target the change of ownership may trigger real estate transfer tax. The same applies in case at least 95% of the share capital of a real estate owning entity are transferred. Depending on the deal structure and the location of the real property, the acquisition can also be subject to notification/approval requirements.
As regards certain industries (eg banking sector) the applicable regulations may provide for additional notification obligations.
Finally, Austrian investment control regulations provide for certain notification and approval requirements applicable to foreign direct investments (FDI) into Austria by an acquirer from a third country (non-EU or -EEA country other than CH), when the FDI likely affects national security or public order (eg FDI regarding critical infrastructure, critical technologies and dual use items, supply of critical inputs, access to sensitive information and the freedom and pluralism of the media). The general approval requirement applies where the FDI results (directly or indirectly) in:
- a controlling influence over an Austrian company
- the acquisition of essential assets of an Austrian company
- voting rights in an Austrian company that reach certain thresholds (in general 25% or 50%, unless the FDI relates to a particular sensitive sector).
The Ministry of Digital and Economic Affairs will be responsible for the FDI screening and approval procedure.
M&A agreements in Brazil are similar to the ones used in most countries.
Regulated Sectors: (i) Financial / Banking; (ii) Energy; (iii) Telecommunication; (iv) Health; (v) Oil & Gas; (vi) Media / Broadcasting; (vii) Advertising; (viii) Agribusiness
Access to the Chinese market still remains highly regulated. Investment access restrictions (eg applicable negative lists), regulatory consents or registrations, and license requirements need to be carefully evaluated upfront and may affect the acquisition structure. Language and bureaucratic requirements can increase the deal complexity and may prolong the timeline up to closing.
Cultural differences also need to be carefully managed to avoid surprises.
There are special regulatory requirements in fields such as energy, health care, insurance, banking, etc. where it is necessary to notify and/or to obtain a prior approval from the respective authorities. Therefore, we would generally advise to consult such matters with a local lawyer in advance.
In case of asset deals public licenses do not transfer to a new legal entity; they have to be requested in advance for the new entity to be operational.
England & Wales
English law is often used for cross-border deals and English style M&A documentation will be quite similar to that used in some other jurisdictions, such as the US.
If defined benefit pension plans are involved, substantial due diligence may be required as liabilities can be significant.
The UK's new National Security and Investment Act came into force on 4 January 2022 and is separate to the competition law regime. The Act has significantly broadened the UK Government's powers to review a range of transactions (including fundraisings and other asset related transactions as well as M&A) across any sector where there is a potential national security issue. The Act will also require mandatory notifications to be made across 17 identified sensitive sectors regardless of whether the transaction actually raises any national security concerns. Clearance will need to be obtained before transactions caught by the mandatory notification regime can close and there are strict penalties for non-compliance, including significant fines, imprisonment and a transaction which was not notified when it should have been is void. There is no turnover threshold, no requirement for a non-UK buyer/investor and the Act also has extraterritorial effect so will apply if for example there is a merger in another jurisdiction where the target has assets or sales in the UK.
In certain circumstances, the transaction may be subject to:
- prior approval from the French Ministry in charge of Economy and Finance if the activities of the French target are considered as sensitive regarding the French public order or if there is one contract concluded with the French authorities
- consultation/information of the employees' representatives
- Hamon law process applicable.
Acquisitions in Germany are traditionally made by private agreements. Large scale takeover battles of the kind witnessed in the US and the UK have few equivalents in the German market. The vast majority of transactions are related to the acquisition of medium-sized, mostly family-owned businesses (so-called Mittelstand). Germany has still a quite liberal attitude towards foreign investors. For cross-border deals, German style M&A documentation is often aligned to the extent possible with international standards.
However, there is an investment screening regime and associated notification obligations for foreign investment in certain sectors. The investment screening regime was significantly tightened in the last years. The Federal Ministry of Economics and Energy (BMWi) is entitled to review foreign investments to a cross-sectoral or sector-specific investment review.
The cross-sector investment review concerns acquisitions by which a non-EU (or EFTA) citizen directly or indirectly acquires control of at least 25% of the voting rights in a German enterprise (section 55 Foreign Trade and Payments Regulation (AWV)). If the German company belongs to a particularly sensitive sector, the threshold is 10% of the voting rights (eg critical infrastructure operators, media, health sector, section 55a (1) no. 1 to 7 AWV). If the German company belongs to one of the case groups pursuant to section 55a (1) no. 8 to 27 AWV, the threshold is 20% of the voting rights (eg artificial intelligence, semiconductors, cyber security).
The sector-specific investment review covers all acquisitions by which a foreigner - including persons or companies from other EU Member States - directly or indirectly acquires control of at least 10% of the voting rights in a domestic company which produces the goods listed in section 60 AWV, primarily certain military equipment.
The BMWi can prohibit the transaction or approve it under condition if the transactions constitute a threat for the public order or security (cross-sector investment review) or essential security interests of Germany or another EU member state (sector-specific investment review). Even though prohibitions must be "ultima ratio", these are still very rare. There have been single prohibitions regarding Chinese acquirers in recent years.
Generally, no legal, regulatory or governmental restrictions on transfer of shares in a Hong Kong incorporated company unless the target business belongs to the following sectors:
- Banking (regulated by the Banking Ordinance (Cap 155))
- Insurance (regulated by the Insurance Companies Ordinance (Cap 41))
- Securities and futures (regulated by the Securities and Futures Ordinance (Cap 571))
- Provident fund (regulated by the Mandatory Provident Fund Schemes (General) Regulation (Cap 458A))
- Telecommunications (regulated by the Telecommunications Ordinance (Cap 106) and the Competition Ordinance (Cap 619)); or
- Broadcasting (regulated by the Broadcasting Ordinance Cap 562).
The Transfer of Businesses (Protection of Creditors) Ordinance (Cap 49) (“TBO”) provides that whenever a business is transferred, the purchaser shall become liable, notwithstanding any agreement to the contrary, for all the debts and obligations (including tax liabilities) arising out of the carrying on of business by the seller, unless the parties publishes a notice of transfer within the time limit specified under the TBO. The purchaser will only cease to be liable for all obligations of the seller on the date which the notice of transfer becomes complete, which is one month after the date of the last publication of the notice, unless within that period a creditor commences proceedings against the seller in respect of any liability of the seller arising out of its carrying on of the business.
Banking - The National Bank of Hungary is involved in the authorisation to merge financial institutions, but its authorisation is not a substitute for the authorisation of the Hungarian Competition Authority.
Media/broadcasting - The Hungarian Competition Authority shall obtain the opinion of the National Media and Infocommunications Authority's Media Council for the approval of concentration of such enterprises which are bearing editorial responsibility and the primary objective of which is to distribute media content to the general public via an electronic communications network or a printed press product. As a main rule, the Media Council shall not have the right to refuse granting official approval, when the level of merger between independent sources of opinion after the merger will ensure the right for diversity of information within the relevant market for the media content service. As a main rule, the amount of the administrative service fee payable to the Media Council for its procedure as administrative authority shall be 2 million forints (approx. EUR 5,000) payable to the Hungarian Competition Authority together with the procedural fee.
Electricity and natural gas utility: approval of the Hungarian Energy and Public Utility Regulatory Authority for the merger of electricity and natural gas utility companies operating under licences issued by the same authority.
M&A documentation is quite similar to that used in other jurisdictions, such as the UK and US. Regulatory consents may be required depending on the nature of the deal eg. Central Bank of Ireland approval is needed for certain banking and insurance transcations. Pension deficits require substantial due diligence in view of huge potential liabilities to be made good. An investment screening regime is likely to be introduced in critical sectors where public order or security may be at stake.
Pursuant to Legislative Decree N. 177/2005, Article 1 of law. N. 249/97 and implementing regulations of the Italian Authority for Communications (AGCO), specific rules and anti-concentration limits apply to mergers and acquisitions of relevant shareholdings in the media/broadcasting and communications sector. Further, changes of control over companies operating in the media and communications sector must always be notified with the AGCOM, irrespective of the size or turnovers of the undertakings involved.
A regime for foreign investment review is set forth under Law Decree No. 21/2012 (converted into Law No. 56/2012 FIR). The FIR assigns the Government special powers (so-called golden powers) to veto or impose conditions on certain resolutions or transactions made by foreign investors (including EU investors in certain cases) relating to Italian companies operating in certain strategic sectors. In particular, the Italian Government may exercise its golden powers in the following sectors: (1) defense and national security (which includes broadband electronic communication services based on 5G technology); (2) energy; (3) transport; (4) communications; and (5) other new sectors included in the regime in the following years (water, health, sensitive data and information, electoral infrastructure, finance and insurance, artificial intelligence and other technologies, aerospace infrastructure, agri-food and steel, dual-use products, freedom and pluralism of media). Further, Law Decree No. 21/2022 (Decree Ukraine) made the emergency regime introduced by Government Decree n. 23/2020 become permanent and introduced new procedural rules, including a pre-notification procedure and the concurrent obligation of the target company to notify the transaction under the FIR, either jointly with the buyer(s) or separately. Notably, the rules made permanent by the Ukraine Decree provide, inter alia, that even genuinely intra-EU transactions of acquisition of control, or acquisitions of minority (non-controlling) stakes in “strategic” assets in Italy by non-EU investors must be priorly communicated to the Government under the FIR.
From a general standpoint, please consider that specific regulatory requirements such as notifications and/or approvals may be required in specific sectors such as banking and insurance. Therefore, we would generally advise to consult a lawyer in advance on a case-by-case basis.
Certain sectors, especially the financial and energy sector, are indeed subject to regulatory supervision. M&A transactions may cause prior notice or approval of such regulator. In addition, the Dutch government is working on specific M&A focused potential legislation introducing governmental review of qualifying acquisitions in other vital sectors (following the EU FDI-Regulation), which is expected to take effect as of Q42020. Similar legislation has recently been adopted by the Dutch legislator with respect to acquisition in telecom.
Apart from eventual regulatory burdens, Dutch style M&A documentation can be considered partly as “leaner” compared to, for example, US style documentation. This is because statutory Dutch law already provides for many of the definitions of contractual terms and concepts, eg definition of damages etc., so that fewer contractual details are needed.
For cross-border deals, Dutch style M&A documentation is often aligned to the extent possible with international standards.
In general, Dutch M&A is relatively foreign investor friendly.
When an individual from outside the EEA acquires shares in a Polish company which owns a real property, a permit for a transaction has to be obtained from the Minister of Internal Affairs. Furthermore, if an individual acquires shares in a Polish company which owns an agricultural real property or properties with the total area exceeding 5 ha, the purchase of shares is subject to pre-emptive right of the Polish Agricultural Agency. In addition the Polish Act on Controlling Specific Investments aims to protect strategic Polish companies from hostile takeovers by requiring potential buyers to notify the competent minister responsible for a given strategic sector of their intention to buy shares in a strategic company.
Some sectors require commercial companies to request previous approval before incorporation, such as credit brokers, banking, and healthcare services.
Certain business activities are regulated and may be subject to licensing, permits or authorisations. The licenses may contain provisions requiring prior consent or approval from the relevant governmental or regulatory authority for any change of ownership of the license. Certain public M&A transactions may require obtaining consents or approvals from the relevant personnel, governmental or regulatory authorities. If the M&A transaction comes within the scope of the Competition Act (Chapter 50B), parties may wish to consult the Competition and Consumer Commission of Singapore to ensure compliance with the competition laws in Singapore.
Similar to other countries, special sector regulation applies to companies being active in the particular sector (eg merger of banks requires prior approval of the regulatory authority). In most of the transactions, M&A documentation is similar to international standards and Slovakia is friendly to foreign investors.
Investment screening legislation entered into force on 1 March 2021 (“FDI regime”) as a new part of a Critical Infrastructure Act.
Under the current FDI regime the acquisition of a shareholding in certain designated entities (share deal) or of the business of these entities (asset deal) needs to be reported to the Ministry of Economy and may be subject to approval of the Slovak Government.
This obligation applies regardless of whether the acquirer is a Slovak or foreign entity and also applies to indirect transactions, i.e. a change in the persons having a direct or indirect participation in the operator of critical infrastructure exceeding a 10 % shareholding or voting rights is eligible to be screened.
The current FDI regime only applies to businesses designated as part of the critical infrastructure in the following industries: mining, electric power engineering, gas, petroleum and petroleum products, pharmaceutical, metallurgical and chemical. General notification requirement applies to all sectors considered as critical infrastructure under the Critical Infrastructure Act, including transportation, electronic communications, energy, postal services, heavy industry, information and communication technologies, water management, healthcare, pharmaceuticals, finance and agriculture.
Foreign Direct Investments (FDI) may be subject to prior filing and approval in Spain if certain criteria are met. FDI are acquisitions by foreign companies of stakes in Spanish companies that are equal or higher than 10% or that grant control. Foreign companies are those ultimately controlled in more than a 25% by a company domiciled in a non-EEA country. FDI on strategic sectors may be subject to prior filing and approval. FDI on non-strategic sectors may also be subject to prior filing and approval if the investor is controlled by a government, has other activities in strategic sectors in other EU countries or there is a serious risk that the foreign investor engages in illegal activities. FDI in Defence sector are subject to specific rules. Advice before proceeding with a transaction is always recommended.
United Arab Emirates
In the UAE, almost every share transfer requires the pre-approval of the concerned Company Registrar (DED or free zone registrar), and if the activity conducted by the target company is regulated and subject to a third party authority approval requirement, a no objection certificate from such third party authority is typically required in relation to a share transfer to a new shareholder.
In some cases (depending on the concerned registration authority and/or the details of the transaction) official newspaper publications need to be arranged prior to the share transfer.