Transaction Arrangement Agreement

In addition to an arrangement agreement and the associated plan of arrangement, Acquirors often strives to ensure that the majority shareholders and directors of the target company enter into “lock-up” or “support” agreements in which those holders agree to vote in favour of the agreement. However, these agreements are generally only required by a relatively small number of holders (e.g. B maximum 10 to 15). Newsletter for the General Assembly. An arrangement transaction may require that a disclosure circular be prepared and sent to the shareholders of the target company in respect of the meeting that must be held to approve the plan of arrangement, unless the plan of arrangement can be approved by decision approved in writing by all shareholders. The drafting of an information circular is more complex in situations where the consideration to be received against the shareholders under the plan of arrangement includes shares of the purchaser, in which case the circular must provide the holders with information about the purchaser and its securities. Judicial authorization fees. Another disadvantage is that an arrangement transaction requires one or often two court decisions, with the resulting attorney`s fees in connection with applications for such injunctions. Plans of agreements must be approved by the court as part of a “final order”, after the fairness of the agreement with the shareholders concerned has been taken into consideration.

For most arrangement transactions, the offeree company also requests an “injunction” to have a meeting of its shareholders to approve the plan of arrangement. While there is no assurance that the court will approve a plan of arrangement, it is unusual for a plan of arrangement not to be approved by the court if the plan of arrangement has been approved by a significant majority of the shareholders involved. While shareholders who wish to object to a plan of arrangement have the right to participate in the lawsuit and argue that it is unfair, legal proceedings are generally not dismissed. [1] However, since the agreement is generally concluded only between the acquirer and the target entity, and not between the shareholders of the target entity, share purchase agreements are distinguished by the fact that they often contain only assurances and guarantees of the target company with regard to its status and financial situation and other similar issues, as well as the lack of insurance and guarantees from the shareholders of the target company. . . .

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