Corporate M&A 2025 Comparisons

The M&A market in Bosnia and Herzegovina has experienced steady growth over the past 12 months. There is a rising interest among institutional and private equity investors in a range of assets, from real estate and tourism to IT and energy. Although the current deal volume has not yet reached the record levels of 2018, activity is increasing, and it is anticipated that previous records will soon be surpassed.

The main trends which marked the last 12 months in Bosnia and Herzegovina include efforts towards the alignment of Bosnia and Herzegovina’s framework with EU standards, including reforms in business regulations, environmental law, and human rights protections. These changes are part of the country’s bid for EU accession. Additionally, the judiciary and legal professionals are increasingly adopting digital tools, such as e-registration of legal entities and electronic case management, to improve efficiency and accessibility.

Various industries experienced M&A activity over the past 12 months, including real estate, IT, production facilities, and fast-moving consumer goods (FMCG).

Common methods for acquiring a company in Bosnia and Herzegovina include share purchases, asset purchases, mergers, tender offers, joint ventures (JVs), and squeeze-outs. The choice of acquisition method depends on factors like control, risk, regulatory requirements, and strategic goals. In most cases, share acquisitions are preferred as they facilitate the smooth continuation of business operations.

Acquisition of shares in non-regulated companies is subject to merger control (if the conditions are met) and registration of the acquisition with the competent court. Acquisition of shares in all regulated entities (banking, finance, insurance, etc) requires an approval of the regulator prior to closing the deal which is usually stipulated as a condition precedent in the transaction documents, as well as merger filing and registration requirements.

Bosnia and Herzegovina generally has a liberal foreign direct investment regime, but some restrictions exist in specific sectors, notably the defence and military industry, and public media and broadcasting. Foreign ownership in companies belonging to the above sectors is limited to 49%, unless a special approval is obtained from the authorities.

In Bosnia and Herzegovina, antitrust regulations are governed by the Competition Law (Official Gazette of BiH, No 48/05, 76/07, and 80/09). This law sets the framework for fair business practices and ensures that mergers and acquisitions do not negatively impact the market of Bosnia and Herzegovina.

A transaction/acquisition must be notified to the Competition Council if the following conditions are met:

• combined worldwide turnover of the undertakings concerned amounts to BAM100 million (approximately EUR51 million); and
• turnover in Bosnia and Herzegovina of each of at least two undertakings concerned amounts to at least BAM8 million (approximately EUR4.1 million) OR if the combined market share on the relevant market of Bosnia and Herzegovina exceeds 40%.

It is prohibited to implement the transaction prior to the approval of the transaction by the local antitrust authority.

In Bosnia and Herzegovina, separate laws apply to the Federation of Bosnia and Herzegovina (BiH), Republika Srpska, and Brčko District as follows:

• Labour Law of the Federation of BiH (Official Gazette of FBiH, No 26/16, 89/18, and 44/22);
• Labour Law of Republika Srpska (Official Gazette of RS, No 1/16 and 66/18); and
• Labour Law of Brčko District (Official Gazette of BD, No 19/06, 19/07, and 25/08).

According to these laws, an acquirer has certain responsibilities to protect the rights of the employees. The acquirer must consult with the employees or their representatives about the transfer of the business. Additionally, employees are required to give their consent to the transfer of their employment to the new employer. Furthermore, any collective agreements that were in place with the previous employer automatically transfer to the acquirer. These agreements cannot be unilaterally terminated.

Bosnia and Herzegovina does not conduct national security review of acquisitions.

Over the past three years, Bosnia and Herzegovina has not witnessed any landmark court decisions or legal developments specifically related to mergers and acquisitions. Of interest is the ruling of the Constitutional Court of BiH in 2024 that certain state-owned properties, including agricultural land, rivers, forests, and forest land, are under the ownership of the state of Bosnia and Herzegovina. This ruling emphasised that the disposal of such properties should be managed at the state level, rather than by entities or local authorities as had previously been the case. This has created issues for entities to whom such property has been granted for use, sold or transferred.

The process for mandatory takeovers in Bosnia and Herzegovina is regulated separately at the entity and district levels, resulting in three distinct takeover laws:

• Takeover Law of the Federation of Bosnia and Herzegovina (Official Gazette of FBH No 77/2015);
• Takeover Law of Republika Srpska (Official Gazette of RS No 65/2008, 92/2009, 59/2013 and 19/2019); and
• Takeover Law of Brčko District (Official Gazette of BD No 32/2019).

There have not been any significant changes to the takeover laws in Bosnia and Herzegovina in the last three years.

The Bosnia and Herzegovina stock market is not highly developed, mostly due to the very low number of joint stock companies and low levels of trading. As a result, it is not customary for stakebuilding strategies to be implemented. When they are implemented, they allow the bidder to gain a strategic position and potentially influence the target company’s decisions before making a formal offer.

Investors are required to disclose their holdings once they acquire 5% or more of a company’s shares, as well as upon exceeding or falling below certain thresholds (eg, 10%, 20%, 25%, 33%, 50% and 66.6% of voting rights). Acquisition of a controlling stake (25% or more in the Federation of Bosnia and Herzegovina or 30% or more in Republika Srpska) triggers an obligation to publish a mandatory takeover bid.

Reporting and mandatory takeover bid thresholds are regulated by the applicable entity laws and therefore are not subject to separate regulation by the companies. There are strict prohibitions against trading based on non-public, material information, and insider trading. Further, share acquisitions must not involve deceptive practices or market manipulation.

Bosnia and Herzegovina’s regulatory environment for derivatives is still evolving. The country has been working towards aligning its financial regulations with European Union standards, including aspects related to derivatives trading. However, comprehensive and specific regulations governing derivatives are not yet fully established.

There is no applicable information in this jurisdiction.

In Bosnia and Herzegovina, shareholders acquiring significant stakes in a company are subject to specific disclosure requirements, particularly when their holdings reach certain thresholds. While these regulations mandate the disclosure of share ownership, they do not explicitly require shareholders to declare the purpose of their acquisition or their intentions regarding control of the company.

The regulatory framework does not explicitly mandate the disclosure of a potential merger or acquisition at the initial approach or during preliminary negotiations. However, certain obligations arise as the transaction progresses, such as merger notification, mandatory takeover bid notification, and regulatory procedures, among others.

The rules and deadlines for disclosure are prescribed by the law and should be strictly adhered to. Fines may be applicable for non-compliance.

Due diligence in a negotiated business combination is typically comprehensive, covering financial, legal, operational, environmental, and human resources aspects. Financial due diligence involves a detailed review of audited financial statements, tax compliance, and asset verification to assess the target company’s financial health and potential liabilities. Legal due diligence focuses on corporate structure, key contracts, and regulatory compliance to ensure that the company operates within the legal framework and does not pose any legal risks. Operational due diligence examines management capabilities, supply chain stability, and IT infrastructure to evaluate the company’s efficiency and growth potential. Environmental due diligence is conducted to verify compliance with environmental regulations and assess any potential risks related to company-owned properties. Human resources due diligence includes a review of employment contracts, benefits, compensation structures, and labour relations to identify any existing or potential workforce-related risks.

Neither standstills nor exclusivity clauses are legally regulated in Bosnia and Herzegovina and are not very often used in negotiated transactions.

The legal framework governing tender offers is primarily based on securities regulations and competition laws, both of which are highly regulated and overseen by the regulators. Parties must exercise caution when agreeing to terms outside the standard regulatory process.

The process for acquiring or selling a business in Bosnia and Herzegovina typically takes between three to twelve months, depending on the complexity of the transaction, regulatory requirements, and due diligence procedures.

For smaller transactions with minimal regulatory hurdles, the process can be completed within three to six months. This includes negotiations, due diligence, drafting agreements, and closing. However, for larger or more complex deals – especially those involving regulatory approvals, or competition authority clearance – the timeline can extend to nine to twelve months or more.

Key factors influencing the timeline include due diligence scope, financing arrangements, shareholder approvals, and regulatory reviews. Transactions requiring merger control clearance or sector-specific approvals, such as in banking or telecommunications, may take longer due to additional regulatory scrutiny.

All three applicable takeover laws set a mandatory offer threshold: 25% in the Federation of Bosnia and Herzegovina and Brčko District, and 30% in Republika Srpska.

Cash is the most commonly used method of consideration in takeover bids. Although the law provides for an option to deposit shares to be used as consideration, this is rarely used in practice.

The offeror cannot condition the obligation to purchase shares that are the subject of a mandatory takeover offer, except that the shares that are encumbered will not be purchased. A voluntary takeover offer can be conditioned on reaching a specific success threshold, which cannot be lower than the controlling threshold.

There are no minimum acceptance conditions for tender offers in Bosnia and Herzegovina.

Financing for the tender offer must be fully secured prior to launching it and the regulators will not approve a tender offer unless the funds for the acquisition of the entire outstanding shares of the target are deposited with the authorities, or an adequate bank guaranty provided.

Deal security measures are not governed by the laws of Bosnia and Herzegovina, and therefore the parties may agree on them at their own discretion. Although they are not commonly used, instances of non-solicitation and break-up fees have been observed in practice.

If a bidder does not seek 100% ownership of a target company, it can negotiate various governance rights to influence the company’s operations. These rights may include board representation (allowing the bidder to appoint members to the board and participate in strategic decisions) or protective provisions requiring a supermajority for significant changes. Additionally, pre-emptive rights allow the bidder to purchase additional shares before they are offered to others, thereby maintaining or increasing their ownership stake. Tag-along and drag-along rights further ensure security if other investors become involved.

Shareholders can vote by proxy in Bosnia and Herzegovina. The form and content of the proxy are regulated by the law and form requirements must be adhered to.

In the Federation of Bosnia and Herzegovina and Brčko District, squeeze-out mechanisms apply only  to certain joint stock companies, and only if the bidder holds 95% or more shares following a takeover offer. In Republika Srpska, the squeeze-out threshold is set at 90% and applies to both joint stock and limited liability companies.

It is not common in Bosnia and Herzegovina to obtain irrevocable commitments to tender.

As soon as the takeover threshold is achieved, the acquirer is obliged to immediately (the next day) inform the public and the regulator about the acquisition and the planned issuance of the takeover offer. Subsequently, the takeover offer must be submitted to and approved by the regulators before it is published.

The disclosure requirements for the issuance of shares in a business combination vary depending on the type of entities involved (limited liability companies v joint stock companies, regulated or non-regulated, etc), but generally include detailed information to ensure transparency for shareholders, regulators, and the market.

If the shares are issued to the public, a prospectus is required, detailing the terms of the issuance, risks, financial statements, and the impact on shareholders. Such issuance is subject to regulatory approval and scrutiny, as well as regulatory filings. Furthermore, public companies often issue proxy statements or circulars to inform shareholders about the share issuance, including voting rights, dilution effects, and fairness opinions.

In case of mergers, companies must disclose the terms of the transaction, including share exchange ratios, consideration structure, and any conditions precedent, as well as how the share issuance affects earnings per share, the ownership structure, and capital structure.

The need to prepare extraordinary financial statements depends on the nature of the corporate transaction that is in question. For instance, in the case of mergers, extraordinary financial accounts may be required.

The need to disclose transaction documents depends on the type of the companies involved and the level to which they are regulated. For instance, in the case of the acquisition of shares in private, non-regulated limited liability companies, disclosure obligations are quite modest and transaction documents often include a short-form share purchase agreement to be provided to the authorities for registration purposes. However, in the case of regulated and/or joint stock companies, the disclosure obligations are more stringent, with regulators frequently requesting full details of the transaction.

Directors are generally responsible for ensuring that the company’s operations comply with the law. As a result, although their duties are mostly owed to the shareholders, they always have to make sure that all of their actions are lawful and in the best interest of the company.

It is not common for boards of directors to establish special or ad hoc committees in business combination deals.

There is limited court practice to draw on in this area; however, it is generally accepted that if directors act in good faith, with due care and in the best interests of the company and its shareholders, they will be protected from liability, unless they undertake unlawful actions. The degree of judicial deference afforded to board decisions typically depends on the circumstances of the takeover.

Directors rely on financial, legal, tax, and regulatory experts to evaluate risks, structure deals, and comply with legal obligations. Seeking independent advice strengthens board decisions, mitigates liability, and helps secure shareholder and regulatory approval. Financial advisers provide valuation analysis and fairness opinions, while legal counsel ensures compliance with corporate and securities laws. Accounting and tax experts assess financial risks and tax implications, while regulatory specialists handle competition and antitrust approvals. Occasionally, proxy solicitors and PR firms are engaged to assist in shareholder engagement and public communication.

We are not aware of any cases where conflicts of interest of directors, managers, shareholders or advisers have been the subject of judicial or other scrutiny in Bosnia and Herzegovina.

Hostile tender offers are neither regulated nor common in Bosnia and Herzegovina.

Since hostile takeover bids are not common in Bosnia and Herzegovina, directors’ defensive measures have not been established or developed.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.

Litigation related to mergers and acquisitions is uncommon in Bosnia and Herzegovina. When disputes do arise, it is typical for the parties to agree to resolve them through foreign arbitration.

When M&A litigation occurs, it usually takes place within one to two years after closing.

The COVID-19 pandemic led to some disputes over pending M&A transactions, particularly regarding material adverse effect (MAE) clauses, termination rights, and interim operating covenants. Courts generally found that broad economic downturns did not qualify as an MAE unless explicitly stated, highlighting the need for precise contract language. Some buyers attempted to exit deals by citing force majeure or drastic operational changes by sellers, leading to legal battles over what constituted a breach of “ordinary course of business” provisions. Regulatory delays further complicated transactions. However, the majority of deals were renegotiated rather than litigated. As a result, M&A agreements now include pandemic-specific MAE language, flexible closing conditions, and clearer force majeure provisions to prevent future disputes.

Shareholder activism has not yet taken off in Bosnia and Herzegovina.

There is no applicable information in this jurisdiction.

There is no applicable information in this jurisdiction.