Following the COVID-19 period outbreak in 2020–22, the M&A market in Barbados has been steady and continues to grow as entities pursue plans that were put on hold or are now feasible to pursue.

There have been at least two publicised acquisitions in the last 12 months involving Barbados companies engaged in the financial services and real estate sectors.

• Banking and investment sector: In 2024, Republic Bank (Barbados) Limited, a subsidiary of a Trinidad-based parent, completed the transfer of its 100% shareholding in its investment fund company to VM Wealth (Barbados) Ltd, which is owned by a Jamaican group of companies. This transaction reflects the continued trend of regional financial institutions expanding their presence in Barbados.

• Real estate: Also in 2024, Proven Group Limited, a regional investment firm, acquired One Warrens Limited, a Barbadian real estate owning company, through its affiliate. This acquisition aligns with Proven’s broader investment strategy of expanding its real estate and private equity portfolio within the Caribbean.

These transactions demonstrate a continued trend of regional financial integration.

The following industries have experienced significant M&A activity within the past 12 months in Barbados:

• wines/spirits;
• manufacturing; and
• financial services.

In Barbados, companies can be acquired through a number of legal techniques, with the most common ones being share purchases, asset purchases, amalgamations/mergers and takeover bids.

A share purchase involves acquiring the target company’s shares, while an asset purchase focuses on specific assets, avoiding unwanted liabilities; these company acquisitions are governed by the Companies Act, Cap 308. Mergers are governed by the Fair Competition Act (FCA), Cap 326C and refer to a combination of two or more companies. Assets and liabilities are transferred to the surviving company, which acquires control over the other company. Mergers over 40% require the approval of the Fair Trading Commission (FTC).

Takeover bids are governed by the Companies (Take-Over Bid) Regulations, 2002 and are defined as a direct offer to shareholders of a public company to acquire their shares. A mandatory takeover bid in Barbados is triggered when a person directly or indirectly acquires 25% or more of a company’s shares.

The primary regulators for M&A activity in Barbados are as follows.

• The Financial Services Commission (FSC): The FSC is responsible for supervising and regulating non-bank financial institutions in Barbados, particularly those entities licensed or registered under a number of pieces of legislation including the Securities Act, Cap 318A. The FSC regulates market conduct, ensuring fairness in M&A transactions and protecting shareholders’ interests.
• The Barbados Stock Exchange (BSE): The BSE provides rules and guidelines concerning the listing, trading and public disclosures of securities for publicly listed companies. It also ensures that M&A transactions for publicly listed entities are in compliance with the stock exchange’s listing rules and regulations.
• The FTC: The FTC may in some circumstances be involved if the M&A transaction potentially raises competition concerns. The FTC reviews and approves transactions that may significantly affect market competition under the FCA, Cap 326C.

Foreign investment is encouraged in Barbados, and restrictions are limited. The acquisition of securities in a Barbados entity by a non-national requires the prior approval of the Exchange Control Authority of the Central Bank of Barbados. No industries are closed to private enterprise, although the government reserves the right to control how certain investments are effected. For example, activities in some sectors, such as telecommunications, utilities, broadcasting, franchises, banking and insurance, require a government licence. It is not unusual for licences to be issued with conditions attached, such as requiring the prior approval of the government for a change in a significant shareholding in the licensee. Before granting permission for a change in control, the regulator or government would need to be satisfied that the investor is compliant with all anti-money laundering requirements and that the directors are fit and proper to undertake their responsibilities.

Within Barbados’ legal framework, the equivalent of what are referred to as “antitrust laws” are the competition laws. Regulations related to business combinations are primarily governed by the FCA. The FTC is responsible for enforcing these regulations to prevent anti-competitive practices that could harm the market.

The FCA prohibits M&A transactions that would result in the substantial lessening of competition in any market in Barbados. It explicitly stipulates that only those mergers that control or are likely to control in excess of 40% of any market must be approved by the FTC. Parties involved in a merger will therefore need to engage with the FTC if the transaction meets this threshold.

The FTC thereafter evaluates whether the merger would create or strengthen a dominant market position, reduce competition significantly in a given sector or lead to other anti-competitive conduct, such as price fixing or monopolistic control.

A merger may be authorised if the FTC determines that the benefits outweigh the anti-competitive effects and that it is likely to promote the public good.

There are several key employment law regulations that must be adhered to by acquirers by way of mergers, acquisitions or other business combinations so as to ensure compliance with Barbados law.

The primary employment law legislation includes the Employment Rights Act, 2012, the Employee (Prevention of Discrimination) Act, 2020, the Severance Payments Act, Cap 355A, the Safety and Health at Work Act, 2005, the Trade Unions Act, Cap 361 and the Labour Clauses (Public Contracts) Act, Cap 349.

In circumstances where a business is acquired by merger or acquisition, it must be noted that even where the employees may be re-engaged under a new contract of employment, provided that the terms of the contract largely remain the same, the employee will have continuity of employment, and they will retain their rights and benefits. If the new employer offers continued employment on terms not less favourable and the employee rejects the offer, the employee will not be entitled to severance pay.

Where the acquisition results in loss of employment for employees due to, for example, redundancy, the employees will likely be entitled to severance payments, which are calculated based on the employees’ length of continuous service and their basic pay. Employees also have a right not to be unfairly dismissed once they have been working continuously for the employer, that is, for a period of not less than one year. The employee will therefore have a right to claim unfair dismissal if terminated without just cause.

As it relates to trade unions, if the target company has a contract with a union, the new employer must honour the existing collective agreements.

Acquirers will also assume responsibility for workplace health and safety obligations. It is therefore always recommended that employment contracts, collective agreements and any potential severance liabilities are reviewed thoroughly before the completion of an acquisition.

There is no formal national security review process specifically for acquisitions of private entities in Barbados. Acquisition of an interest in some sectors that require government licences, such as broadcasting, will likely involve a review of the national security implications.

The jurisprudence for competition law matters is not extensive in Barbados, and as such there have been no landmark court decisions specifically related to M&A in the last three years. However, though not within the last three years, a notable legal development in this area was the issuance of the Merger Guideline, 2007 (the “Guideline”) by the FTC.

The Guideline provides an analytical framework for assessing merger activities, aiming to promote and maintain competition within the Barbadian market. The Guideline outlines the FTC’s approach to evaluating mergers, including the potential impact on competition.

There have not been any significant changes to takeover law in Barbados within the past year. The primary legislation governing takeover bids remains the Companies (Take-Over Bid) Regulations, 2002, established under the Companies Act, Cap 308 (the “Regulations”). The Regulations outline the necessary requirements and relevant procedures for conducting takeover bids.

There are also no publicly announced reviews or proposed amendments to the Regulations, which suggests that there will not be any significant changes in the coming 12 months.

In Barbados, the most recent bids have been initiated by shareholders of the target. It is not apparent that the acquisition of securities in the target would primarily be motivated by the desire to build a stake.

In Barbados, pursuant to the FSC’s Material Changes Disclosure Guideline dated 1 November 2024, financial institutions are required to disclose the following:

• direct or indirect acquisition of a significant interest by a person in the financial institution; and
• a change in shareholding that is in a range of ≥5% and <10% of the stated capital held by a shareholder of the financial institution.

Financial institutions must also provide information on any new shareholder that demonstrates that the shareholder is fit and proper.

Disclosure to the FSC, the Offeree Company and the Shareholders of the Offeree Company

Under Barbados law, shareholders who acquire a material interest in a company must make specific disclosures.

Acquisition threshold

Any person who acquires 25% or more of a company’s equity is required to submit a written statement by registered mail to:

• the FSC and;
• the target at its registered office.

The written statement must be made within 24 hours of the acquisition and must include the identity, occupation, residence and citizenship of the offeror and a declaration confirming:

• the amount of equity being acquired and confirmation of the triggering of the Take-Over Code;
• the share price of the equity at the point of purchase;
• the purpose of the acquisition;
• whether the offeror intends to purchase further equity in the offeree company; and
• whether the offeror intends to acquire control of the business or a majority shareholding in the offeree company.

Takeover bid circular obligation

Where the offeror intends to acquire control of the business or a majority shareholding in the offeree company, they must mail or deliver a takeover bid circular to all registered shareholders of the offeree company within seven days of the purchase of the equity and no less than 28 days before the date of the close of the takeover bid. Furthermore, the registered shareholders must be invited, through the takeover bid circular, to tender their shares at the same price, a better price or in exchange for an equivalent or better consideration.

Shareholders and Beneficial Owners

Companies in Barbados must maintain and disclose, when obliged to do so, accurate records of their shareholders and beneficial owners.

Shareholders’ register requirement

Every company must maintain a register of its shareholders at its registered office, which must include:

• the name and last known addresses of the shareholders;
• a statement of the shares held by each shareholder; and
• the date that each shareholder was entered in the register or ceased to be a shareholder.

Companies are required to certify compliance with the above-mentioned requirements in their filed annual return. Additionally, the registrar may occasionally instruct companies to complete questionnaires confirming the maintenance of an accurate and up-to-date shareholders’ register at the registered office of the company. These disclosure obligations are critical for transparency, regulatory compliance and investor protection within Barbados.

To prevent stakebuilding through insider trading, persons in possession of information that is not publicly available are prohibited from trading or using that information. Additionally, a company can introduce different rules to support its corporate objectives by amending the articles of incorporation by way of a special resolution, which is a resolution passed by at minimum two-thirds of the votes cast by the shareholders who voted regarding the resolution, or a resolution signed by all shareholders entitled to vote.

Dealings in derivatives are allowed in Barbados.

In Barbados, there are no filing/reporting obligations specific to derivatives under securities disclosure and competition laws.

Shareholders must make known the purpose of their acquisition and their intention regarding control of the company. Please see 4.2 Material Shareholding Disclosure Threshold for further details.

As it relates to private companies, save for where regulatory approvals are required – for example, a review by the FTC of a merger over the threshold – there is no legal obligation to publicly disclose M&A transactions.

However, publicly listed companies are bound by the rules and regulations of the BSE (which provides the only stock exchange in Barbados), and other legislation may be applicable such as the provisions of the Securities Act, Cap 308. Pursuant to the rules, to maintain a listing, the listed company must observe and comply with the exchange requirements (the Listing Rules, trading procedure and policies issued by the BSE, any direction, order or decision of the BSE and the guidance notes), keep the BSE fully informed of events and decisions affecting its security holders and disclose material information concerning its business and affairs forthwith upon said information becoming known to management, or in the case of information previously known upon it becoming apparent that the information is material.

The rules require disclosure by listed companies of any proposed material change in the business or affairs of said companies. “Material change” includes a change in the known beneficial or registered ownership of shares of the company that, to the knowledge of the company or its officers, directors or major shareholders – or in the opinion of the Exchange – is sufficient to materially affect control. Since disclosure is required for a “proposed” material change, early disclosure is expected. Material change disclosure to the FSC is also required.

Market practice on the timing of disclosure in Barbados can differ from legal requirements, especially as it relates to publicly listed companies. While the BSE Listing Rules and the Securities Act, Cap 318A set out disclosure obligations, market practice may lead to earlier disclosures, so as to provide a sense of transparency or to reassure investors, or to more detailed disclosures in certain cases.

In Barbados, due diligence usually encompasses the following aspects, among others, and is dependent on the structure of the deal.

• Legal due diligence involves (i) reviewing the corporate structure and governance of a company, including the articles of incorporation, by-laws, and shareholder agreements (if any); (ii) reviewing key contracts and identifying whether there are any related party transactions and potential conflicts of interests; (iii) verifying the litigation status of the company, including whether there are any ongoing or potential legal disputes, by conducting court searches and obtaining legal opinions confirming the status of the company if necessary; and (iv) confirming that the company is in good standing with the Corporate Affairs and Intellectual Property Office by obtaining a certificate of good standing and an insolvency certificate.

• Financial due diligence encompasses (i) examining the audited financial statements of the company, typically within the past three years; (ii) assessing the debt obligations of the company; and (iii) confirming that there are no outstanding tax obligations by reviewing a Barbados Revenue Authority tax clearance certificate.

• Regulatory due diligence involves reviewing the relevant licences, permits or government approvals of the company if applicable.

• Employment due diligence includes (i) reviewing employment contracts, pension plans, collective bargaining agreements and employee benefits; (ii) ensuring compliance with the Employment Rights Act of Barbados as it relates to severance pay, redundancy rules and the transfer of employees; and (iii) checking whether there are any employee disputes or pending claims.

In Barbados, it would not be unusual for parties to a proposed merger to enter into a letter of intent, which would include provision for the potential seller to refrain from offering its interest in the target for a specified period of time or to grant the potential buyer exclusivity in negotiations for a specified period.

It is common practice for the parties to enter into a definitive agreement setting out the agreed terms and conditions.

The length of time that it takes to acquire or sell a business in Barbados varies depending on the complexity of the transaction, the regulatory approvals required and due diligence processes. Generally, the process can take between three and 12 months, with larger or more regulated transactions taking even longer.

As indicated in 2.1 Acquiring a Company, in Barbados, where a person directly or indirectly acquires 25% or more of the equity of a company (intended for a public company), that person must deliver – by registered mail – a written statement containing relevant information to be included in an offer to the shareholders, both to the FSC and to the company at its registered office or principal place of business within 24 hours of the acquisition.

Cash consideration is generally more common in Barbados as it relates to M&A transactions, as it provides immediate value to purchasers and cash transactions tend to be easier to structure from a regulatory standpoint. Furthermore, given that Barbados has a relatively small capital market, there is a higher possibility that shares of private companies are illiquid; as such, cash is more attractive for these types of transactions.

In Barbados, pursuant to the regulations, a takeover bid must be made without conditions, except the condition that it may be withdrawn where:

• a specified percentage of the shares that are outstanding and not already owned is not tendered;
• a government or government agency moves to prevent it from proceeding or to alter the status of the offeree company materially; or
• a natural disaster or the directors of the offeree company intervene between the making of the offer and the closing date to materially change the value or nature of the offeree company.

The offeror has the flexibility to add the condition to its offer that completion is subject to the tender of a specified percentage of shares outstanding and not already owned. Where a bidder holds more than 50% of the voting shares, the bidder is allowed to pass an ordinary resolution at shareholder meetings that gives them control over corporate decisions, including the appointment of directors.

As it relates to the approval of special resolutions, which may include actions such as amendments to the articles of incorporation of the company, approval or mergers, a two-thirds majority is required. These percentages will provide some guidance to a proposed offeror on the minimum acceptance condition that should be included in the offer if desired.

As identified earlier, where the acquisition results in the control of 40% or more of a market for goods or services in Barbados, FTC approval will be required.

A business combination in Barbados can be conditional on the bidder obtaining financing; however, such conditions must be carefully structured to ensure compliance with regulatory requirements and market expectations. It must be noted that the Companies (Take-over Bid) Regulations, 2002 impose certain requirements that impact such conditions.

Regulation 7(d) mandates that a takeover bid circular must disclose the method and timing of payment for the shares of the offeree company, which ensures transparency regarding financing arrangements. Additionally, Regulation 18(4) requires that if the bidder elects to proceed with the offer, they must take up and pay for the shares within 30 days of the closing of the offer. This suggests that while financing conditions may be included, bidders must ensure they can secure the financing to complete the transaction within the required timeframe.

A bidder in Barbados can seek protection mechanisms to secure its position in a transaction, including lock-up agreements whereby the acquirer seeks certainty before launching an offer from key shareholders who vote in favour of the transaction.

The regulatory framework in Barbados has not seen changes in recent years that have significantly impacted the length of interim periods. It must be noted, however, that the timeline may be impacted where regulatory approvals are required – for example, where the FTC has to review for reasons of competition.

Additional governance rights are typically outlined in shareholder agreements and may include securing the right to appoint a specified number of directors to the target’s board, which allows for oversight and participation in the decision-making process. Pre-emptive rights to maintain shareholding, tag-along rights or drag-along rights may also be negotiated for future sales. These rights ensure that the bidder maintains a level of oversight despite not having 100% ownership.

A shareholder who is entitled to vote at a meeting of shareholders may, by means of a proxy, appoint a proxy holder or one or more alternate proxy holders, none of whom need be shareholders, to attend and act at the meeting in the manner and to the extent authorised by the proxy, and with the authority conferred by the proxy.

The proxy appointment must be in writing and typically submitted before the meeting, as per the company’s by-laws or notice of meeting.

The use of a squeeze-out mechanism to buy shareholders that have not tendered following a successful tender offer is the subject of a lawsuit in the High Court of Barbados and is therefore now also the subject of judicial review.

While Barbados does not have a statutory squeeze-out mechanism, Section 186 of the Companies Act provides that, if (within 120 days after the date of a regularly made takeover bid for all the shares of the offeree company) the bid is accepted by holders of 90% or more of the shares of any class of shares to which the takeover bid relates, other than shares held at the date of the takeover bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror may acquire the shares held by the dissenting offerees. Minority shareholders may therefore be forced to sell under a compulsory acquisition process initiated by the bidder.

In Barbados, it is not unusual for bidders to seek irrevocable commitments from the principal shareholders of the target company to tender their shares or vote in favour of a proposed transaction. These commitments help to provide certainty of the deal and are usually negotiated prior to the public announcement of a bid. Consequently, these negotiations are usually undertaken at the early stages of a transaction, especially in friendly takeovers or mergers where the bidder wants to secure key shareholder support before proceeding with the launch of an offer. The parties will need to be mindful of disclosure obligations under the applicable rules and regulations during the negotiations.

The nature of these undertakings is often formalised through lock-up agreements, which legally bind principal shareholders to support the transaction in case of both hard lock-up agreements, which restrict withdrawal by shareholders, and soft lock-up agreements, which include a fiduciary out clause. This clause permits the shareholder to withdraw their commitment, though usually with a penalty, if a superior competing offer is made, provided the initial bidder does not match or exceed the new offer within a specified period.

While Barbados does not have a strict legal framework governing lock-up agreements at this time, they are used in negotiated business combinations to minimise execution risk and ensure a successful transaction.

A bid is made public upon the mailing or delivering of the takeover bid circular to all registered shareholders of the offeree company. The circular should be mailed no less than 28 days before the date on which the takeover bid will close.

Regarding the type of disclosure required for the issuance of shares in a business combination, please see 4.2 Material Shareholding Disclosure Threshold.

The International Financial Reporting Standards (IFRS) are usually used for companies incorporated in Barbados. Bidders are required to produce financial statements in their disclosure documents with certain conditions. Where all or part of the consideration being offered consists of securities of the offeror, the takeover bid circular must include pro forma financial statements of the offeror reflecting the impact of the acquisition. Additionally, the circular must contain a description of the offeree company’s relied-upon financial statements, earnings per share figures prepared in accordance with international accounting standards and a summary of the offeror’s plans for the offeree company, including consolidated financial results on a fully diluted basis.

In Barbados, the Regulations require certain disclosures but do not mandate full disclosure of all transaction documents. However, there are key documents that must be made available to regulators and shareholders, including:

• the takeover bid circular;
• the directors’ circular; and
• material agreements.

While it is not typical for full transaction documents to be disclosed to the public, the FSC has the authority to request additional information as it may deem necessary.

The directors of a company have a duty to direct the management of its business and affairs. Directors must also act honestly and in good faith, with a view to the best interests of the company, exercising the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In determining the company’s best interests, the directors must consider the interests of the company’s employees and shareholders. The directors owe these duties solely to the company. Generally, no fiduciary is owed by a director to shareholders.

In Barbados, boards of directors often establish an independent directors’ committee, especially in circumstances where conflicts of interest arise. This is especially so where directors may have personal stakes in the bid.

For example, as it relates to takeover bids, the committee’s primary role is to prepare the directors’ circular, which provides shareholders with key information including the terms of the transaction, recommendations, fairness opinions and any alternative strategies. This independent committee ensures transparency, fairness and compliance with legal requirements, protecting shareholders’ interests throughout the process.

Although the term “business judgement rule” does not exist in Barbados law, the underlying principles of that rule apply as directors are not held personally liable for the decisions made on the company’s behalf where the directors have acted honestly, in good faith and with a view to the company’s best interests.

However, the courts will not automatically defer to the directors’ decisions in takeover situations solely because the directors have acted in the pursuit of their duties. Rather, if they disagree with the decisions of the director when they exercised their duty, the courts will rule in favour of the claimant, and the company will be held liable. Similarly, if they agree with the decisions of the directors, the courts will rule in favour of the directors’ decisions, and not solely based on whether the directors were carrying out their duties.

For example, in Ansa McAl (Barbados) Limited (ANSA) v Banks Holdings Limited (BHL) and Slu Beverages Ltd (SLU) BB 2016 CA 13, ANSA (a shareholder of BHL) brought an oppression remedy action against BHL and SLU in the Supreme Court of Barbados regarding a loan agreement entered into by BHL’s directors.

ANSA alleged that the loan agreement would have the effect of conferring special rights and privileges on SLU’s conversion shares, which would require the shares to be redeemed by BHL upon a fundamental change (such as a takeover) at a premium of 2.5 times the value of the shares. This premium was not conferred on the common shares held by ANSA and other shareholders, giving SLU an unfair advantage over ANSA and the other shareholders who held common shares. Also, the payment of this premium would place a significant financial burden on BHL and decrease the value and marketability of the shares.

This action was initiated during the takeover of BHL shares by SLU, and while seeking this claim, ANSA made an interim injunction application to restrict BHL from performing some of the provisions in the loan agreement. This application was initially granted but subsequently discharged. Upon appeal, the court granted the interim injunction and, in making its ruling, did not automatically defer to the decisions of the directors to enter into the agreement. Rather, the court acknowledged that ANSA’s affidavit evidence established a serious claim regarding the infringement on the shareholders’ interests due to the provisions in the loan agreement and ruled in ANSA’s favour.

Alternatively, in Kenneth Went v Cable & Wireless BB 2018 HC 26, the court ruled in favour of the directors’ decision and denied the shareholders’ action for an interim injunction. However, the court made this decision because it disagreed with the claimant’s views and not solely based on whether the directors acted to carry out their duties.

The claimant shareholders alleged that the amalgamation of Cable & Wireless (Barbados) Ltd and CWB Ltd (NEWCO) was a takeover disguised as an amalgamation to avoid compliance with the Take-Over Code. They also proposed that the amalgamation would lead to the delisting of Cable and Wireless from the exchange, which would eradicate the public market for their shares and result in an unfair squeeze out of the minority shareholders, thereby forcing the minority shareholders to sell their shares. This substantive matter is presently before the Supreme Court of Barbados. A shareholder in this matter sought an interim injunction to prevent the directors from cancelling the shares held by them, and to prevent the directors from delisting the company from the BSE.

The court ruled in favour of the directors. Although the court acknowledged that there was a serious issue to be tried on whether the amalgamation was oppressive and acknowledged the claimants’ arguments that the amalgamation functioned like a takeover, they decided in the defendants’ favour as there was a significant delay in the filing of the claim for interim injunctive relief, and they disagreed with the claimants’ view that damages were not an appropriate remedy to fairly compensate the minority shareholders. Additionally, as the amalgamation was completed and over BBD61 million was paid to minority shareholders, the granting of an injunction would cause further issues.

The board of directors usually relies on advice from external counsel on the most cost-effective structure to use for the transaction, cost assessment and settlement of the transaction documents. In takeover transactions, the board can create a committee, comprising the independent directors, with a mandate to assess whether the price offered to shareholders in the takeover bid is a fair and a reasonable price. Also, the directors of the target company, upon receiving the takeover bid circular, can seek a valuation of the company’s shares and obtain a “fairness opinion” from a financial expert.

The interests of the directors and the shareholders were in conflict in Ansa McAl (Barbados) Limited v Banks Holdings Limited and Slu Beverages Ltd BB 2016 CA 13, as the directors acted in the management of BHL’s business and affairs by entering into a loan agreement for the purpose of modernising the machinery and plant operations, and upgrading the brewery production capabilities, to increase BHL’s competitiveness.

ANSA, a shareholder, argued that the directors conducted BHL’s business and affairs in a manner that unfairly disregarded and conflicted with the interests of shareholders who held common shares, where the agreement would negatively affect the marketability and value of their shares if a takeover occurred.

Hostile tender offers have occurred in Barbados. Once the tender documents comply with the requirements of the legislative framework for takeover bids, hostile tender offers are likely to be permitted.

Directors are permitted to use defensive measures contingent upon their actions complying with their fiduciary duties to the company. A director’s main defensive measure is the use of the directors’ circular, which the directors of the offeree company are required to provide to the shareholders following the shareholders’ receipt of the takeover bid.

In the circular, the directors are required to provide the following, which can be used as defensive measures in hostile takeovers:

• up-to-date information regarding the company and the position of the directors;
• recommendations to the shareholders regarding the acceptance of the takeover bid and reasons for their recommendations;
• disclosure of the directors’ intended course of action;
• a price range of the shares sought to be acquired; and
• any information known by the directors pertaining to material changes in the prospects of the offeree company.

Also, if the directors find a legal challenge regarding the takeover, they can seek a remedy through litigation to have the courts decide on the matter. Steps can also be pursued to protect the interests of certain key employees should the offer be successful.

The offeree company’s defensive measures are typically the measures undertaken by directors through the directors’ circular and any contractual arrangements that can be pursued and disclosed prior to the completion of the offer. Please also see 9.2 Directors’ Use of Defensive Measures.

When enacting defensive measures, the directors’ actions are subject to their fiduciary duties to the company. Please also see 8.1 Principal Directors’ Duties.

Directors are unable to mandate that the shareholders of the offeree company refuse to accept a takeover bid. Rather, the directors are required to circulate the director’s circular among the shareholders and perform their duties. Directors are permitted to recommend to the shareholders as to whether the offer should be accepted. Please also see 9.2 Directors’ Use of Defensive Measures and 8.1 Principal Directors’ Duties.

Litigation regarding M&A deals is not frequent in Barbados. The most recent M&A cases were Ansa McAl (Barbados) Limited (ANSA) v Banks Holdings Limited (BHL) and Slu Beverages Ltd BB 2016 CA 13 and Kenneth Went v Cable & Wireless BB 2018 HC 26. For details, please see 8.3 Business Judgment Rule.

Actions in the Supreme Court of Barbados regarding takeovers have been brought after the offer for the takeover bid has been made and before the offer closes.

As a result of the COVID-19 pandemic, the following were identified as key for M&A transactions in Barbados:

• well-defined materially adverse change clauses in contracts, the importance of which was underscored by some parties seeking to terminate transactions based on unforeseen economic disruptions;
• the need to have clear force majeure clauses within contracts to determine whether unforeseen events could justify the termination of a contract or renegotiations; and
• the need for more thorough due diligence, especially as it relates to the financial stability of the target company.

Minority shareholders are becoming increasingly vigilant with respect to the protection of their rights and the preservation of the value of their shares. There is limited trading of shares on the BSE, and share retention is therefore important. The general focus of shareholders is to ensure that they are fairly compensated for their shareholding and that the mechanism used to value said shareholding is of an acceptable standard.

The authors are not aware of cases of activists encouraging companies to enter into M&A transactions or major divestitures.

Activists seek to scrutinise announced transactions and to review whether, for example, the directors are compliant with their obligations under the Take-Over Code to alert minority shareholders to their rights and ensure fair treatment. The authors have not seen cases where activists who are not shareholders have sought to interfere by way of court proceedings, etc, with an announced transaction. Any such attempt would require the activists to convince the court that they have a cause of action to pursue.