The M&A market in Moldova has shown signs of progress in the last months. While the number of M&A transactions decreased by 25% in the last 12 months, the total transaction value grew by 45.69% in 2024. Maintaining the current economic trajectory, the transaction value in the M&A market is projected to reach USD12.12 million in 2025.

Moldovan M&A trends suggest that sustainability and ESG factors are increasingly important in deal-making. Companies are prioritising targets with strong ESG profiles. Additionally, persistent market volatility necessitates careful risk assessment and due diligence in any M&A transaction, including those in Moldova. Finally, the adoption of digital technologies is likely playing a role in Moldova’s M&A market, as in 2024, firms sought to leverage data-driven insights and innovative platforms to enhance efficiency and value creation.

In the past 12 months, the industries that experienced significant M&A activity in our jurisdiction include the energy sector, the banking sector and the IT sector. The energy sector has seen a notable increase in M&A activity, driven not only by the global transition to renewable energy but also by foreign investments and the new policies developed by the government to support the sector’s growth and modernisation. Similarly, the banking sector has been influenced by foreign investments, with international players increasingly involved in the local market, aiming to strengthen their presence and expand their operations. The IT sector continues to experience high levels of M&A activity due to growing demand for innovative technologies and digital transformation.

Company acquisitions can be carried out in several ways: through a merger or the purchase of shares (or assets, depending on the case).

A merger is carried out through either consolidation or absorption. Consolidation results in the dissolution of the legal entities involved without entering liquidation, and the full transfer of their rights and obligations to a newly established legal entity. In contrast, absorption results in the dissolution of the absorbed legal entity without entering liquidation, and the full transfer of its rights and obligations to the absorbing legal entity.

Another alternative for acquiring a company is through the purchase of shares, which may begin with acquiring smaller share packages and culminate in a public offer to buy the shares of the target company. An additional method is the purchase of all assets of a company, which has the advantage that the new company will not face minority shareholders. However, this method involves additional costs, as it requires the transfer of ownership over each asset.

National Bank of Moldova (NBM)

The NBM is responsible for approving the mergers and absorptions of commercial banks, ensuring that systemic risk remains at the lowest level and that such activities contribute to a strong and competitive financial sector. In the case of a merger, the NBM issues a financial licence to the successor bank, while in the case of an absorption, the successor bank operates under its existing licence. The sale of a significant share of a bank’s assets (10% to 50%) is decided by the bank’s Board, while sales over 50% require approval from the general meeting of shareholders.

Moldova Stock Exchange

The specialised department of the market operator examines the documents for securities admission and ensures that the issuer complies with the regulations of the exchange. The procedure culminates in the issuance of an admission certificate for trading.

National Commission for Financial Markets (NCFM)

The NCFM oversees all participants in the financial market, including securities issuers, investors, insurance companies and non-bank credit organisations.

Competition Council (CC)

The CC is responsible for enforcing competition law. Any economic concentration operation resulting in changes to the control of enterprises must be evaluated and notified to the CC before implementation, provided it meets specific criteria.

Central Public Authorities

Certain acquisitions involving state-owned property require prior authorisation from the relevant public authorities before proceeding.

In the Republic of Moldova, there is a review process for certain acquisitions, especially those involving critical sectors that may impact national security. Foreign direct investments are generally encouraged, and with no significant restrictions imposed, the country’s economic policies are designed to foster these investments. For example, the fiscal policy avoids double taxation through the Ministry of Finance’s Order No. 177 of 2023, which also supports international co-operation through treaties aimed at preventing tax evasion.

Acquisitions in sensitive areas like personal data storage, electoral domains and electronic communications require prior approval from the Council for Nationally Significant Investment Projects, which can approve the investment, reject it, or approve it with conditions.

The CC is the authority vested with the power to make decisions, regulate, prohibit, intervene, inspect, impose sanctions and adopt decisions as provided by law for cases of economic concentration. Economic concentration operations are those that result in lasting changes to the control of the undertakings involved and, consequently, to the structure of the market.  The implementation of an operation involving the merger of two or more independent undertakings, or the acquisition by one or more persons who already control at least one undertaking, or the acquisition of social shares (or assets, as applicable) leading to the direct or indirect control over one or more undertakings or parts thereof, is prohibited until the economic concentration is declared compatible with the competitive environment by a decision issued by the Plenary of the CC.

The implementation of a public offer or a series of transactions involving securities, accepted for trading, through which control is acquired from different sellers, is permitted provided that (i) the concentration is notified to the CC without delay, and (ii) the acquirer does not exercise the voting rights attached to the securities in question.

Economic concentration operations are subject to evaluation and must be notified to the CC when the global aggregate turnover of the undertakings involved, recorded in the year preceding the operation, exceeds EUR2.5 million, and at least two of the undertakings involved in the operation have individually achieved a total turnover of more than EUR1 million within the territory of the Republic of Moldova in the year preceding the operation.

The implementation of an economic concentration operation is understood, as applicable, to mean the conclusion of an agreement, the announcement of a public offer or the acquisition of a controlling stake.

In the Republic of Moldova, acquirers must be mindful of several key labour law regulations during business acquisitions, particularly in cases of organisational restructuring or ownership changes. When such events occur, the acquirer automatically assumes all rights and obligations derived from existing individual and collective labour contracts. It is important to note that the mere reorganisation or change in ownership does not provide grounds for terminating individual labour contracts, except for certain top management positions such as the unit’s director, deputy directors and chief accountant.

Dismissal can only occur in specific cases, such as when an employee refuses to continue work due to the ownership change or restructuring, or if there is a reduction in the number of positions. Furthermore, the current employer is required to inform employee representatives at least 30 days in advance about the reorganisation, outlining the proposed start date, the reasons for the change, and its legal, economic and social impact on employees. Adhering to these regulations is essential for the acquirer to avoid legal issues and ensure a smooth transition.

For acquisitions related to sensitive areas such as personal data storage infrastructure, electoral domains and the provision of electronic communications services or networks, a prior approval from the state is required. This review is conducted by the Council for the Promotion of Nationally Significant Investment Projects. Following an assessment, the Council can either approve the proposed investment, reject it, or approve it with conditions.

In the past three years, the most significant legal development in the corporate area was the approval of Law no. 229/2023, which brings major changes to the regulation of limited liability companies (LLCs). The law removes the cap on the number of shareholders in an LLC, simplifying company formation by merging the statute with the founding act. It also introduces greater flexibility in capital management, allowing capital increases through non-cash contributions, including consumables. Additionally, the law facilitates online shareholder meetings and allows electronic document retention. A notable change is the inclusion of arbitration clauses in company statutes, providing a clearer framework for dispute resolution within LLCs.

Over the past 12 months, there have been no significant changes to the takeover law. The current regulations continue to be based on the following key provisions: (i) any shareholder seeking to acquire a significant stake in a company is required to make a public offer; (ii) the target company’s shareholders and management must be properly informed about the takeover intentions, including the requirement to disclose information about the ultimate beneficial owner; (iii) provisions are in place to safeguard the interests of minority shareholders, ensuring they have the option to sell their shares under fair conditions; and (iv) in cases where the acquisition exceeds certain market thresholds, the transaction is subject to scrutiny by the CC to prevent negative effects on market competition.

In the context of the Republic of Moldova’s legislation, building a stake in the target company prior to launching a public offer for acquisition (OPA) is possible, but it comes with certain legal complexities. It is not common for a bidder to acquire a significant position in a target company before making an offer, because the process is closely regulated and must comply with transparency and reporting obligations.

The Capital Market Law regulates the financial market and transactions with financial instruments. It includes transparency requirements for investors and regulates significant reporting when an entity or investor acquires a substantial stake in a company. Investors must report to the authorities when they acquire a majority position, typically at thresholds of 5%, 10%, 20%, 30%, etc, depending on the specific case.

In the context of stock acquisitions and mergers, the Competition Law regulates the conditions under which one entity can take over another, to prevent the creation of monopolies or dominant market positions. The CC is responsible for reviewing and approving such transactions when the legal conditions are met.

When an investor wants to gain control of a company by acquiring shares in the regulated market, they must follow the procedure of an OPA. According to regulations, any significant acquisition of shares in a listed company must be publicly notified to the authorities and the public.

It is important to note that, in the Republic of Moldova, the concept of identifying the ultimate beneficial owner plays a key role in this process. If the bidder is acting through intermediaries or multiple layers of entities, they must disclose the beneficial owner of the stake.

The material shareholding disclosure thresholds and filing obligations outline that a potential buyer must notify the NCFM of their acquisition project before purchasing or selling shares in an investment company if they intend to obtain a qualified participation or if they plan to increase their stake.

Securities Holders

A shareholder who, individually or together with persons acting in concert, has acquired or disposed of voting shares or securities convertible into voting shares of a public-interest entity and/or listed on the Multilateral Trading Facility (MTF) is required to inform, in the prescribed form, both the issuer of securities and the NCFM within no more than four working days from the date of acquisition or disposal, if as a result of this transaction they reach, exceed or fall below the thresholds of 5%, 10%, 15%, 20%, 25%, 33%, 50%, 66%, 75% and 90% of the issuer’s share capital.

Economic Concentration

Additionally, economic concentration operations are subject to evaluation and must be notified to the CC before they are implemented. This notification requirement applies when the total worldwide turnover of the companies involved, accumulated in the year preceding the operation, exceeds EUR2.5 million, and at least two of the companies involved in the operation have each achieved a turnover of more than EUR1 million in the Republic of Moldova in the previous year. The implementation of an economic concentration operation includes actions such as concluding an agreement, announcing a public offer or acquiring control of a company. This ensures that any significant changes in market concentration are reviewed to prevent anti-competitive practices and to maintain a competitive market environment.

Public Offer

Furthermore, a public offer cannot be made without the publication of a prospectus approved by the CNPF. However, the obligation to prepare and publish a prospectus does not apply to the following categories of offers: (i) offers addressed exclusively to qualified investors; (ii) offers addressed to fewer than 100 individuals or legal entities, other than qualified investors; (iii) offers directed at investors purchasing securities in an amount equivalent to at least EUR50,000 per investor; (iv) offers where the nominal value of a security is equal to or greater than the equivalent of EUR50,000; and (v) offers with a total value of less than EUR100,000 within a 12-month period. These exemptions allow for greater flexibility in certain types of securities offers while maintaining transparency for larger or more impactful transactions.

In the Republic of Moldova, companies cannot introduce different reporting thresholds for stakebuilding in their articles of incorporation or by-laws. The thresholds for reporting are defined by law, particularly the Capital Market Law, and are set at specific levels (eg, 5%, 10%, 20%, 30%) that must be adhered to.

Other hurdles to stakebuilding include compliance with transparency and reporting obligations, the requirement to disclose the ultimate beneficial owner, and obtaining approval from the CC for certain acquisitions to prevent monopolistic practices. Additionally, the process is closely regulated by both the Capital Market and Competition Laws to ensure proper oversight (see 4.1 Principal Stakebuilding Strategies).

Dealings in derivatives are regulated under similar frameworks to those governing the trading of shares, and they are subject to the same reporting obligations. These regulations ensure transparency and protect market participants by requiring detailed disclosures of derivative transactions (see 4.2 Material Shareholding Disclosure Threshold).

Under securities disclosure and competition laws, derivatives transactions must be reported and disclosed in accordance with established regulations to ensure market transparency and prevent anti-competitive behaviour.

For securities, including derivatives traded on regulated markets or within multilateral trading systems, the validity of transactions remains unaffected, except when the seller and buyer are aware, or should have been aware, that the transaction violates specific provisions.

Regarding economic concentration under competition law, any transaction involving derivatives that may result in economic concentration is subject to approval. Such concentrations cannot be implemented until they are declared compatible with the competitive environment by a decision from the Plenary of the CC.

Shareholders are not required to disclose their purpose for acquisition and intentions regarding control of the company, but rather to disclose information about their reputation. Any individual or legal entity intending to buy shares in an investment company must notify the NCFM prior to completing the transaction. The notification must include the identity of the potential buyer, financial reports for the past three years (for legal entities), the buyer’s intentions regarding the company’s services and activities, any planned changes to internal organisational and prudential requirements, and information about the management and reputation of individuals who may take over the company’s operations.

A target is required to disclose a deal at the stage when the public offer is intended to be made. Specifically, the person intending to carry out a voluntary takeover offer must submit the notification, the issuer whose securities are subject to the offer, and the relevant market operator/system. This notification must be made simultaneously with the publication of the notice in one or more national publications. The content of the notice and the required information are specified in the regulations of the NCFM. Additionally, economic concentration operations must be evaluated and notified to the CC before implementation, which may include the signing of agreements, announcing the public offer or taking control of the target company.

According to the legislation, disclosure must occur when a voluntary takeover offer is intended, as outlined previously, and is tied to specific events such as the public announcement of the offer and the notification to relevant authorities and market participants. The legal requirements demand that this disclosure be made promptly, including the publication of the notice in national publications.

In terms of market practice, however, it is common for disclosures to be made at later stages, such as when the definitive agreements are signed or after negotiations have progressed further. Companies may wait until more concrete steps are taken in the transaction, such as when there is a higher level of certainty or finality in the deal. Additionally, there may be strategic considerations, such as avoiding market volatility or protecting business interests, that influence the timing of public disclosure.

In the Republic of Moldova, due diligence in a negotiated business combination typically covers key areas such as verifying title to shares, assessing the incorporation and corporate structure, and reviewing employee option plans, convertible loans and operating permits. It also involves analysing employment contracts, intellectual property rights (including trade marks), and commercial contracts such as supplier or customer agreements. Additionally, due diligence includes examining major leases (eg, office or equipment leases), investigating any ongoing or pending litigation, and ensuring that the target company is legally sound and compliant with applicable regulations.

In the Republic of Moldova, the practice tends to favour standstill agreements over exclusivity agreements. This is largely due to the strict regulatory framework that governs significant transactions, which requires detailed reporting and disclosure. When a company intends to launch a takeover offer, it is generally preferred to maintain the flexibility to negotiate with multiple financial players to increase the chances of a successful transaction. A standstill agreement is typically demanded to ensure the stability of the deal and prevent further acquisition of shares before the offer is finalised.

It is both permissible and common for tender offer terms and conditions to be documented in a definitive agreement. In practice, it is standard for parties involved in a transaction to formalise the terms and conditions of the offer in a written agreement. This definitive agreement typically outlines the specifics of the tender offer, including the price, the conditions for acceptance and any other relevant provisions. This ensures that both parties have a clear understanding of their obligations and expectations, while also providing a legally binding framework to govern the transaction.

The tender offer prospectus must contain detailed information regarding the bidder’s intentions regarding the future activities of the issuer whose securities are the subject of the offer. This should include clear information about the potential impact of the offer on the target company and, in the case of a corporate bidder, on the bidder itself. Relevant information includes measures concerning the retention of jobs for employees and management, potential changes to working conditions, post-offer strategic plans, and their effects on employment and the operational location of the company. These details are essential for shareholders and employees to understand the impact of the offer and make an informed decision.

The legal process for acquiring or selling a business in the Republic of Moldova typically takes between two and three months, with a maximum duration of up to six months, as stipulated by the relevant legislation. However, in practice, the timeline may be extended due to various factors such as the complexity of the transaction, the need for regulatory approvals, and the involvement of multiple stakeholders. This extension may arise particularly in cases where the transaction requires scrutiny by regulatory bodies, such as the CC or the NBM, or when there are additional legal and financial considerations that require further due diligence or negotiation. Therefore, while the statutory timeframe provides a general guide, the actual duration may vary based on the specifics of each case.

Moldovan legislation has a mandatory offer threshold. Any individual or legal entity that holds, directly or indirectly, alone or together with persons acting in concert, more than 50% of the voting securities of a company, is required to make a mandatory takeover offer. This offer must be made to purchase the securities held by other shareholders at a fair price.

Exemptions

However, there is an exception to this obligation. The mandatory offer requirement does not apply in cases where the acquisition of more than 50% of the securities occurred as a result of a voluntary takeover offer to buy all the securities of the same class. In such cases, the individual or entity is exempt from the mandatory offer obligation under the applicable laws at the time the acquisition took place.

Timeframe

Additionally, the mandatory takeover offer must be initiated as soon as possible but no later than three months after the acquisition of the securities by the party involved or by those acting in concert. This three-month period begins from the date the party required to make the offer is registered in the Central Depository’s accounts with the securities that trigger the offer obligation. The offer must then be made on the first day the offer is launched.

In the Republic of Moldova, cash is more commonly used as consideration in business acquisitions due to its simplicity and liquidity. However, in cases of high valuation uncertainty or when there is a gap in perceived value, several tools are employed to bridge these differences. Common methods include earn-outs, where part of the purchase price is contingent on future performance, seller financing to allow payments over time, escrow arrangements to address potential liabilities, and convertible instruments such as debt or preferred shares that adjust based on future milestones. These tools help align the interests of both parties and manage the risks associated with valuation discrepancies.

In the Republic of Moldova, certain conditions are commonly required for a takeover offer. A takeover offer can only be initiated for securities that are admitted to trading on a regulated market or within an MTF. The offer cannot be made by the issuer for its own securities, nor does it apply to investment fund units or shares issued by Collective Investment Units in Securities. The terms of the offer must be equal for all holders of the targeted securities. The offer period must last between a minimum of two weeks and a maximum of ten weeks, with certain exceptions. The fair price for the securities must be at least the highest price paid by the bidder or persons acting in concert within the past 12 months, or the weighted average market price of the securities over the last six months if the former is not applicable. After the NCFM’s approval, the offer prospectus must be published within seven working days.

The bidder is allowed to modify the offer conditions by issuing a supplement to the prospectus. Regulators do restrict the use of offer conditions to ensure transparency and fairness in the process. Additionally, it is common for the parties in a voluntary offer to adopt a series of additional conditions between them, though these conditions are limited by the obligation to comply with the regulatory framework and fairness requirements.

Furthermore, before the takeover offer is executed, the bidder is required to have the necessary payment means to finance the offer. As proof of the availability of the required funds, the bidder can provide, separately or in combination:

• their own financial resources;
• financial resources of a guarantor;
• a bank guarantee; and/or
• an insurance policy for guarantees.

A significant control threshold is reached when a bidder acquires more than 50% of a company’s shares. Usually, for the tender offer to be valid, the bidder will require a minimum acceptance condition of at least 50% of the shares to be sold, to gain control of the company. This ensures that the bidder will have sufficient decision-making power over the business, and the offer will have a meaningful impact on the control structure of the target company. Additionally, in some cases, higher acceptance thresholds (eg, 66% or 90%) may apply, depending on specific regulations and the bidder’s strategic objectives.

Before a takeover offer is executed, the bidder must demonstrate that they have the necessary financial resources to fund the offer. It is essential for the bidder to prove the availability of these financial means, and as such, a condition based on the subsequent acquisition of financing is not permissible (see 6.4 Common Conditions for a Takeover Offer).

In the Republic of Moldova, a bidder can seek several deal security measures to protect their interests in an acquisition. Common provisions include non-solicitation clauses, which prevent the target company from soliciting or negotiating offers from other potential buyers during the transaction process, and break-up fees, which provide financial compensation to the bidder if the target terminates the deal or accepts a competing offer. These provisions help to mitigate the risks associated with deal uncertainty and provide a level of security for the bidder. Additionally, regulatory changes in the jurisdiction, particularly in relation to transparency and antitrust considerations, have led to more extended interim periods in some cases. This is due to the increased scrutiny required by regulatory bodies such as the CC, which may necessitate more time for approval processes, further extending the overall timeline for deal completion.

If a bidder does not seek 100% ownership of a target, they can seek additional governance rights that are not directly tied to the percentage of shares they hold but still allow them significant influence over the company’s decisions. According to the legislation, there are several rights a bidder can request, depending on the percentage of shares they hold, as detailed below:

• For shareholders holding at least 5% of the voting shares:
1. the right to introduce items on the agenda of the annual general meeting of shareholders and to propose resolutions for the items included or proposed to be included on the agenda;
2. the right to propose candidates for the company’s board of directors, the supervisory board, or, where applicable, the audit committee; and
3. the right to request the convening of an extraordinary meeting of the company’s board of directors.
• For shareholders holding at least 10% of the voting shares:
1. the right to request the determination of the cost of placing the company’s shares, based on a report from an auditor or another specialised organisation;
2. the right to request extraordinary audits of the company’s financial and economic activities and/or the annual financial statement audit; and
3. the right to file a lawsuit on behalf of the company against individuals in responsible positions for damages caused by intentional or serious violations of the law or other legal acts.
• For shareholders holding at least 25% of the voting shares, the right to request the convening of an extraordinary general meeting of shareholders.

Additionally, the company’s by-laws may grant shareholders further supplementary rights. So, even without 100% ownership, the bidder can gain considerable influence over the decisions and strategy of the target company.       

A shareholder can appoint one or more representatives to vote on their behalf at the general meeting of shareholders. There is no limit to the number of shareholders a person can represent. However, the representative is required to vote according to the instructions provided by each shareholder who designated them. These instructions must be written and can be included in a proxy, a mandate, a contract or another separate document, which should be presented along with the representation act. These documents, along with the shareholder list, are attached to the attendance list for the meeting. The representative can only vote on behalf of the shareholder if they have received written instructions regarding how to vote on each item on the meeting’s agenda.

Squeeze-out mechanisms are commonly employed following a successful tender offer, particularly in cases where a bidder has acquired a majority stake in a target company and seeks to acquire the remaining shares held by minority shareholders. This mechanism is more adapted to local practice, as it allows the bidder to force the sale of shares from dissenting minority shareholders once they have reached a specified threshold of ownership. The legal framework provides that if a bidder acquires a significant portion of the shares – typically 90% or more – they may initiate a squeeze-out, compelling the remaining shareholders to sell their shares at the same terms as those offered in the tender. This ensures that the bidder can gain full control of the company without being hindered by holdout shareholders. Short-form mergers, another commonly used tool, allow the acquiring company to merge with the target without requiring shareholder approval if the bidder already controls a substantial majority of the shares, streamlining the acquisition process and eliminating the need for lengthy negotiations with minority shareholders. Both mechanisms offer a more efficient and practical approach to completing an acquisition, especially in a jurisdiction like Moldova where such provisions are well supported by local law.

Under the Moldovan legislation, it is not uncommon to seek irrevocable commitments from principal shareholders of the target company to tender or vote in favour of a particular offer. These commitments can be obtained at different stages of the process, although they are typically more common during the bidding phase, after initial non-binding offers have been made. Early negotiations may involve non-binding offers, where parties express interest but the terms are not yet finalised. As the process progresses, binding offers are usually made, and at this stage, irrevocable commitments are more likely to be secured from the principal shareholders to ensure their support.

The nature of these undertakings can vary, but typically they provide an out for the principal shareholder if a superior offer is made. This is often included as a safeguard, allowing the shareholder to accept a better offer if one arises, which helps to maintain flexibility in a competitive market environment. While such commitments can be important in securing support, there is no conclusive practice or standardised approach in Moldova, as each deal may have its own unique terms and conditions depending on the specifics of the transaction.

A public offer cannot be made without publishing a prospectus approved by the NCFM. Once the prospectus is approved, it must be published by the bidder no later than the opening date of the offer. The prospectus is considered published if it is made available (i) in one or more newspapers with national circulation; (ii) in printed form accessible to the public; (iii) in electronic form on the bidder’s website; and (iv) in electronic form on the regulated market’s website.

Approval and Publication of the Prospectus

For the issuance of shares in a business combination, a prospectus must be approved by the NCFM before it can be published. Once the prospectus is approved, it must be made available by the bidder no later than seven working days from the approval date. The prospectus must be published in accordance with the methods of publication. This includes making the prospectus available in print or electronic form, and it must be accessible through national newspapers, the bidder’s website and the regulated market’s website.

Disclosure of Results and Post-Offer Report

After the offer has closed, the bidder must publish a notice detailing the results of the offer. This notice should be made public within seven days from the expiration of the offer period, using the same means of publication that were used for the initial prospectus. The notice will include detailed information about the number of securities held by the bidder and any individuals acting in concert with the bidder, reflecting the changes after the completion of the offer. This ensures transparency about the post-offer ownership structure.

Notification of Intent and Pre-Offer Disclosure

Before proceeding with the business combination, the bidder must notify the NCFM, the target company, and the relevant market operator of its intention to make a takeover offer. This notification must be published in national periodicals to ensure that stakeholders are informed of the bidder’s intentions. Additionally, within 30 days of submitting the notice of intent, the bidder must submit the detailed prospectus for approval. The target company is then required to inform its employees about the offer. This process ensures proper pre-offer disclosure and allows for informed decision-making by all involved parties.

Exceptions from Disclosure Requirements

There are certain exceptions to the obligation to prepare and publish a prospectus for a business combination. These exceptions apply to offers that are exclusively addressed to qualified investors, or to offers directed to a limited number of fewer than 11 individuals or legal entities. Additionally, if the offer involves securities whose value per investor equals or exceeds EU50,000, or if the total value of the offer over a 12-month period amounts to EUR100,000 or more, the requirement for a prospectus publication does not apply. These exceptions are intended to provide flexibility in cases where the offer is limited in scope or targeted at experienced investors.

Bidders are required to provide certain financial information in their disclosure documents, even if the preparation and publication of a prospectus is not mandatory. When a prospectus is not required, the bidder must provide at least the following information to qualified investors or the categories of investors to whom the offer is addressed:

• a brief description of the issuer and, if applicable, the guarantors of the offer, including the total value of assets and liabilities, net asset value, and other relevant financial indicators based on the most recent financial statements of the issuer/guarantor. This should also include a summary of the associated risks and, if applicable, the nature and purpose of the guarantee.

When a public offering prospectus is required, it can be structured as a single document or as a set of three separate documents, and it must include:

• information regarding the issuer and the securities offered to the public or those that will be admitted for trading on a regulated market; and
• all information necessary for investors to make an informed assessment of the issuer’s or guarantor’s assets and liabilities, financial position, profits or losses, prospects, and the rights attached to the securities offered.

This ensures that potential investors have the necessary financial information to make a well-informed decision about the offer.

The law requires that all mandatory information be presented in the prospectus and listed explicitly. Beyond these requirements, there is no legal obligation to disclose the full transaction documents. It remains at the discretion of the bidders to negotiate and determine the specific terms of the transaction, including the decision on whether to disclose additional documents. Therefore, any further disclosure beyond the prescribed requirements is not mandatory and is subject to the parties’ negotiation.

In a business combination, the principal duties of directors are to act in the best interest of the company, ensuring the long-term success of the business while fulfilling their legal obligations. These duties include overseeing strategic decisions, such as approving major transactions, ensuring compliance with relevant laws and managing the day-to-day operations of the company. Directors are responsible for making and executing decisions on corporate actions, such as the approval of public offerings, managing financial matters and overseeing corporate governance structures. Additionally, directors must make decisions relating to dividends, profit distribution, and any other matters as outlined by the company’s statutes or regulatory frameworks.

Directors’ duties are primarily owed to the company and its shareholders, but these duties may also extend to other stakeholders, such as employees, creditors and the broader community. While the principal duty is towards shareholders, directors are expected to consider the impact of their decisions on various stakeholders and to act with fairness and in the company’s overall interest. In the context of a business combination, this could include taking into account the interests of employees, ensuring proper regulatory compliance and safeguarding the company’s reputation.

It is not a common practice for boards of directors to establish special or ad hoc committees specifically for business combinations. Typically, decisions regarding business combinations are handled directly by the board of directors as a whole, without the need for a separate, specialised committee. This is because the board is expected to work collaboratively in overseeing significant corporate actions such as mergers, acquisitions or other large transactions.

Any transaction involving a conflict of interest can only be concluded or modified by the company through a decision of the board of directors, provided that the transaction’s value does not exceed 10% of the company’s assets according to the most recent financial statements. Alternatively, such a transaction may be approved by a resolution of the general meeting of shareholders, in accordance with the provisions of the applicable law and the company’s by-laws.

As such, the involvement of ad hoc committees is usually not necessary, as these decisions are made based on the input of the full board, ensuring a broader perspective on the transaction at hand.

In 2019, the Moldovan Civil Code was modernised, and according to the new provisions, administrators are not held liable for every managerial decision that later turns out to be wrong. They are only responsible for decisions that they knew, or should have known, to be wrong, considering specific criteria. This framework emphasises that judges should not automatically hold administrators accountable for their decisions without due consideration.

Furthermore, judges are not permitted to assess the opportunity or reasonableness of business decisions. In the event that a company proves a breach of the administrator’s obligations, the administrator can be exempted from liability by demonstrating that they acted with the necessary competence and diligence.

This principle is similar to the “business judgement rule” in the United States, which offers directors a level of protection from liability for decisions made in good faith, with reasonable care, and in the best interest of the company. Courts in Moldova, under the current legal framework, are expected to defer to the judgement of the administrator or board of directors in such situations, provided they meet the required standard of care and competence, ensuring that they are not held accountable for decisions that were made in the exercise of their business judgement.

In practice, the external opinion in our jurisdiction is provided primarily through the audit process, which is mandatory for public interest entities and for companies where the state holds more than 50% of the share capital. For such companies, the government determines the selection of audit entities and the terms of reference. Additionally, audits may be requested by shareholders holding at least 10% of the voting shares, and the cost is borne by those shareholders unless otherwise decided by the general meeting.

However, besides audit services, external consultation is also commonly provided by financial advisers, typically investment banks or management consulting firms, who assist with strategic decision-making, financial structuring and valuation. Legal advisers provide guidance on regulatory compliance, contractual matters and corporate governance, while tax advisers ensure proper tax planning and compliance with tax regulations. In certain cases, pension and environmental advisers may also be engaged, especially for businesses with significant employee benefit schemes or environmental obligations. This multifaceted external support ensures that the company receives comprehensive and independent advice across all critical areas of its operations and business transactions.

The law provides that directors and managers have a fiduciary duty to act in the best interests of the company, and any conflicts of interest must be disclosed and addressed accordingly. However, cases where conflicts of interest have led to judicial decisions are rare, and enforcement mechanisms primarily rely on internal corporate governance and regulatory oversight rather than judicial action.

In the Moldovan legal framework, hostile tender offers are not prohibited, and there are specific rules governing takeover bids and public offers. However, in practice, hostile tender offers are rare and have not been commonly encountered. The regulatory environment provides a structured process for acquisitions, but hostile takeovers have not been a prevalent feature of the market in Moldova.

Under Moldovan legislation, directors may implement certain defensive measures within the limits of their authority, as defined by the company’s statutes, its internal regulations and the applicable legislation. For instance, the executive body of the company has the power to act on behalf of the company without a power of attorney, including entering into transactions, approving payroll, and issuing orders and directives. However, any defensive measures or actions must not violate corporate law, including shareholder rights and regulatory frameworks. While such measures can be included in the company’s statutory documents or management agreements, they must comply with legal requirements and cannot be used to undermine the interests of shareholders or other stakeholders.

Board and Shareholder Vote Requirements

The executive body must ensure that certain resolutions, particularly those affecting the company’s structure or significant changes, are passed with the appropriate majority as outlined in the company’s statutes (eg, two-thirds majority or cumulative voting for certain decisions).

Statutory Delegation of Powers

The executive body can delegate specific powers to managing organisations through fiduciary management agreements. This allows the executive body to control or restrict decisions through the delegation of authority to trusted entities.

Shareholder Approval for Strategic Decisions

Defensive measures can also include requiring approval from the general shareholders’ meeting or the board for significant actions, ensuring that the company has a clear oversight mechanism in place for important decisions like business combinations or other strategic moves.

Transparency and Compliance With Public Procurement Procedures

The executive body ensures transparency in procurement processes and adherence to public procurement rules, especially when the company has state ownership, which can act as a protective measure against hostile moves.

When enacting defensive measures, directors are obligated to act in accordance with the best interests of the company and its shareholders, while ensuring compliance with the company’s statutory provisions and legal requirements. The executive body of the company is responsible for ensuring the implementation of decisions made by the general shareholders’ meeting and the board of directors. The executive body must act under the authority of the board and, where applicable, the general shareholders’ meeting, as specified in the company’s by-laws. Additionally, directors must provide the board, the audit committee and their members with all necessary documents and information to perform their duties effectively.

In enacting defensive measures, directors must also adhere to principles of transparency and fairness, ensuring that any actions taken do not compromise shareholder interests or violate corporate law. Moreover, if the company is state-owned or has majority state capital, the executive body must ensure the execution of decisions relating to procurement and production planning with full transparency, in line with legal procedures. Therefore, defensive measures must be aligned with corporate governance rules, the company’s by-laws and the overarching legal framework governing such actions, ensuring that no actions taken by the directors negatively impact shareholder rights or the company’s overall integrity.

Directors have the right to vote against or abstain from voting on a proposed business combination. However, they cannot unilaterally block or overturn the decision if it has the approval of the majority of the council or the general shareholders’ meeting, as applicable. The final decision on such matters rests with the majority vote, and the directors are bound to adhere to the outcomes of these collective decisions in accordance with the company’s by-laws and applicable corporate governance regulations.

In the Republic of Moldova, litigation in connection with M&A deals is rare. Most conflicts are typically resolved during the negotiation phase, where the parties work to address any issues before formalising the transaction. Additionally, any potential disputes that could lead to legal action are generally anticipated and addressed through specific provisions in the agreements. These provisions often include mechanisms for dispute resolution, such as arbitration or mediation, which help to avoid court proceedings. As a result, it is uncommon for M&A transactions to result in litigation, as the focus is on resolving differences early and within the agreed-upon frameworks.

See 10.1 Frequency of Litigation.

See 10.1 Frequency of Litigation.

Shareholder activism is not a significant or well-developed force. It is not commonly practised, and there are few instances where shareholders actively engage in pushing for changes or influencing corporate governance in a meaningful way. The concept of shareholder activism has not yet gained widespread traction in the Moldovan market, and the focus of shareholders tends to be more passive, with limited involvement in the day-to-day management or strategic decisions of companies.

See 11.1 Shareholder Activism.

In the Republic of Moldova, shareholder activists do not typically seek to interfere with the completion of announced transactions. Given that shareholder activism is not a well-developed force in the jurisdiction, there is little to no activity from activists aimed at disrupting or challenging M&A transactions. The market culture tends to be more passive, and any objections or concerns from shareholders are usually addressed during the negotiation phase rather than through active interference once a transaction has been announced.