Following the recession during the COVID-19 pandemic, the M&A market is picking up, with businesses taking more risks and leading to financial health.

Notable events in the last 12 months include the completion of the Scotiabank sale to an indigenous bank, Eastern Caribbean Amalgamated Bank, and the completion of the acquisition of RBC Royal Bank by another indigenous bank, Bank ACB Caribbean.

Domestic banking and international business corporations have seen significant M&A activity in the past 12 months.

Most companies in Antigua and Barbuda are acquired through the sale of their shares. A company can also be acquired by purchasing its assets, including fixed assets and real estate. Companies that own vast real estate are attractive for purchasers as most investors seek to develop the property, which can profitable.

The Financial Services and Regulatory Commission regulates financial activities for off-shore companies. The Antigua and Barbuda Investment Authority also regulates foreign direct investments. Depository institutions such as banks and insurance companies are regulated by the Cabinet of Antigua and Barbuda, and would require approval in most cases of a merger or acquisition. The Eastern Caribbean Securities Exchange Commission and the Eastern Caribbean Central Bank are also regulators in this jurisdiction.

There are no restrictions on foreign investment in Antigua and Barbuda. In fact, as a country which depends largely on tourism, foreign direct investment is encouraged.

There are no antitrust regulations in Antigua and Barbuda.

Acquirers should be aware of the need for employers to consult with unions where employees are unionised. The Labour Code makes it mandatory for a company that is taking over another to ensure that employees are adequately compensated for severance.

National security reviews are conducted only in respect of the merger and acquisition of banks and other financial institutions. There are otherwise no national security reviews.

There have been no significant court decisions or legal developments in the past three years related to M&A.

There have been no significant changes to takeover law in the past 12 months, and none are under review. Currently, takeovers are provided for in the Companies Act.

While it is not “customary”, in a few instances potential bidders may pre-bid. While the market for M&A in Antigua is not yet flooded with deals and deal activity has been sporadic, it is growing.

In respect of financial institutions and public companies, the threshold is 10% of the share capital. A recent amendment to the Companies Act now requires any person who controls or has a beneficial interest in a company to declare and report this when filing annual returns. This recent amendment is to ensure compliance with Financial Action Task Force (FATF) Recommendations, to which Antigua is a signatory.

There are no statutory regulations or limitations on stakebuilding.

Dealing in derivatives is generally allowed.

There are no competition laws in Antigua.

Shareholders do not have to disclose the purpose of their acquisition.

Outside financial institutions, it is not a regulated requirement for a target to disclose a deal but one which depends largely on the parties. Usually, once negotiations begin, requests for disclosure of a deal may be made.

Generally, market practice on timing of disclosure does not differ from the legal requirements: each M&A depends on their own unique circumstances.

Due diligence will usually cover legal matters involving:

• title to land, encumbrances, surveys, valuations and taxes;
• environmental due diligence involving environmental impact assessments and consultations with residents, where necessary;
• accounting and finance due diligence, including satisfying money-laundering compliance; and
• operational due diligence, covering employees’ rights to severance, engaging with unions, etc.

Interested buyers would usually prefer exclusivity to standstills.

There are no rules on the documentation of tender offer terms and conditions, though persons are best advised to document tender offer terms and conditions in a definitive agreement.

The process of acquiring/selling a business takes approximately nine to 12 months, although this period could be shorter or longer depending on the length of the due diligence period and the satisfying of the conditions of acquisition/sale.

No mandatory offer threshold is provided for in Antigua and Barbuda.

Cash is more commonly used as consideration in Antigua. However, if there are value gaps, parties may agree to an escrow arrangement where a portion of the funds is kept until the realisation of an event where full value may be achieved. One other method may be to agree to have the business remain as a going concern in the hands of the vendor in order to generate income that is sufficient to meet the full value. This latter approach will come with certain undertakings designed to retain the goodwill and value of the business.

There are no regulated restrictions on takeover offers.

The minimum acceptance condition for offer bids is not less than 90% of the shares with or without voting rights.

A business combination can be conditional on the bidder obtaining financing, though there is no specific regulation on this.

A bidder may seek any measure of security for the deal, but the most commonly used measure is match rights. There are no regulatory restrictions or changes that have impacted the length of interim periods.

A bidder may seek governance rights over the composition of the board by appointing directors to break/avoid deadlocks.       

There are statutory provisions on shareholders voting by proxy in Antigua. A group of shareholders may also solicit the proxies of other shareholders.

Section 203 of the Companies Act allows an offeror to acquire shares held by a dissenting shareholder by sending a notice of the bid within 60 days after the date of termination of the take-over bid. A dissenting shareholder who has failed to respond or demand fair value for the shares is presumed to have elected to transfer their shares on the same terms being offered.

Since tender offers are usually in a binding agreement, it is difficult for the principal shareholder to be given an “out” if a better offer is made.

A bid for an M&A of financial institutions is required to be made public from the date of the offer. There is no regulatory provision for any other M&A or takeovers expect for publicly traded companies, of which there are very few in Antigua and Barbuda.

Disclosures of who is the ultimate beneficial owner are a requirement both for domestic and international business corporations. At the bidding stage, this will also be required as part of due diligence to ensure compliance when shares are registered and recorded.

Bidders do not need to produce financial statements (pro forma or otherwise) in their disclosure documents. Financial statements would take the usual form according to accounting standards.

No disclosure of documents of any of the transactions is required.

A director’s primary duty is to the company. Directors must act in the best interest of the company, but must have regard for the interests of the shareholders.

It is common for boards of directors to establish special or ad hoc committees in business combinations – these are members with particular expertise who will then report to the board for review.

The courts in this jurisdiction take the view that the board of directors, acting in good faith, is best suited to make sound decisions and judgements in a takeover situation. A court will only intervene where there is evidence of bad faith or malfeasance on the part of the board.

Independent external advice would often be given to directors in a business combination in matters requiring particular expertise – eg, matters of a financial nature, taxation or legal advice.

There have been cases where the question of a conflict of interest has arisen. In such cases, courts consider the duties of the directors and its officers and apply them to specific facts.

The Companies Act provides for conferring a right on an offeror who makes a takeover bid for more than 90% of the shares of a class of shares. Such tender offers are not very common.

Directors are allowed to use defensive measures in hostile takeovers, given their duty to act in the company’s best interest.

A “poison pill” remedy may be used to make the hostile takeover more expensive for the offeror. Directors may also assess the validity of the offer bid by way of a purpose or best-interest test.

When enacting defensive measures, directors have a duty to act bona fide and in the corporation’s best interest.

Directors cannot “just say no” to a business combination, without justification. Directors must be mindful of their fiduciary duties to act in the best interest of the company and to have due regard for the interest of the shareholders. Directors cannot refuse to act without just cause.

Litigation is not very common; this is due to the low number of M&A deals over recent years, together with the recession caused by the COVID-19 pandemic, which Antigua and Barbuda are now emerging from.

With litigation not being common, there is no stage at which proceedings have been brought.

A marginal number of broken deals have been seen, which were largely due to parties needing to know their “partners in business” better or have more patience during due diligence.

Shareholder activism is not an important force in this jurisdiction.

As per the response at 11.1 Shareholder Activism, there is no applicable information in this jurisdiction.

As per the response at 11.1 Shareholder Activism, there is no applicable information in this jurisdiction.