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Documentation

Preliminary agreements

What preliminary agreements are commonly drafted?

Customary preliminary agreements are non-disclosure agreements, non-solicitation agreements and exclusivity agreements. The parties often also choose to negotiate a letter of intent or a term sheet before entering into sales and purchase agreement negotiations.

Principal documentation

What documents are required?

A share or asset purchase and sale agreement with relevant appendices is required.

In case of a takeover of a listed company, the bidder must submit an offer document to the target’s shareholders.

Which side normally prepares the first drafts?

This varies on a case-by-case basis and no general rules apply.

What are the substantive clauses that comprise an acquisition agreement?

An acquisition agreement would normally include the following clauses:

  • provisions regulating and specifying the transfer of shares and assets;
  • provisions regulating the purchase price (including regulating mechanisms and earn outs);
  • provisions regulating the closing of the transfer (including conditions precedent for closing);
  • provisions describing the due diligence conducted by the buyer;
  • provisions stating the representations and warranties of the buyer and the seller, respectively;
  • provisions regulating certain undertakings or covenants of the parties, such as how to conduct business from signing to closing;
  • provisions regulating the buyer’s right to indemnification in case of breach of the agreement, including any limitations in this regard; and
  • miscellaneous provisions (eg, choice of law, venue, confidentiality and costs).   

What provisions are made for deal protection?

In private deals, the buyer and seller will often enter into an exclusivity agreement for a certain period, where the seller is prohibited from entering into negotiations with a third party.

Exclusivity agreements are not possible in public deals, where the target has a large number of shareholders. Instead, before submitting a voluntary public bid, bidders often enter into an agreement with one or more large shareholders pursuant to which the shareholders irrevocably undertake to accept the bid if and when submitted. Normally, the shareholders will be entitled to accept a higher offer, unless the original buyer matches the new and better offer within an agreed timeframe.

Closing documentation

What documents are normally executed at signing and closing?

In addition to the asset or share sale and purchase agreement, documents relating to changes to or the continued employment of management or auditors as well as financing (depending on the deal structure) are usually executed. In some cases, an executed letter of approval from the board of the buyer or the seller is presented.

A closing memorandum is often, but not necessarily, drafted to sum up the contemplated actions at closing.

Are there formalities for the execution of documents by foreign companies?

No, except for the normal provisions in the articles of association of the buyer and seller regarding the power of signature, which should be observed.

Are digital signatures binding and enforceable?

Yes; however, debt instruments with an enforcement clause must be signed in non-digital form in order to be directly enforceable in the bailiff’s court (otherwise litigation must be initiated before enforcement in the bailiff’s court can take place).

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