Mauritius
Answer ... Private M&A transactions in Mauritius may be structured as:
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share transactions, through:
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- the sale of shares of the target to the buyer by contract; or
- the redemption of the seller’s shares and issue of new shares to the buyer through corporate actions pursuant to the Companies Act;
- asset sale transactions through the sale of the assets of the target to the buyer by contract;
- amalgamations:
- a statutory procedure pursuant to the Companies Act to merge the target with another Mauritius company or, where the statutory procedure is not possible, through an order of the Supreme Court (Bankruptcy Division) upon application by the target or, with leave of the court, any shareholder or creditor of the target;
- cross-border mergers, which are available to an authorised company using a special procedure under the Companies Act to merge an authorised company with a foreign company;
- schemes of arrangement, through an order of the Supreme Court (Bankruptcy Division) upon application by the target or, with leave of the court, any shareholder or creditor of the target; or
- takeovers pursuant to the Takeover Rules, which apply to ‘reporting issuers’, but not to global business licence companies.
The most common mechanisms are:
- sale of the shares of the target;
- sale of the assets of the target; and
- amalgamation through the statutory procedure.
These three structures are the focus of this Q&A.
Mauritius
Answer ... In a share sale transaction, the buyer – directly or through a wholly owned vehicle – acquires (a whole or partial stake in) the target with all of its assets as well as existing and contingent liabilities. However, the parties may contractually agree that certain liabilities or assets (eg, any receivables) be excluded and thus be assigned to the seller.
In an asset sale transaction, the buyer acquires – directly or through a wholly owned vehicle – the brand name, goodwill, operating licences, client base, equipment, right to lease, patents, intellectual property, domain names, plant and machinery of the target. The seller will remain the owner of the target; and as a general rule, the liabilities of the target stay with it. If the target intends to sell any immovable property it owns to the buyer, this will form part of a separate transaction by way of notarial deed.
Under the Companies Act, an amalgamation can only take place between two or more companies registered in Mauritius. Therefore, in an amalgamation scenario, the target will be absorbed by a Mauritius company owned by the buyer (the buyer’s company). The property, rights, powers and privileges of the target will continue to be the property, rights, powers and privileges of the buyer’s company. The buyer’s company will continue to be liable for all liabilities and obligations of the target and all pending proceedings by, or against, the target will be continued by or against it. A conviction, ruling, order or judgment in favour of or against the target may be enforced by or against the buyer’s company.
The legal documents required for a share sale transaction, an asset sale transaction and an amalgamation differ significantly from each other (see question 5).
Mauritius
Answer ... The factors that will condition the choice of mechanism include:
- the type of company that the target is – whether a domestic company or a global business licence/authorised company;
- whether the transaction is consensual or resisted by some shareholders or a hostile transaction;
- the tax treatment of the proceeds received by the seller;
- the regulatory requirements in any jurisdiction in which the target has subsidiaries;
- whether the target has debts which must be restructured with the involvement of the creditors;
- whether the target has liabilities which the buyer will not take on;
- the ease of obtaining regulatory approval for the transaction, if required;
- the financial situation or solvency of the target; and
- the status and standing of the seller.
Mauritius
Answer ... Structuring a sale by way of auction is not common for private M&A transactions in Mauritius.
Where auctions are held – for example, to enforce a share pledge through the sale of the pledged shares pursuant to the Civil Code:
- a licensed auctioneer must be appointed to carry out the sale;
- public notices must be issued; and
- statutory delays must be observed.