Hungary

Takeover Guide
Contact
Dr. Judit Budai
Szecskay Attorneys at Law
judit.budai@szecskay.com

Contents

Page

INTRODUCTION

THE REGULATION OF TAKEOVERS: APPLICABLE

LEGISLATION AND REGULATORY BODIES

NOTIFICATION AND DISCLOSURE REQUIREMENTS ON

ACQUISITION/DISPOSAL OF VOTING INTEREST IN A
PUBLIC COMPANY

TRIGGERING EVENTS: MANDATORY AND VOLUNTARY

OFFERS

PRE-BID DUE DILIGENCE AND SECRECY OBLIGATIONS

TERMS AND CONDITIONS AND ANNOUNCEMENT OF THE

PUBLIC OFFER

CONDITIONS THAT MAY BE ATTACHED TO AN OFFER

CONSIDERATION

TASKS AND RESPONSE OF THE TARGET

OFFER TIMETABLE

POST-BID ISSUES: SQUEEZE-OUT AND DELISTING

10

OTHER REGULATORY CONSIDERATIONS

11

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INTRODUCTION
Hungarian capital markets have undergone significant changes over the last two decades
and the legal framework regulating takeover bids reflect the evolving nature of local
markets and participants. Investors must view the law relating to takeover bids in light of
the recent transplant of the EC Directive on Takeover Bids into the Hungarian legal
framework. The following pages will outline the basic principles and legal provisions
regulating takeover bids in an attempt to familiarise the reader with the nature of such an
undertaking in the Hungarian market. Those preparing to participate in takeover bids are
advised to solicit professional advice.

THE REGULATION OF TAKEOVERS: APPLICABLE LEGISLATION

AND REGULATORY BODIES
Act CXX of 2001 on the Capital Markets (the CMA) is the primary piece of legislation
regulating public takeovers in Hungary. That came into force on May 20, 2006, an
amendment to the Act implements and incorporates the European Parliament and
Council Directive 2004/25/EC concerning takeover bids (Takeover Directive) and is
enforced by the Financial Supervisory Authority (the FSA").
The FSA is the main financial authority entrusted with regulating Hungarian capital
markets (including the Budapest Stock Exchange), as well as banking and insurance
institutions and transactions. In particular, it:

ensures reliable, continuous and transparent operation of financial markets;

strengthens confidence in financial markets;

promotes the development of financial markets based on fair competition;

protects the legitimate interests of market participants;

supports the reduction of consumer risk by providing access to adequate

information; and

participates in eliminating financial crime.

Equally important provisions are found in the Company Act (Act IV of 2006 on Business
Associations) (the CA) regarding the establishment and operation of non public and
public companies and the legal mergers of companies registered in Hungary, as well as
in the Competition Act (Act LVII of 1996 on the Prohibition of Unfair and Restrictive
Market Practices) (the Competition Act), which contains certain merger control related
provisions. The Competition Office is the regulatory body charged with enforcing the
Competition Act, ensuring that Hungarian markets are competitive and comply with EC
regulations. Sections 199 205 of the CMA contain regulations on insider trading laws.
Information outside the public domain about, among other things, a public offer, which
may have a significant influence on a public company's value or share price, is inside
information under the CMA. The trading of a target's shares by a person who possesses
inside information may amount to insider trading, which has administrative and criminal
penalties under the Criminal Code (section 299/A, Criminal Code (Act IV of 1978).
Listing rules of the Budapest Stock Exchange (Listing rules) also contain relevant
regulations. The Budapest Stock Exchange is supervised by the FSA. The Listing Rules
are approved by the FSA, and listed companies must comply with them.

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NOTIFICATION AND DISCLOSURE REQUIREMENTS ON

ACQUISITION/DISPOSAL OF VOTING INTEREST IN A PUBLIC
COMPANY
The latest CMA amendment revised applicable provisions on notification and disclosure
requirements relating to the acquisition and disposal of voting interests in public
companies limited by shares and introduced specific exemptions from such notification
and disclosure obligations.
Direct or indirect acquisition or disposal of 5% and multiples of all voting shares, or voting
rights in any form, e.g. on the basis of syndicate agreement, or options, futures for voting
shares on which basis the holder may discretionally decide on the acquisition or disposal
of the voting shares, must be reported to the issuer and the SSFO and published within 2
days. Once 50% is reached the above rules apply in case of acquisition or disposal of
75%, 80%, 85%, 90% and above 90% any additional 1% of voting interest.
The voting rights must be calculated on the basis of all the shares to which voting rights
are attached even if the exercise thereof is suspended. The obligation also applies to
treasury share transactions.
The following persons and/or share acquisitions/disposals are exempted from the above
notification and disclosure obligation:

shares acquired for the sole purpose of clearing and settling within usual a short
settlement cycle;

custodians holding shares in their capacity as custodians, provided that such

custodians can only exercise the voting rights attached to such shares under
instructions given in writing or by electronic means;

acquisition or disposal by a market maker acting in such capacity, provided that it

is authorised by its home Member State and it neither intervenes in the
management of the issuer concerned nor exerts any influence on the issuer to
buy such shares or guarantee the share price.

A parent company of an investment firm or credit institution or a fund management

company shall not be required to aggregate its holdings for the purposes of the above
disclosure obligation if the subsidiary is acting independently or if the subsidiary is
authorised to provide portfolio management services.
In the event of non-compliance with the above obligation of notification and disclosure,
the person involved may not exercise his voting rights in the target company until the
notification is submitted. Moreover the SSFO may impose fine on the person in delay or
non-compliance, the amount of which may be from 100,000 to 6,000,000 HUF (i.e, 425 to
25,200 EUR or 640 to 39,500 USD).
Further implementing regulations concerning the notification and disclosure requirements
may be expected in the near future.
Additionally, transactions have to be reported above certain thresholds under the insider
trading rules.
Pursuant to section 201(2) of the CMA, an insider is any entity or business association
lacking the legal status of an entity including its directors, executive officers and
supervisory board members that holds, directly or indirectly, a share or voting rights of
10% or more in an issuer. Therefore, the conduct (i.e. any transaction including the

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acquisition of direct or indirect voting rights in the issuer) of any such person or entity
which knows, or ought to have known under normal and reasonable circumstances, that
the information possessed is inside information (i.e. not yet published) shall be deemed
insider trading. Irrespective, however, of whether the trading is insider or not, each and
every transaction of an insider entity holding more than 10% of the shares granting voting
rights or the equity and issued by a public company, must be reported to the FSA,
regardless of whether the transaction is carried out by the insider itself or via any agent.
Shareholders of limited liability companies and private companies limited by shares must
report a 75% interest to the Court of Registration. The Court of Registration can order the
target's acquirers or management to comply with the reporting duty, or fine them for a
failure to do so.

TRIGGERING EVENTS: MANDATORY AND VOLUNTARY OFFERS

A mandatory public offer must be made for all remaining voting shares if the shareholding
of a person (or persons acting in concert) in a public company exceeds the following
thresholds:

33% of the voting rights;

25% of the voting rights, if there are no other shareholders (excluding the bidder
or bidder group) holding, either directly or indirectly, more than 10% of the voting
rights.

If a mandatory bid contrary to the CMA, is not made, the FSA declares such noncompliance and any shareholding exceeding 33% (or 25%) must be sold within 60 days
of the FSA's declaration. The FSA can also impose a fine from HUF500,000 (about
US$3,100) to HUF100 million (about US$625,000).
The takeover bid must be made in advance of the intended acquisition. However, if a
person's shareholding reaches and exceeds 33% (or 25% if no other shareholder holds
more than 10%) of the target's voting shares in any of the following ways, it must be
notified to the FSA within two days, and the acquisition triggers a mandatory public offer
subsequently within 15 days of notification:

by a method other than a bid (for example, through an inheritance);

by exercising a call or repurchase option;

as a result of a privatisation of a company held partly or entirely by the state; or

by acting in concert with other shareholders.

A voluntary offer may be made for less than all of the shares of the target, therefore, it is
often made for the remaining voting shares if the bidder has exceeded the thresholds for,
and made, a mandatory offer, but has not yet acquired 90% of the voting rights, and
wishes to squeeze out minority shareholders. In case of a voluntary offer a counter-offer
may not be made and a voluntary offer may not be made once a mandatory offer is
announced until its completion.

PRE-BID DUE DILIGENCE AND SECRECY OBLIGATIONS

While in a number of jurisdictions friendly bidders may gain access to high levels of
confidential information on a target prior to the public announcement of a takeover bid, in
others, even in the case of recommended bids, management is generally reluctant to

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provide information on the target, citing the duty not to disclose confidential information
on the corporation and not to serve insider information to third parties.
The CMA permits prior to the announcement of the draft public takeover bid, the board of
directors of the target to, upon request by the offerer, convey any information to the
offerer (or consultants) on the operation of the target, provided that the offerer must treat
such information confidentially in line with rules regarding the confidential treatment of
business secrets and securities secrets, as well as the prohibition on insider trading.
There is a general requirement of equal treatment of potential bidders, if other bidders
also wish to seek pre-announcement due diligence information, for example for the
purposes of making a counter-offer, even if the management of the target may not find
them equally friendly.
Another issue to be considered by any potential bidder is that if pre-announcement due
diligence is made and ultimately the published takeover bid is not made (for example, as
a result of market leaks, sudden volatility of prices and large volume trades which within a
relatively short period of time cause a significant mandatory bid price increase) all
potential subsequent transactions of such potential bidder are exposed to being deemed
insider trading.
This means that, although in Hungary the legislation and the FSA supports preannouncement due diligence, potential bidders must carefully consider whether they may
provoke a potential sudden price increase on such a relatively closed market.
It should be noted, however, that information in the public domain includes a wide variety
of items. Information in the public domain includes:

Regular and special reports, which must be published by public companies (under
the CMA) and listed companies (under the Listing Rules), to disclose essential details
about their financial position and the general development of their business. Regular
disclosure is made by submitting yearly and half-yearly (or quarterly for listed
category A companies) reports, and annual accounts. Disclosure requirements of the
CMA are harmonised with the Prospectus Directive and the Transparency Directive;

Documents available at public registries, including the:

Court of Registration;

Land Registry; and

Floating and Other Registered Charges Notarial Registry.

Examples of information kept at public registries include:

by-laws of public companies;

details from the corporate register, including details of directors, share capital and
direct and indirect shareholders holding more than 75% of the share capital;

annual audited accounts;

market, financial or business information on public (including listed) companies,

disclosed under special reporting rules (see above);

previous Competition Office decisions; and

floating charges or other registered charges.

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Records on shareholders with voting rights of more than 5% in public companies.

The bid must be kept secret until it is announced.

If the target's board has given information to the bidder or its representatives about the
company's operations before a public offer is announced, the bidder and its
representatives must keep this information strictly confidential to comply with the
regulations on:
Business secrets (section 81(2), Civil Code, Act IV of 1959 and section 4,
Competition Act) and, if applicable due to the nature of the business, state or service
secrets;

Securities secrets (sections 369 to 371, CMA); and

Insider trading (sections 199 to 205, CMA).

The bidder must keep undisclosed information about the company's operations
confidential, regardless of the announcement or closing of the public offer, and cannot use
it unlawfully (for example, by passing it on to third parties or using it for insider trading).

TERMS AND CONDITIONS AND ANNOUNCEMENT OF THE PUBLIC

OFFER
The bidder must engage an investment service provider (a broker) to make a public
takeover bid.
The launching of a public takeover bid requires the following actions and performance of
the following tasks, which must be carried out simultaneously by the bidder and its broker:

announce the draft bid to the FSA and file the offer document with it, to be
approved;

send the target's board a copy of the offer document; and

publish the announcement and the offer document in a national daily newspaper,
or the website of the target and the broker, or the website of the BSE, if the target
company is a listed company, or the website of the FSA or in its Official Gazette.
The announcement must state that the FSA's approval of the offer document is
pending and that the bidder has applied for competition clearance, if applicable.

The bidder must publish the FSA's decision, the offer document and the first and last day
of the offer period in the same manner the draft offer was published, immediately after it
has received the FSA's approval (or the deadline for the FSA's response). If the same
announcement is made in the above-mentioned different publications and at different
times, all deadlines commence as of the date of the latest publication. The bidder does
not have to send copies of the offer document to the target's shareholders.
The public takeover offer must include the following elements on the basis of data
required pursuant to the CMA:
The description of the offer must specify:

the bidder's name and residence or business address;

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the interest (direct or indirect) already held in the target by the bidder and any
close relative of the bidder, if the bidder is a natural person, and any other
persons acting in concert with the bidder;

the following information about the offer consideration:

its amount;

its composition (for example, the ratio of cash and securities, and a
description of any securities offered);

the formula for calculating it; and

its payment terms.

the end of the acceptance period;

the designated place and method of accepting the offer (the declaration of
acceptance), and the conditions in which a proxy or an intermediary can be
involved;

the corporate name and address of the participating investment service provider;

the place where the bidder's future plans for the target (operating plan) and a
report of the bidder's business operations (bidder's business report) are open for
inspection;

if the bid is submitted jointly, the amount of shares to be sold to each bidder;

if applicable, a condition reserving the right to withdraw the offer if the interest
acquired as a result of the acceptance declarations is representing less than 50%
of all voting rights;

a description of the relationship between the bidder and the target;

details about the compensation for potential loss of rights by voting preferential
shareholders as a result of implementing certain "break-through rights";

the potential consequences of the public takeover on the target's employees;

governing law and forum in the sale and purchase agreement to be concluded by
the offerer and the shareholders accepting the offer; and

other material circumstances that may influence the bid.

The bidder and the investment service provider must attach the following to the offer
document for the FSA's approval:

the Operational plan and Description of Offerers business activities;

an EU or OECD resident bank's certificate on a cash deposit or deposit, or bank

guarantee or treasury bonds issues by EU Member States or OECD countries
proving that the bidder has sufficient funds to pay the consideration;

if the bid is aimed at obtaining more than 90% control, the bidder's declaration of
its intention regarding the exercise of a call option for the remaining
shareholdings in the target;

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if the acquisition takes place by persons acting in concert and there is only one
bidder, the consortium agreement appointing the bidder; and

if the offer is mandatory subsequent to exercising an option, repurchase right or

other forward right, the agreement on which basis such right have been exercised
by the bidder.

CONDITIONS THAT MAY BE ATTACHED TO AN OFFER

Under Hungarian takeover rules, the only explicit and permitted cancellation condition
pursuant to the CMA is that a takeover bid must contain the declaration of the bidder - if
intended by the bidder - on reserving the right to cancel the bid, if on the basis of the
acceptance declarations the bidder would not acquire influence exceeding 50% in the
target.
As a result of the implementation of the Takeover Directive, the CMA, as of May 20,
2006, has been modified by an additional mandatory content of the bid, that is the
takeover bid must include any other [than explicit other mandatory conditions] substantial
circumstances that may influence the takeover offer.
Potentially, material adverse changes (MACs), in the cases of voluntary offers are
increasingly common in European markets. These conditions, however, must be
objective, otherwise the FSA may argue that they should be interpreted as a waiver that
is only effective if less than 50% of the shareholders accept the offer. The FSA also
takes into account the duty to treat all the target's shareholders equally when assessing
any MACs.
Pursuant to Act IV of 1959 on the Civil Code, if the parties have stipulated that the
condition of the entering into force of their contract is an uncertain future event
(suspending condition), the contract shall become effective upon that event taking place.
It is open to doubt whether a material adverse change clause is effective under
Hungarian Law.

CONSIDERATION
Cash remains the most common form of consideration in takeover bids. With respect to
listed securities, the relevant regulatory requirements stipulate that consideration must be
at least the higher of:

the average stock market price weighted on the basis of the trading volume for
the 180 or 360-day period before the public offer is submitted to the FSA for
approval (the latter applies if within 180 days there were less than 36 trades). If
the target's shares are traded on several exchanges, the weighted average must
be calculated for each exchange individually and the highest must be taken into
account. The Hungarian Forint equivalent of trades at foreign exchanges is
calculated using the official Central Bank rates applicable on the trading dates; or

the equity per share price calculated using the target's latest audited and, if
applicable, consolidated annual financial statements; or

the highest price paid for target shares (or votes in the target) by the bidder and
affiliated persons within the 180-day period before the public offer is submitted to
the FSA for approval; or

the aggregate of the call price and fee of a call or repurchase option.

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For non-listed securities, the consideration in a public offer must be at least the higher of:

the market price weighted on the basis of the trading volume for the 180-day
period before the public offer is submitted to the FSA for approval;

the highest price paid for target shares (or votes in the target) by the bidder and
affiliated persons within the 180-day period before the public offer is submitted to
the FSA for approval;

the equity per share price calculated using the target's latest audited and, if
applicable, consolidated annual financial statements, or if audited figures are not
available, the latest published semi-annual or annual report; or

the aggregate of the call price and fee of a call or repurchase option.

Offering a price range in the offer is not possible, but it is possible to increase the offer
price during the acceptance period, if duly announced.

TASKS AND RESPONSE OF THE TARGET

While the target's shareholders can obtain the offer document as published by the bidder,
there is no obligation on the target's board to inform shareholders individually.
The target's board must form an opinion on the offer and make this opinion open to
inspection by its shareholders, at the same place where the Operational plan and
Description of Offerers business activities are kept before the first day of the acceptance
period. If the FSA changes the offer document when approving it, the target's board can
revise its response if necessary and make it open for inspection in a similar way to the
original opinion. The target's board can also recommend its shareholders not to accept
the bid when giving an opinion on the offer.
The target's board may engage an independent financial expert to report on the public
offer. The expert's report must be made open for inspection by the target's board to its
shareholders, in a similar way to the original opinion.
On receipt of a bid, the target's board must forward a copy to the Employees'
Representative and must attach the opinion of the Employees Representative on the bid
to its own opinion.
After the bid is announced (or once informed of the intent to bid, if earlier) and during the
acceptance period, the target's board , if explicitly regulated so by the by-law of the public
company, cannot make any decisions that could frustrate the bid, except for the following:

the target's board can seek a white knight (that is, an alternative bidder which the
target's board recommends) to make a competing bid;

the target's board can implement decisions of the general meeting made before
the announcement (or being informed of the intent to bid), provided that the
decisions relate to the target's normal course of business.

In addition, the bid is not deemed frustrated if the target's board acts according to the
resolutions adopted by its general meeting (called under the Company Act) after either:

the takeover bid is launched; or

after receiving information about the bid.

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Act 2007 of CXVI, on the amendment of certain acts relating to public supply
undertakings of significant importance, effective as of October 24, 2007 (the so-called
LEX MOL, which is currently being revised by the European Commission in the course of
an infringement procedure) introduced protective measures. Such measures include the
requirement that, when making a public offer for the shares of a strategic public company
of significant importance from the perspective of energy and water supply, the offerer
must have an operating plan, which is a mandatory attachment of the bid approved by its
general meeting. More generally LEX MOL modified the CMA so that the target's board
is not prevented from frustrating the bid, unless explicitly regulated by the by-laws of the
public company.
The by-laws of public companies can also contain poison pills against hostile bids
(Company Act). For example, restrictions can be imposed on the voting rights that a
shareholder can exercise (maximum level of voting rights) or the general meeting can be
allowed to pass resolutions to frustrate a bid (such as introducing a capital increase).
Since almost all major stock exchange companies contain poison pills in their by-laws,
hostile bids are not common. LEX MOL also deleted section 299 (2) Company Act, which
regulated that the restriction of voting rights to a maximum level by the by-laws
automatically became ineffective when as a result of a successful public takeover bid, the
offerer acquired 75% of all shares granting voting rights.
However, breakthrough rights, which are allowed under Directive 2004/25/EC on takeover
bids (Takeover Directive), can be incorporated into the target's by-laws (sections 76/A
and 76/B, CMA). For example, provisions can be included to prevent the following
applying during the offer period:

transfer restrictions on the target's shares (specified in the by-laws or

shareholders' agreements); or

multiple voting rights or restrictions on exercising voting rights in connection with

decisions on defence measures at the target's general meeting.

Other provisions can also be included in the target's by-laws, for example, so that if the
bidder has acquired 75% of all shares granting voting rights during the takeover
procedure and convenes the general meeting to propose the amendment of the by-laws,
or appoint or remove a director or supervisory board member:

multiple voting rights represent one vote; and

special appointment or removal rights do not apply.

OFFER TIMETABLE
The FSA has 15 days to approve the offer, provided that if additional documents are
requested, or if the FSA requires the revision of the draft bid, the bidder has five days to
submit and the FSA has a further five days to approve.
Immediately upon receipt of approval by the FSA (or by the expiration of the deadline for
the FSA's response, which is not precedented, as the FSA always responds on the
submission of a draft bid or suspends the response time with good reasons), the bidder
must publish the FSA's decision, and the final offer document, by indicating the first and
last day of the acceptance period, similarly as the draft offer was published. The bidder
does not have to send copies of the offer document to the target's shareholders.
The starting date of the acceptance period must be within two-five days of the publication.
The duration of the acceptance period must be at least 30 days and no more than 65
days, including any potential extension, as the FSA may approve the extension of the
acceptance period once with a maximum of 15 days.

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The contents of the target's statutes are determinative of its response to a bid and
response strategies are discussed below. However, competing bids may be submitted if
the competing offer price exceeds the original bid by at least 5% (in Hungarian Forint). A
competing bid must be made at least 15 days before the acceptance period ends and it
must be similarly sent to the FSA and the Board of the target and announced as the
original offer. If a new competing bid is made which only differs from the previous
competing bid in terms of the consideration offered, the FSA decides whether to approve
it within three days of the new competing bid being filed. To avoid running through the
acceptance period of the original offer, the FSA would most probably suspend the original
acceptance period to assess the counter offer. The target's board can support a
competing bid. As a result of an approved counter offer the original offer and all
acceptance declarations become ineffective. There is no limitation on the number of
counter-offers that may be made.
The bidder must notify the FSA and publish the outcome of the public offer within two
days after the end of the acceptance period.

POST-BID ISSUES: SQUEEZE-OUT AND DELISTING

Payment of the price to the shareholders accepting the offer must be made within five
working days after the acceptance period ends, or on the day on which the Competition
Office grants clearance (if applicable), whichever is later. The bidder must notify the FSA
that the consideration has been paid within two days of the payment deadline and explain
any partial or non-payment. If the accepting shareholders are not paid within 30 days of
the payment deadline, they may rescind their acceptance declarations. If the contract is
rescinded by the seller the bidder shall so notify the FSA within two working days.
If the bidder indicated in the bid that it wishes to squeeze out minorities, and within 3
months of the completion of the successful bid the bidder acquired at least 90% of all
voting interests in the target, and publicly announced its intention to exercise a call option
and evidenced to the FSA to have sufficient funds for exercising the squeeze out, the
bidder may exercise a call option for the remainder minority shareholders' shares in the
target company during the subsequent three months, at a price which is the higher of the
original offer price or the equity per share price based on the latest published audited
annual balance sheet of the target company, if it does all of the following:

indicates in the bid that it wishes to squeeze out minorities;

acquires at least 90% of all voting interest in the target within three months of the
successful completion of the bid;

publicly announces its intention to exercise a call option; and

provides evidence to the FSA that it has sufficient funds to exercise the squeeze
out.

The notification and publication of the intention of the bidder to exercise the call option
must specify the:

place, date and terms of the takeover of shares; and

offer price; and

date and payment terms of the consideration.

The bidder must also deposit the consideration at a bank registered in any EU member
state.

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If as a result of a successful takeover bid the bidder acquired 90% voting interest, the
minority shareholders, within 90 days of announcement by the bidder of acquiring 90%
shareholding, may exercise a put option at a price which is the higher of the original offer
price or the equity per share price based on the latest published audited annual balance
sheet of the target.
De-listing can take place at the target's request or automatically. According to the Listing
Rules of the BSE, the target can file an application for de-listing with the BSE if a public
offer or stock exchange offer for all its listed shares has been made.
If a bidder acquires more than 90% of the voting rights in a listed target and exercises its
squeeze-out right as outlined above, the listed target is automatically de-listed.

OTHER REGULATORY CONSIDERATIONS

The CMA stipulates the concentration thresholds, which, if exceeded, necessitate the
attainment of merger control clearance. Such concentrations include:

a merger of previously independent undertakings (or part of them);

an acquisition of direct or indirect control in a previously independent undertaking

(or part of it) or;

creation of a concentrative joint venture.

The two turnover tests that must be satisfied are as follows:

First Test
Whether the combined net turnover in Hungary, during the previous financial year of the
following, exceeds HUF15 billion (about US$72 million):

all the groups of undertakings concerned; and

undertakings that are jointly controlled by members of the group companies

concerned with other undertakings.

Second Test
Whether the combined net turnover in Hungary, during the previous financial year of the
following exceeds, HUF500 million (about US$2.2 million):

at least two groups of undertakings; and

undertakings that are jointly controlled by members of the group companies

concerned with other undertakings.

The Competition Office must receive notification if the above thresholds are met. The
substantive test applied by the Competition Office is whether the merger creates or
strengthens a dominant position, which would impede the formation, development or
continuation of effective competition in the relevant market.
The Competition Office must issue a decision to clear the transaction, prohibit it or clear it
subject to conditions within 45 days after notification for simple matters, and 120 days for
complex matters. If necessary, the Competition Office can extend these deadlines by 60
days. As clearance is required for a merger to be valid, it is not advisable to implement a
transaction before this is obtained. If there is a serious problem, the transaction can be

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delayed by the period of time needed for clearance, depending on whether the bidder has
notified the Competition Office in a timely manner.
Further governmental approvals may be necessary to acquire shares in certain
companies, such as banks, insurance companies and various companies belonging to
the energy industry. However, the CMA does not specify the effect of obtaining these
approvals on the public offer timetable. Nevertheless, it should be noted, that without
some of these approvals, the acquisition may be invalid and the time taken to obtain them
(if necessary) must therefore be considered as well as that for receiving merger control
clearance.

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