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Because of the size and liquidity of the U.S. capital markets, many non-U.S. companies whose shares are traded principally outside the U.S. nonetheless also have shares traded in the U.S. or otherwise owned by U.S. holders. When those companies are the targets in M&A transactions, the transactions potentially become subject to the U.S. securities laws. In October 1999, in a release that became known as the “Cross-Border Release”, [FOOTNOTE 1] the Securities and Exchange Commission announced the adoption of a series of exemptions from the securities law requirements that otherwise apply to various types of cross-border M&A transactions. Since January 2000, when those exemptions (which are referred to in this article as the “Cross-Border Exemptions”) took effect, M&A professionals have worked their way through a number of the practical implications and potential pitfalls associated with the Cross-Border Exemptions, and the staff of the SEC has published significant guidance on these issues. [FOOTNOTE 2] This article contains a review of some recent developments in the area. APPLICABLE U.S. REGULATIONS The U.S. securities laws potentially applicable to M&A activity are (i) the portions of the Securities Exchange Act of 1934 (Exchange Act) and related rules collectively known as the Williams Act provisions (among other matters, these provisions govern the conduct of tender offers, including stock-for-stock exchange offers), (ii) the provisions of the Securities Act of 1933 (Securities Act) and the comparable provisions of the state “blue sky” securities laws governing the offer and sale of securities (these provisions apply to tender offers in which the consideration offered by the acquirer consists in whole or in part of securities as well as to transactions in which shareholders vote to approve a transaction in which they will receive securities) and (iii) the provisions of the Exchange Act and related rules governing proxy solicitations. It is important before deciding whether particular Cross-Border Exemptions may be available for a specific cross-border M&A transaction to decide which U.S. securities laws otherwise will apply. In many transactions, exemptions may not be needed because the otherwise problematic securities law requirements do not apply in the first place. This analysis can be performed by process of elimination, as follows. � Proxy rules. Does the target company qualify as a foreign private issuer? [FOOTNOTE 3] If it does, any solicitation of votes by that company’s shareholders will be exempt from the SEC’s proxy rules. [FOOTNOTE 4] The proxy rules also will not apply if the shares to be voted are not registered under the Exchange Act. [FOOTNOTE 5] Obviously, if shareholders are not voting in the transaction, the proxy rules will not apply in any event. � Securities Act/blue sky requirements. Is the transaction an all-cash transaction? If it is, the bidder will not be offering or selling securities so the requirements of the Securities Act and of corresponding state blue sky securities laws will not apply. As discussed below, in some transactions even if securities are offered to the target company’s non-U.S. shareholders, the bidder may elect to offer U.S. holders only cash, in order to avoid these requirements. � Williams Act requirements. Are the shares being tendered registered under the Exchange Act? If not, the tender offer will be subject only to Exchange Act Regulation 14E. If the shares are registered under the Exchange Act, the tender offer also will be subject to Exchange Act �14(d) and Regulation 14D. Regulation 14D contains detailed disclosure, filing and procedural requirements. Regulation 14E includes rules governing minimum offer periods, amendments, extensions and settlement practices and also includes a rule (Rule 14e-5) that prohibits the bidder or anyone acting on the bidder’s behalf from purchasing the securities covered by the offer outside the offer. [FOOTNOTE 6] TIER I, TIER II EXEMPTIONS The principal Cross-Border Exemptions are designated Tier I and Tier II. The Tier I exemption provides broad relief from the requirements of all of the substantive requirements of �14(d) of the Exchange Act, all of Regulation 14D, significant portions of Regulation 14E and (for stock-for-stock transactions otherwise subject to the Securities Act) from the registration requirements of the Securities Act. The Tier I exemption is available for offers for shares of foreign private issuers that have U.S. ownership of 10 percent or less. [FOOTNOTE 7] The Tier II exemptions provide more limited but nonetheless substantial relief from several provisions of Regulations 14D and 14E. [FOOTNOTE 8] The Tier II exemptions apply to offers for shares of foreign private issuers that have U.S. ownership of 40 percent or less. Rule 14e-5 contains its own set of exemptions, including an exemption for offers that satisfy the Tier I requirements. [FOOTNOTE 9] Each of the Tier I, Tier II and Rule 14e-5 exemptions imposes requirements in addition to the requirement based on the level of U.S. ownership. [FOOTNOTE 10] WORKING WITH EXEMPTIONS Summarized below are some of the issues that have arisen in working with the Tier I and Tier II exemptions since their adoption. Calculating Share Ownership Levels. The Cross-Border Exemptions contain detailed instructions on how to calculate the 10 percent and 40 percent ownership thresholds that drive the availability of the Tier I and Tier II exemptions [FOOTNOTE 11] and of the exemption from the requirements of Rule14e-5 pursuant to Rule 14e-5(b)(10). In our experience, clients need careful guidance in calculating U.S. share ownership for these purposes. In particular: � The requirement to exclude from the calculation any shares owned by the bidder or by any 10 percent shareholder must be carefully observed. Under this provision, for example, U.S. ownership of 6 percent of the target’s outstanding shares is treated as ownership of 12 percent or more if one or more 10 percent holders together own over 50 percent of the class. Thus, a transaction that initially appears likely to benefit from the Tier I exemption may be subject to significant additional requirements. [FOOTNOTE 12] � The bidder must make “reasonable inquiry” of brokers, dealers, banks or nominees appearing in the target company’s share register as record owners with addresses in the U.S. or the target’s home jurisdiction (or the primary trading market for the shares, if different from the home jurisdiction), to determine the amount of shares held for the account of U.S. persons. Without good advance planning, bidders may find they do not have enough time to complete this process, leaving them with the unattractive choices of delaying the transaction, excluding U.S. holders [FOOTNOTE 13] or seeking relief from the SEC that otherwise might not be needed. � The time as of which the ownership calculation must be made — 30 days before commencement of the offer for purposes of the Tier I and Tier II exemptions, 30 days before announcement of the offer for purposes of the Rule 14e-5(b)(10) exemption — can give rise to practical difficulties. The SEC staff has given the following guidance: — With limited exceptions, the ownership calculation must be performed as of the 30th day before commencement, not another, more convenient date. [FOOTNOTE 14] — If the 30th day is “impracticable for reasons outside of bidder’s control,” the bidder should use the date closest as practicable to the 30th day. [FOOTNOTE 15] — If both the bidder and the issuer are limited in their access to security holder list information prepared periodically by third parties, calculation of U.S. ownership may be based on the latest available list. [FOOTNOTE 16] — For UK and Irish pre-conditional offers, bidders may elect to make the ownership calculation as of the 30th day before announcement. [FOOTNOTE 17] — If a second offer is to be made as part of a single transaction, the ownership calculation used for the first offer may be used for the second offer. [FOOTNOTE 18] In some instances it simply may not be possible to obtain sufficiently reliable share ownership data to perform the calculation, in which case the bidder’s best course of action will be to seek the requisite no-action and exemptive relief. The bidder must bear in mind that under the U.S. securities laws, the burden of proving the availability of an exemption generally rests on the person seeking to rely on the exemption. Dual Offer Structures. Under a dual offer structure, a cross-border offer is divided into two parallel offers. A U.S. offer that is addressed to “U.S. shareholders” (typically, all holders of American Depositary Shares wherever located and all other holders with U.S. addresses) is conducted consistent with U.S. law and practice and involves delivery of U.S.-style tender offer documents. These documents must comply with the applicable U.S. disclosure rules and have been filed as required under Regulation 14D and/or the Securities Act. Meanwhile, a non-U.S. offer addressed to all other holders is conducted consistent with the target company’s home jurisdiction. It involves delivery of a different set of documents based on the requirements of the target company’s home jurisdiction. The consideration offered by the bidder in each of the dual offers typically is substantially the same, and to the extent practicable the timing of the dual offers is the same. Dual offer structures are frequently used for multi-jurisdictional offers that include U.S. holders, although there are situations in which dual offers are either inappropriate or unnecessary. The dual offer structure is not used, for example, in the takeover of target companies organized under the U.K. Companies Act 1985 or other laws based on that statute, because under the Companies Act, in order to preserve the ability to effect a second-stage squeeze-out of non-tendering shareholders, it is important that the prior share acquisitions be made pursuant to a single offer. Also, since the adoption of the Cross-Border Exemptions, if an offer qualifies for the Tier I exemption, the dual offer structure normally is unnecessary because the Tier I exemption permits the use of home jurisdiction documents (translated into English) and permits the offer to be conducted in accordance with the law and practice of the target company’s home jurisdiction. Dual offer structures generally require some level of exemptive and/or no-action relief under the following provisions: � Rule 14e-5 — to permit purchases of shares in the parallel non-U.S. offer, because those purchases technically are outside of the U.S. offer. This relief is required in all dual offer structures that do not qualify for the Tier I exemption [FOOTNOTE 19] (as discussed above, offers that qualify for the Tier I exemption generally do not need to be bifurcated into the dual offers). � Rule 14d-10 (the “all-holders rule”) — to permit the U.S. offer to be limited to less than all holders (because it is not extended to non-U.S. holders). This Rule will apply (and exemptive relief therefore need be obtained) only if (i) the shares being tendered are registered under the Exchange Act and (ii) the offer does not qualify for the Tier II exemption provided in Rule 14d-1(d)(2)(ii). � Rules 14e-1(c) and (d) (regarding prompt payment for tendered shares and announcements of extensions, respectively) — to permit these aspects of both the U.S. and non-U.S. offer to be conducted pursuant to non-U.S. requirements and market practice. Like Rule 14d-10, these Rules do not apply (and no relief will be required) in Tier II transactions or if the subject shares are not registered under the Exchange Act. Obviously, relief also is not required if home jurisdiction law and practice do not preclude compliance with these rules. The SEC staff generally has been quite accommodating in granting relief to facilitate dual offers, including in transactions in which U.S. ownership was over 40 percent. [FOOTNOTE 20] Mix-and-Match Elections. In a “mix-and-match” election structure, a bidder offers consideration consisting in the aggregate of a fixed amount of cash and a fixed amount of securities (usually stock). The target company’s shareholders can elect to receive all cash or all securities. To the extent offsetting elections permit, the elections are respected. If the elections do not fully offset, the mixes of cash and stock are varied on a pro rata basis to meet as nearly as practicable the requests of the tendering shareholders. If an offer that includes a mix-and-match election feature is to provide for a subsequent offering period pursuant to Exchange Act Rule 14d-11 or is to be made pursuant to a comparable procedure (such as the applicable procedure under U.K. City Code on Takeovers and Mergers (City Code)), the bidder will be required to accept and pay for the shares tendered in the initial offer period before the subsequent offering period is completed. For mechanical reasons, therefore, the proration factor for the shares tendered in the initial offer period must be set before the entire offer is completed. Furthermore, since shares tendered in the subsequent offering period must be accepted and paid for as tendered, it is not possible to offer the mix-and-match feature during the subsequent offering period because the proration factor would constantly fluctuate as tenders were received. Typically, therefore, no mix-and-match election is offered in the subsequent offer period and holders tendering during that period instead receive a “default” ratio, specified in advance, of cash and securities. In an offer subject to Rule 14d-11, (i.e., an offer for shares registered under the Exchange Act and for which the Tier I exemption is not available) this type of arrangement may be inconsistent with Rule 14d-11(f), which requires that the bidder offer “the same form and amount of consideration to security holders in both the initial and subsequent offering period.” The mix-and-match structure described above also may be inconsistent with the “all-holders” requirement of Rule 14d-10. Paragraph (c) of that Rule provides that the offer of more than one type of consideration does not violate the all-holders rule, provided security holders “are afforded equal right to elect among each of the types of consideration offered.” This requirement would not be met in the subsequent offering phase of a mix-and-match offer. Before and since the adoption of the Cross-Border Exemptions, the staff has been willing to grant exemptive relief in order to facilitate mix-and-match elections. [FOOTNOTE 21] Cash-Only Features; Vendor Placings. If a bidder making an all-shares offer or a mix-and-match shares-and-cash offer is offering shares that are not listed on a major U.S. exchange or the National Market System of the Nasdaq Stock Market, the bidder may wish to offer U.S. holders consideration consisting solely of cash. This may be because, without a listing exemption, compliance with state blue sky laws would be unduly burdensome, [FOOTNOTE 22] or because the securities that otherwise would be offered are not expected to be attractive to U.S. holders. If this is achieved through a “straight” substitution of cash, in an offer that otherwise qualifies for Tier I treatment, the “equal treatment” requirement for Tier I offers will not be breached (and the exemption therefore will be available) if specified conditions are satisfied. [FOOTNOTE 23] In an offer subject to Regulation 14D (including an offer that otherwise qualifies for the Tier II exemptions), exemptive relief from the all-holders requirements of Rule 14d-10 would be required for a structure in which U.S. holders were offered only cash. [FOOTNOTE 24] If the bidder wishes to provide the U.S. cash-only feature through a “vendor placing” feature, additional issues are presented. In a vendor placing, the shares to which the tendering shareholders otherwise would be entitled are sold for the account of those holders and the holders receive the net sale proceeds. The vendor placing technique can be particularly valuable if the offerer wants to avoid using additional cash beyond the amount originally planned or if the target company’s home jurisdiction requires all holders to be offered the same consideration. The Cross-Border Release contemplates the possibility of vendor placings in these situations and suggests that exemptive relief to permit this approach will be available in appropriate circumstances. [FOOTNOTE 25] In the Singapore Telecommunications letter, [FOOTNOTE 26] the staff granted relief to permit use of a vendor placing and also to permit the bidder to separately offer the stock-and-cash alternative available outside the U.S. to U.S. institutional investors that qualified as “QIBs.” [FOOTNOTE 27] [FOOTNOTE 28] Subsequent Offer Periods — Reconciliation to U.K. Practice. Even following the adoption of the Cross-Border Exemptions, for tender offers made into the U.S. that are subject to the City Code, the process of reconciling the Williams Act tender offer rules with the requirements of the City Code continues to require attention. For offers subject both to the City Code and to Regulation 14D (and for which the Tier I exemption is not available): � In order to avoid breaching the Williams Act requirements with respect to withdrawal rights, bidders typically commit that they will not declare their offers unconditional as to acceptances without at the same time declaring them wholly unconditional. [FOOTNOTE 29] � In order to avoid breaching the Williams Act requirements with respect to announcements of material changes in the terms of the offer, [FOOTNOTE 30] bidders typically commit to follow interpretive guidelines, confirmed in the Cross-Border Release, [FOOTNOTE 31] requiring that before waiving or reducing the minimum acceptance condition, the bidder must give at least five business days’ notice that it may do so. (Under the SEC’s interpretation, making this announcement in the original offer document is insufficient.) � In order to ensure a sufficient amount of time to achieve the 90 percent share ownership level after the offer is declared wholly unconditional, bidders frequently seek relief from the requirements of Rule 14d-11, to permit the subsequent offering period to be held open for a period of more than 20 business days. Our experience has been that while this relief is routinely granted for offers that otherwise qualify for the Tier II exemptions, [FOOTNOTE 32] when U.S. ownership levels exceed the 40 percent level required for Tier II treatment, the relief is not granted. � Care should be taken in cashing out employee share options in order to avoid a potential breach of Rules 14d-10 and 14d-11(f). In U.K. practice, holders of employee share options may be offered additional benefits to encourage them to exercise their options and tender the shares acquired upon exercise, but in a cross-border tender offer subject to Regulation 14D that practice could be deemed a payment of greater consideration than the consideration offered to other shareholders. Schemes of Arrangement. For negotiated acquisitions of target companies organized in jurisdictions whose laws provide for “schemes of arrangement” or similar transactions, a number of the U.S. securities law requirements that, even with the benefit of the Cross-Border Exemptions, are burdensome may be avoided by pursuing a scheme of arrangement instead of the more typical takeover/tender offer. This is because the Williams Act tender offer rules will not apply to these transactions (because they do not involve tender offers); if the target company qualifies as a foreign private issuer, the SEC’s proxy rules will not apply; and if structured properly, even if the consideration to be received by the target company’s shareholders will include securities, the transaction will be exempt from the registration requirements of the Securities Act pursuant to �3(a)(10) of the Securities Act. The staff’s views on the availability of the �3(a)(10) exemption are set forth in Revised Staff Legal Bulletin No. 3(CF) (Oct. 20, 1999). That Bulletin reiterates the staff’s position that the phrase “any court” in �3(a)(10) may include a foreign court and summarizes the requirements applicable to any request for no-action relief for a �3(a)(10) transaction. [FOOTNOTE 33] Some technical blue sky issues must be addressed in the case of schemes of arrangement involving U.S. shareholders. Any analysis of those blue sky issues must take into account the amendments to �18 of the Securities Act implemented by the National Securities Markets Improvements Act of 1996 (NSMIA) and then by the Securities Litigation Uniform Standards Act of 1998 (SLUSA), and the staff’s interpretation of those amendments. Section 18 generally pre-empts the registration and qualification requirements of the blue sky laws insofar as they otherwise would apply to “covered securities.” As initially enacted pursuant to NSMIA, “covered security” included both any security listed on a major exchange and any security issued in a �3(a)(10) transaction. An amendment effected by SLUSA deleted �3(a)(10) securities from the list of “covered securities,” but exchange-listed securities remain on the list. Clearly, after the SLUSA amendments, if the securities to be received by the target’s shareholders pursuant to a scheme of arrangement are not listed or approved for listing on a major U.S. exchange, the transaction potentially will be subject to blue sky regulation, at least in those states that treat a shareholder vote on a merger or corporate reorganization as involving an offer and sale of securities. At first glance, however, a �3(a)(10) transaction in which the target company’s U.S. holders are to receive exchange-listed securities would appear to continue to enjoy the blue sky preemption benefits afforded under �18 to offers and sales of covered securities. Although that appears a reasonable reading of the statute, under the staff’s interpretation, described in the 1999 Revised Bulletin, of the amendments introduced by SLUSA, “all” securities issued in reliance on Section 3(a)(10) are removed from the definition of covered securities. Apparently, this means that if an acquirer in a �3(a)(10) transaction will be issuing exchange-listed shares to the target company’s shareholders, the acquirer will need to confirm the availability of blue sky exemptions or otherwise comply with applicable blue sky requirements. John A. Healy is a partner in the New York office of Clifford Chance Rogers & Wells LLP. ::::FOOTNOTES:::: FN1 Cross-Border Tender And Exchange Offers, Business Combinations and Rights Offerings, Release No. 33-7759/34-42054 (Oct. 22, 1999). FN2 The guidance includes a series of responses to requests for no-action and exemptive relief, some of which are discussed below, and the Third Supplement to the Manual of Publicly Available Telephone Interpretations (July 2001), published by the SEC’s Division of Corporation Finance (the “July 2001 Manual Supplement”). FN3 See Exchange Act Rule 3b-4. FN4 Exchange Act Rule 3a12-3(b). FN5 If the target company has arranged for its shares (or ADRs representing its shares) to be traded on a U.S. national securities exchange or on the Nasdaq Stock Market, they must be registered under the Exchange Act. If the target company is a foreign private issuer and its shares are not so traded, they probably are not registered under the Exchange Act, pursuant to the exemption contained in Exchange Act Rule 12g3-2(b). FN6 See Exchange Act Rule 14d-1(a). The staff of the SEC has stated that the provisions of �14(d)(1) through 14(d)(8) of the Exchange Act similarly apply only to tender offers subject to Regulation 14D. See SEC Division of Corporation Finance, Manual of Publicly Available Telephone Interpretations (July 1997). Regulation 14D also applies to tender offers for equity securities of certain types of insurance companies and closed-end investment companies. Exchange Act �14(d)(1). FN7 Exchange Act Rule 14d-1(c); Securities Act Rule 802. As discussed below, the rules for calculating the level of U.S. ownership are complex. FN8 Exchange Act Rule 14d-1(d). FN9 Exchange Act Rule 14e-5(b)(10). FN10 The Tier I exemption requires equal treatment for U.S. holders, subject to limited exceptions, and certain informational filings with the SEC. The Tier II exemption requires compliance with all other U.S. tender offer rules. The 14e-5(b)(10) exemption requires specified disclosures. FN11 See Instruction 2 to Exchange Act Rules 14d-1(c) and 14d-1(d). FN12 See, e.g., Singapore Telecommunications Limited, SEC No-Action Letter (May 15, 2001). In that transaction, U.S. holders held less than 10 percent of the target company’s outstanding shares but a single holder held 52.2 percent of the shares. Once that block was excluded from the calculation, as required by the rules, the U.S. holding increased to over 10 percent, and accordingly the Tier I exemption was not available. FN13 It should be possible to exclude U.S. holders until the level of U.S. ownership is determined and then extend the offer into the U.S., but cf. July 2001 Manual Supplement, Section II, Cross-Border Release, Question E.5 (where the SEC staff takes the position that the Tier I exemption would not be available if it appeared the bidder initially excluded U.S. holders in order to cause migration of shares from the U.S., thereby reducing U.S. ownership to below 10 percent). FN14 July 2001 Manual Supplement, Section II, Cross-Border Release, Question E.7. FN15 July 2001 Manual Supplement, Section II, Cross-Border Release, Question E.7. FN16 July 2001 Manual Supplement, Section II, Cross-Border Release, Question E.8. FN17 July 2001 Manual Supplement, Section II, Cross-Border Release, Question E.6. A preconditional tender offer involves an announcement by a bidder that it will commence an offer on stated terms when certain conditions (usually relating to antitrust or other regulatory clearances) have been satisfied. Note that in any event, the announcement (as opposed to commencement) of an offer triggers the application of Rule 14e-5 (subject to any applicable exemption). FN18 July 2001 Manual Supplement, Question E.9. This interpretation is particularly helpful in a case in which the rules of the target company’s home jurisdiction require a second offer to be made by any acquiror that achieves a specified level of ownership, because the bidder’s ownership of the target company’s shares acquired in the first offer obviously distorts the U.S. ownership calculation. FN19 See July 2001 Manual Supplement, Section II, Cross-Border Release, Question L.3. FN20 Dual Offers in U.S. and Chile: Ivax Corp., SEC No-Action Letter (June 5, 2001). Dual offers in U.S. and Argentina: Banco Bilbao Vizcaya Argentina, S.A., SEC No-Action Letter (April 19, 2001); Banco Santander Central Hispano, S.A., SEC No-Action Letter (June 20, 2000); Repsol-YPF, S.A., SEC No-Action Letter (June 20, 2000); Telefonica S.A., SEC No-Action Letter (June 5, 2000); Cerveceria y Malteria Quilmes S.A.I.C.A. y G., SEC No-Action Letter (June 2, 2000). Dual offers in U.S. and Colombia: Banco Bilbao Vizcaya Argentina, S.A., SEC No-Action Letter (March 9, 2001). Dual offers in U.S. and Venezuela: The AES Corporation, SEC No-Action Letter (April 28, 2000); Primor Alimentos C.A., SEC No-Action Letter (February 20, 2001). FN21 See, e.g., Amerada Hess Corporation, SEC No-Action Letter (Dec. 13, 2000); The Royal Bank of Scotland Group plc, SEC No-Action Letter (Dec. 27, 1999); Telwest Communications, SEC No-Action Letter (June 23, 1998). FN22 Most state blue sky securities laws contain an exemption for shares listed on a major securities exchange or the Nasdaq Stock Market. Any blue sky laws that do not provide this type of “listing exemption” generally are pre-empted under �18 of the Securities Act. FN23 The Tier I exemption is available only if the bidder permits U.S. holders to participate in the offer on terms at least as favorable as those offered any holder of the same class of securities, subject to a series of limited exceptions. One of those exceptions permits a bidder to offer U.S. holders only a cash consideration, notwithstanding the fact that the bidder is offering holders outside the U.S. a consideration consisting in whole or in part of securities of the bidder, so long as the bidder has a reasonable basis for believing the amount of cash is substantially equivalent to the value of the consideration offered U.S. holders and the bidder either provides an independent expert’s opinion to that effect or, if the offered security qualifies as a margin security pursuant to Regulation T, the bidder provides certain trading and price data. Exchange Act Rule 14d-1(c)(2)(iii). FN24 See Cross-Border Release, footnote 38 (“The exception to the equal treatment condition of the Tier I exemption for cash only consideration … would not apply to Tier II offers. The staff will continue to consider requests for that type of relief on a case-by-case basis”). FN25 See Cross-Border Release, footnote 31 and accompanying text. FN26 Singapore Telecommunications, supra, note 12. FN27 The term “qualified institutional buyer” is defined in Rule 144A under the Securities Act. The offer and sale of securities exclusively to QIBs generally will be exempt from the registration requirements of the Securities Act pursuant to Rule 506 under the Securities Act and from the corresponding state blue sky securities law requirements. FN28 If the shares being tendered for were registered under the Exchange Act, an offer limited to QIBs would not be possible because it would be inconsistent with the “equal treatment” requirements of Exchange Act Rule 14d-1(c)(2) (applicable to Tier I offers) or of the “all-holders” rule, Rule 14d-10 (applicable to Tier II and other offers for Exchange Act-registered shares). FN29 See, e.g., Amerada Hess Corporation, supra, note 21; Air Products and Chemicals, Inc. and L’Air Liquide S.A., SEC No-Action Letter (March 10, 2000). In The Royal Bank of Scotland Group plc, supra, note 21, the staff permitted withdrawal rights to be terminated without the offer becoming wholly unconditional when the only remaining condition was the receipt of regulatory approvals. FN30 The SEC takes the position that the bidder’s obligation pursuant to Exchange Act Rule 14d-4(d)(1) to disseminate information to security holders regarding a material change in the information previously provided requires that the offer remain open (and withdrawal rights therefore remain available) for an appropriate period which, in the case of a change in or waiver of the minimum condition, would be five business days. See Release No. 34-24296 (April 3, 1987). FN31 Cross-Border Release, Section II.B FN32 See, e.g., Amerada Hess Corporation, supra, note 21 and Air Products, supra, note 29. FN33 These requirements are: the reviewing court must approve the fairness of the terms and conditions of the exchange of securities and must find, before approving the transaction, that the terms and conditions are fair to the target company’s shareholders; the court must be advised before the hearing that the issuer will rely on the �3(a)(10) exemption based on the court’s approval of the transaction; the court must hold a hearing before approving the fairness of the transaction that must be open to everyone to whom securities would be issued in the proposed exchanges, and adequate notice must be given to those persons; there cannot be any improper impediments to appearance by those persons at the hearing; and the issuer must be provided an opinion of counsel licensed to practice in the relevant foreign jurisdiction to the effect that before the court can give its approval, it must consider the fairness of the proposed exchange to persons receiving securities in that exchange.

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