The specific conditions of an acquisition agreement can differ greatly, depending on the particular transaction. In South Africa, there are several typical suspensive conditions or conditions precedent that are frequently encountered and must be fulfilled before the acquisition can proceed. These include:
• Depending on whether the acquisition meets the thresholds for an intermediate or large merger, it is often necessary to secure approval from South African competition authorities.
• Cross-border transactions may require clearance from the Financial Surveillance Department of the South African Reserve Bank.
• When a business holds licenses for operation, the relevant authorities' approval is usually mandatory for license transfer in business sales or for a change in control of the licensee in share sales or mergers.
• Under the Companies Act, 2008 a special resolution from shareholders is typically mandated for business sales or mergers.
• It is common for purchasers to include a condition precedent for obtaining the counterparties' consent to assign material contracts from the seller or to a change of control.
These conditions (amongst others) significantly influence the agreement's terms and the acquisition's timeline, but ensure compliance with legal requirements and regulatory standards.