Mergers and Acquisitions: The Crucial Role of a Company Secretary

What are Mergers and Acquisitions?

Mergers and Acquisitions (M&A) is the process through which two or more companies come together to form a new entity (merger) or when one company takes over another (acquisition). Though these terms are often used interchangeably, they differ in their structure.

M&A is a strategic move that companies use to improve their competitive position, gain access to new markets, acquire new technologies, diversify products or services, and achieve economies of scale. It is generally driven by specific business objectives that enhance growth and profitability.

The Crucial Role of the Company Secretary in Mergers and Acquisitions

While executives and financial advisors are key players in M&As, the Company Secretary ensures that the entire process complies with legal requirements, corporate governance standards, and regulatory obligations. Below are the main roles that the company secretary plays in the M&A process:

1. Legal and Regulatory Compliance

• Filing necessary documents with regulatory bodies like the Registrar of Companies.

• Seeking approvals from regulatory authorities such as the CMA for publicly listed companies.

• Ensuring all formalities, such as board and shareholder approvals, are properly documented.

2. Shareholder Communication and Approval

• Shareholders are informed of the deal in a timely and transparent manner.

• General meetings or extraordinary general meetings (EGMs) are properly convened to vote on the merger or acquisition.

• Resolutions are prepared and all voting procedures are conducted in accordance with corporate governance standards.

3. Corporate Governance and Documentation

• Transparency in the decision-making process.

• Proper documentation, such as board minutes, resolutions, and shareholder approvals, are maintained.

• All corporate filings with regulators and government agencies are completed accurately and on time.

4. Due Diligence and Risk Management

• Assisting in the preparation of due diligence documentation.

• Ensuring that any potential legal risks or liabilities are identified and managed.

• Coordinating with legal and financial advisors to ensure that all aspects of the deal are well-documented and verified.

5. Post-Merger Integration

• Overseeing the consolidation of shareholder registers.

• Ensuring the implementation of any necessary changes in the company’s structure.

• Facilitating any required filings with the Registrar of Companies, including the transfer of assets or the dissolution of one entity.

Mergers and acquisitions are a growing trend in Kenya, especially as the economy continues to mature and businesses seek ways to expand and improve efficiencies. Some notable M&As are Safaricom and Vodafone, Kenya Airways and KLM, East African Breweries Limited (EABL) and Uganda Breweries.

Conclusion

Mergers and acquisitions are complex processes that require careful planning, execution, and legal expertise. The role of the company secretary in these transactions is crucial to ensure that all legal, regulatory, and corporate governance requirements are met.

In Kenya, as the business landscape continues to evolve, the expertise of company secretaries will remain central to the success of mergers and acquisitions, helping businesses to navigate these transitions smoothly and efficiently.