Non-Binding Offers

A "Non-Binding IndicativeOffer" (NBIO) is a common practice in business transactions, includingshare purchases, where initial terms are outlined without creating a legallyenforceable agreement. It's a non-binding agreement used to express aparty's interest in a transaction, like buying shares, and sets the stage forfurther negotiations leading to a formal, binding contract.

Key Aspects of a Non-BindingOffer:

Initial Agreement:

The NBIO serves as apreliminary agreement, outlining key terms like price, number of shares, andother important details.

Not Legally Binding:

The core difference is thatthe terms themselves (like the price of shares) are not legally binding,meaning the offer can be withdrawn or revised before a formal contract issigned.

Confidentiality andExclusivity:

While the core offer terms arenon-binding, terms related to confidentiality and exclusivity (e.g., preventingthe seller from negotiating with other potential buyers) are typically binding.

Foundation for Negotiation:

The NBIO acts as a startingpoint for more in-depth negotiations and due diligence before a formal saleagreement is drafted.

Clear and Specific:

To be effective, an NBIOshould be clear, detailed, and include all important aspects of the potentialtransaction.

Example:

A company might issue an NBIOto a potential investor outlining the price per share, the number of shares tobe sold, and a proposed completion date, but these terms are not yet legallyenforceable.

In essence, a non-bindingoffer allows parties to explore the possibility of a deal without immediatelycommitting to a legally binding contract.

Generally, a non-binding offer (NBIO)for shares in a company doesnot require disclosure to shareholders if it remains confidentialand incomplete. However, there are exceptions and strategic reasons why a company mightchoose to disclose it, even if not legally required.

· Exceptions to the Rule:

There are exceptions where an NBIO might needto be disclosed, such as when it's part of a takeover bid or scheme ofarrangement.