This document is a standstill agreement for a firm that considering merger with another firm. It assures that the status quo remains while the partners pursue various alternatives.
This document is a standstill agreement for a firm that considering merger with another firm. It assures that the status quo remains while the partners pursue various alternatives.
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A standstill agreement prevents a party from issuing proceedings during the currency of that agreement. As such a standstill agreement is a voluntary contractual arrangement between the parties to pause limitation for an agreed length of time (typically 3-6 months).
Standstill agreements to extend or suspend a limitation period have become a regular feature of civil litigation. They enable the parties to focus on the pre-action protocol requirements without worrying about limitation. They can also save the cost of the court issue fee if the dispute settles pre-action.
Example: if a party, in a trade agreement, commits to allowing 30% foreign ownership in domestic companies and later on decides unilaterally to allow 40%, the party can re-introduce the original level of 30% whenever it wishes (but it cannot restrict further below 30%).
The standstill agreement prevents these potential buyers from publicly announcing a bid for the target, without first acquiring the consent of the target (the public company exploring a sale). In this sense, the standstill agreement is seen to help the target company control the bidding process.
A standstill agreement can effectively stall or stop the process of a hostile takeover if the parties cannot negotiate a friendly deal. A company that comes under pressure from an aggressive bidder or activist investor finds a standstill agreement helpful in blunting the unsolicited approach.
There are, for example: Stand still principle, which means that you cannot reduce the quantity and quality of the protected environments.
A standstill agreement is a form of anti-takeover measure. In the banking world, a standstill agreement between a lender and borrower halts the contractual repayment schedule for a distressed borrower and forces certain actions that the borrower must undertake.
Uses of Standstill Agreements Some of its application are as follows: A standstill agreement can be used between a lender and borrower. It gives the borrower time to restructure its liabilities. In contrast, the lender provides some moratorium on the payment of interest or principal on loan.