The State should try to ensure that it is no worse off by agreeing to the change in control. It should therefore try to maintain the agreed financial security package and risk positions that were agreed upfront when the initial project deed was signed.
The grounds on which the State may be able to reasonably withhold consent are usually set out in the project deed, and typically include the following:
1. The private party has not provided the State with full details of the proposed change in control and any further information requested by the State.
2. The change in control is to take effect prior to the second anniversary of commercial acceptance (where it relates to the private party only).
3. The proposed investor/entity:
• is not solvent and reputable;
• has an interest which conflicts in a material way with the interests of the government party and is involved in a business or activity which is incompatible, or inappropriate, in relation to the construction or operation of the facility; or
• does not have a sufficient level of financial and technical capacity.
4. The proposed change in control is against the public interest.
5. The proposed change in control would increase the level of risk or liabilities to the government party.
6. The proposed change in control would impact adversely on the ability or capacity of the private party to perform its obligations under the project deed or any other project contracts, and if applicable, of the key subcontractor to perform its obligations under the key subcontract.