Mandatory bids 

According to the Securities Markets Act, the obligation to make a takeover bid will arise if the shareholder’s voting rights in a company subject to public trading exceed 30 or 50 per cent of total voting rights. A takeover bid made on the basis of such obligation is called a mandatory bid. The Companies Act and the Articles of Association of some companies also include thresholds and rules for mandatory bids or squeeze-out.

Exemptions from the obligation to bid are provided for in the law, where, for example, the relevant threshold is exceeded following a voluntary takeover bid made for all securities of the target company. For particular reasons, FIN-FSA may also grant an exemption from the obligation to make a bid.

The Securities Markets Act also regulates the consideration offered in a mandatory bid. As a rule, the consideration offered must be at the least the highest price paid for the securities subject to the bid, during the six months preceding commencement of the obligation to bid, by the party under the obligation to bid or a person, organisation or foundation having a close relationship to such party, as referred to in the Act. If such a price cannot be determined, the consideration offered must be at least as high as the 3-month trading-volume-weighted average of the prices paid for the securities. The obligation to increase a bid or pay compensation to those who have accepted the takeover bid will be determined in the same manner as in voluntary takeover bids.

The rules on mandatory bids under the Securities Markets Act are designed to protect minority shareholders under circumstances where control or significant influence in the company is becoming concentrated. Shareholders should then be offered the opportunity to dispose of their holdings in the company. However, shareholders are under no obligation to accept a mandatory bid and are therefore not required to respond in any way.

The squeeze-out procedure under the Companies Act may start when one shareholder owns more than 90% of the shares and voting rights in the company. Under the relevant rules of the Companies Act, a majority shareholder has squeeze-out rights in respect of the shares of minority shareholders, whereas minority shareholders have sell-out rights in respect of the remaining shares to the majority shareholders. The squeeze-out procedures under the Companies Act and the mandatory bid procedure under the Securities Markets Act are conducted independent of each other; each process in accordance with the relevant legislation.

2 February 2010