Public bid and obligation to launch a bid
Public bid
The Securities Markets Act contains provisions on the procedures to be followed in public bids. One key principle is that holders of the target securities must be treated equally.
The FIN-FSA’s responsibilities include the monitoring of compliance with the provisions on takeover bids of the Securities Markets Act. An offer document must be published on a takeover bid. In reviewing the offer document for approval, the FIN-FSA gives special consideration to the terms and conditions of the bid, the equivalent treatment of the holders of securities and that the bid consideration meets the requirements of the Securities Markets Act.
The provisions concerning takeover bids apply when offering to buy, on a voluntary basis or on the basis of the obligation to launch a bid, shares or other securities carrying entitlement to shares traded on a regulated market or, upon application or with the consent of the issuer, on a multilateral trading facility in Finland.
The regulation on takeover bids therefore also applies in full to shares admitted to trading on a multilateral trading facility in Finland (e.g. Nasdaq First North Growth Market Finland). An amendment to the Securities Markets Act entered into force on 19 April 2024. The provision on the obligation to launch a bid is subject to a three-month transition period, as described below.
The offeror in a voluntary takeover bid may determine the conditions of the bid and the quantity and nature of the consideration offered freely within the boundaries of the Securities Markets Act. The offer consideration in a voluntary bid may be paid in cash, securities or combination thereof.
- Takeover bids may be restricted, for example, to a certain series of security, but all holders of the same kind of security must be offered equal consideration.
- Considerations for securities of different kinds (for example A or B shares, or shares and warrants) may differ, but they have to be in a reasonable and fair proportion to each other.
In a voluntary bid, the offeror may set conditions to the offer, but the shareholders of the target company must be able to reasonably assess the probability of fulfilment of the conditions.
As a rule, the bid period should be a minimum of 3 and a maximum of 10 weeks.
The offeror is obliged to raise the offer or pay compensation to shareholders who have accepted the offer if the offeror, or someone acting in concert with the offeror, acquires securities in the target company on better terms than those of the takeover bid, during the offer period or within nine months from the end of the period.
The acceptance of a takeover bid by shareholders is voluntary. They are not required to react in any way if they do not accept the offer. Neither does their position as a shareholder change if they decline an offer.
Obligation to launch a bid
In accordance with the Securities Markets Act, the obligation to make a public bid will arise if a shareholder’s voting rights in a company subject to public trading on a regulated market or, upon application or with the consent of the issuer, on a multilateral trading facility exceed 30% or 50% of total voting rights. A public takeover bid made on the basis of such obligation is called a mandatory bid. The Securities Markets Act determines how the proportion of voting rights is calculated.
The purpose of the obligation to bid is to protect the other shareholders of the company in a situation where control in the company is concentrated to a single shareholder or a group of shareholders acting in concert, or transferred to a new shareholder. Shareholders should then be offered the opportunity to dispose of their holdings in the company at a fair price.
The Limited Liability Companies Act and the articles of association of some companies also include thresholds and provisions on mandatory bids or squeeze-outs. The squeeze-out procedures under the Companies Act and the mandatory bid procedure under the Securities Markets Act are independent of each other; each process must be conducted in accordance with the relevant legislation.
Transition provision under the Securities Markets Act on the obligation to make a bid
In accordance with a transition provision under the Securities Markets Act, the obligation to make a public bid, for a company subject to trading, upon application or with the consent of the issuer, on a multilateral trading facility, will be applied three months after the entry into force of the Act (163/2024), i.e. after 19 July 2024.
Equivalent treatment
In accordance with chapter 11, section 7 of the Securities Market Act, an offeror launching a public takeover bid shall afford equivalent treatment to all holders of the securities of the target company, as referred to in chapter 11, section 1 of the Securities Market (equivalent treatment). Equivalent treatment is one of the key principles to be followed in a public takeover bid.
The FIN-FSA should be contacted in good time if there are interpretation issues related to a planned takeover bid, for example the assessment of equivalent treatment in situations where the plan is to make a takeover bid as a consortium bid in which a shareholder of the target company will participate. The duration of the processing of interpretation issues will be impacted by the structure and complexity of the issues and the underlying arrangements as well as how clearly the arrangement is described, and whether the FIN-FSA needs further clarification in the matter.
The consideration payable in a mandatory bid must be a fair price. In a mandatory bid, cash consideration must be always offered, but it is possible to offer a securities consideration or a combination of securities and cash as an alternative.
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 acting in concert with such party.
The obligation to raise the offer or pay compensation to shareholders who have accepted the offer is determined in the same manner as in voluntary public bids.
A mandatory bid may only be conditional to the requisite decisions by authorities.
The Securities Markets Act contains provisions on exceptions to the obligation to bid. For example, there is no obligation to bid when the relevant threshold is exceeded following a voluntary takeover bid made for all securities of the target company.
For particular reasons, the FIN-FSA may also grant an exemption from the obligation to bid. For more detailed information, please see: Regulations and guidelines 9/2013 Takeover bid and the obligation to launch a bid, paragraph 6.4. An exemption may be sought from the FIN-FSA already before exceeding a proportion of voting rights giving rise to the obligation to bid on the condition that the anticipated arrangement materialises.
Offer document
Before the entry into force of a takeover bid, the offeror must publish an offer document containing essential and adequate information to assess the favourability of the bid. The offer document must be kept available to the public throughout the offer period, and it must be submitted to the target company and the relevant operator of trading on a regulated market.
The offer document may be published when it has been approved by the Financial Supervision Authority. The offer document may be filed with the FIN-FSA for approval once the decision on the bid has been published in accordance with the Securities Markets Act.
The contents of the offer document are provided on in Decree of the Ministry of Finance 1022/2012 (available only in Finnish and in Swedish). If securities are offered as consideration in the takeover bid, the offer document must also present the information corresponding to the content requirements for a prospectus. The obligation to draw up a prospectus as well as the exemptions and the content requirements for a prospectus are laid down in the Prospectus Regulation (EU 2017/1129) and the Commission delegated regulations adopted pursuant to it. For more detailed information, see Offering of securities and prospectuses
Approval of an offer document
An application for approval of an offer document is made in writing to the FIN-FSA. The processing period for an offer document is five banking days. The date on which the application was filed is not included in the processing time.
In connection with an application for approval, please provide the FIN-FSA with the following:
- offer document and any appendices
- cross-reference list1
- information on shares in the target company acquired by the offeror2 and
- power of attorney, if an agent is employed who is not an attorney.
1 The cross-reference list indicates which parts of the offer document provide which information under the content requirements. The cross-reference list should include all applicable sections, subsections and paragraphs of the Ministry of Finance Decree. If an information item is not available or cannot be provided, it must be mentioned in the cross-reference list, and the reasons must be given, if necessary.
2 The FIN-FSA must be provided with information on shares in the target company and securities carrying entitlement thereto acquired by the offeror or parties acting in concert with the offeror as well as on the consideration paid for them during a period starting 12 months before the publication of the offer/arising of the obligation to bid and extending to the closing of the bid.
The application and its attachments may be submitted to the Financial Supervisory Authority by.
- by email to kirjaamo(at)finanssivalvonta.fi, we recommend the use of secure email at https://securemail.bof.fi or
- by post to the address Finanssivalvonta, PL 103, 00101 Helsinki
We charge a processing fee for an approval decision in accordance with our price schedule. More information is available on the Supervision and processing fees website.
Submit an approved offer document to the FIN-FSA’s register of prospectuses in accordance with the instructions.
Supplementation of an offer document
An error or deficiency in the offer document or material new information that is revealed before the end of the offer period and which may have a material significance to the investor has to be made known to the public without undue delay by publishing a rectification or supplement in the same manner as the offer document.
Regulation
Chapter 11 of the Securities Markets Act (available only in Finnish and in Swedish).
Further information
Regulations and guidelines 9/2013 Takeover bids and mandatory bids (to be updated)