Are there circumstances where a buyer may have to make a mandatory or compulsory offer for a target company?
Mergers & Acquisitions (2nd edition)
Pursuant to the STA, any person or legal entity, that directly, indirectly, or through consolidation of ownership (following one or more voluntary offers), acquires shares representing more than one-third of the voting rights of a Norwegian company listed on a regulated market, is required to make an unconditional offer of the remaining shares in such company. This obligation to issue such mandatory offer is repeated when the shareholdings exceeds 40% of the voting rights and 50 % of the voting rights, however, such repeated offer is not mandatory when the thresholds are passed in connection with the original mandatory offer. The same rules will apply to acquisitions of the relevant number of shares in a foreign domiciled company listed in Norway but not in its home country. Certain exceptions apply, and the most practical being when shares are acquired as consideration in mergers or demergers.
Consolidation rules apply for shares held by certain affiliates and closely related parties. Hence, the combined holdings of both the acquirer or disposer and such a party’s close associates are relevant when deciding if any disclosure obligations have been triggered.
Some derivative arrangements (total return swaps) may also be considered as controlling votes in relation to the mandatory offer rules, and could under certain circumstances trigger a mandatory offer obligation, even though the bidder owns less than one third of the shares. Acquisitions of more than 50% of the voting rights in a company owning more than 1/3rd of the shares in a company whose shares are listed on a Norwegian regulated market, could also trigger an obligation to issue a mandatory offer, if such owner company’s principal business consists of holding shares in such listed company.
A shareholder exceeding the above mentioned thresholds may sell a portion of its shares to avoid the obligation of a mandatory offer. Such sale must be made within four weeks after the mandatory offer obligation was triggered, and must include all shares exceeding one-third of the shares, or thresholds in the repeated offer.
In addition to the above mentioned rules for companies listed on a regulated market, there are rules on compulsory acquisition for limited liability companies in general. A shareholder who becomes the owner of 90% or more of the total number of issued shares in Norwegian limited company, as well as 90% or more of the total voting rights, is obliged to acquire the remaining shares in the company if a minority shareholder so requests. Please see question 27 for further information of the statutory rules in this respect.
Please see section 5.
The acquisition of control (i.e., at least 30% of the voting rights in the target), whether by a privately negotiated share transaction with one or several major shareholders or by purchasing target shares on the stock exchange, triggers the obligation of the purchaser to publish the acquisition of control and to launch a mandatory tender offer.
The following voting rights attached to the target’s shares are attributable to the bidder:
- held by a direct or indirect subsidiary;
- which belong to a third party and are held “for the account” of the bidder;
- which the bidder has assigned as security to a third party, unless such third party is authorized to exercise the voting rights arising from such shares and states its intention of exercising the relevant voting rights at his own discretion;
- in which the bidder has a usufruct;
- in respect of which the bidder can demand transfer of title;
- which are entrusted to the bidder if it may exercise the voting rights at its own discretion in the absence of specific instructions from the shareholder;
- from which the bidder may exercise the voting rights by agreement, which temporarily transfers the voting rights without the underlying shares for consideration;
- which are held by the bidder as collateral, provided the bidder holds the voting rights and declares its intention to exercise such voting rights; and
- held by a person that is acting in concert with the bidder or one of its subsidiaries, where shareholders, by written agreement or informally, agree on the exercise of voting rights in shareholder meetings of the target or where shareholders cooperate in another manner with the objective of influencing the business strategy of the target.
The acquisition of a certain percentage of securities carrying voting rights of a publicly traded company or the holding company thereof, may give rise to a mandatory public offer in the following scenarios:
- when a person, as a result of its acquisition or the acquisition by a person acting in concert, holds more than 30% of the securities carrying voting rights of a publicly traded company;
- when , as a result of an acquisition, a person directly or indirectly acquires control of a holding company;
- when persons acting in concert, as a result of an acquisition of securities by one of those persons, exceed the threshold of 50 % of the voting securities of a holding company, holding more than 30% of the securities carrying voting rights of a publicly traded company;
- when persons acting in concert acquire more than 50 % of the voting securities of a person who directly or indirectly exercises legal control over the holding company, holding more than 30% of the securities carrying voting rights of a publicly traded company.
There are additional requirements to launch a mandatory public offer for persons acting in concert.
Yes. Please refer to our analysis above in response to Question No. 24.
A bidder is required to make a mandatory offer if such bidder (alone or in concert with others) directly or indirectly exceeds 33⅓% of the voting rights of the target company. However, an issuer may adopt a higher threshold of up to 49% (opting-up) or may opt-out from the tender duty regime entirely by including a respective clause in its articles of association. Approximately one quarter of all SIX-listed issuers have adopted a full opting-out.
Pursuant to Federal law ‘On joint-stock companies,’ the person that acquires more than 30%, 50% or 75% of shares of a public joint-stock company (taking into account the shares already owned by the acquirer and its affiliates) has to make a tender offer to other shareholders of the company to buy out their remaining shares of the same category.
The person that acquires more than 95% of shares of a public joint-stock company as a result of the above mandatory tender offer or a voluntary offer, is obliged to buy out the remaining shares of the company (and has the right to compel such buy-out).
Yes – in line with EU directives
Under the Commercial Companies Law, where an acquisition is approved by the shareholders of the target, the remaining minority shareholders may be required to acquire their shares at the offered price or at a price determined by a valuer undertaking a formal valuation.
The QFMA Mergers & Acquisitions Rules requires a person who wants to acquire 75 percent or more of the shares to notify the authority and he may submit a mandatory offer to buy the remaining shares of the company (Article 34).