At what ownership levels by an acquirer is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
Mergers & Acquisitions (2nd edition)
In business combinations including non-listed companies, there are no specific disclosure requirements for large shareholders. Even so, for AS-companies, the LLCA requires any person who acquires an interest in shares of a target to immediately notify the company of such acquisition. For ASA-companies, the PLCA requires any member of the board, accountant, general manager and other key employees of the company to immediately inform the company’s board of any purchase or sale of shares or other financial instruments of the company, including any such transaction conducted by persons from affiliated parties.
Note that special disclosure requirements apply for certain private equity, hedge or venture funds which, subject to certain exemptions must notify the FSAN as soon as possible and in no event later than 10 business days after such funds has acquired control (more than 50 per cent of the votes) over a target. This notification obligation is as a main rule conditional upon the target being listed on a regulated market. The same notification obligation is also triggered if such funds acquire of control over a non-listed company, provided such target employs 250 or more employees, and either has annual revenues exceeding €50 million or a balance sheet exceeding €43 million. If such funds acquire shares in such a non-listed company, and the fund's portion of shares reaches, exceeds or falls below 10 per cent, 20 per cent, 30 per cent, 50 per cent or 75 per cent of the votes, the fund's manager will also have to inform the FSAN about the transaction.
For companies listed on a Norwegian regulated market, the STA sets out detailed disclosure provisions for acquisition of significant shareholdings. If an investor's (buyer's) shareholdings exceeds specific thresholds related to percentage of shareholdings, the investor is obligated to immediately notify the company and Oslo Stock Exchange on behalf of FSAN. As soon as an agreement on acquisition or disposal has been entered into that entails that a proportion of an investor's shares, right to shares or corresponding proportion will exceed or fall below 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90 %, the investor must issue such disclosure notification. Shares held by various related parties are, for the purpose of the above calculation, deemed to be included in the shareholdings of the disclosing party. The same notification requirements apply to the acquisition or disposal of subscription rights, options and similar rights. Certain amendments to such disclosure obligations are expected in the near future.
In addition, merger talks or acquisition discussions involving a listed company will at some point constitute inside information between the parties (i.e. information that is likely to affect the price of a specific financial instrument and that is not publicly known), and must accordingly be disclosed to the market by the prospected target. Note that Oslo Stock Exchange’s Appeals Committee has previously ruled that confidential negotiations between a potential bidder and a target’s board could trigger disclosure requirements even before it is highly probable that a takeover offer will be launched insofar as such conversations “must be assumed not to have an immaterial impact on the target’s share price”. However, to avoid prejudice or cause harm to legitimate business interests during a negotiation and planning phase, such prospected listed target may decide to delay disclosure; provided, that: postponement does not mislead the public; the inside information is kept in strict confidence between the parties; and Oslo Stock Exchange is informed about the target’s decision to delay disclosure. If so, the target is required to keep a list of all persons in possession of the information (with date and time entries), of which a copy must be furnished to Oslo Stock Exchange upon request. Any leakage of the intention to launch a bid, typically evidenced by share price movements or rumours and speculations in the market, will force the bidder to publish its intention to launch an offer.
The disclosure obligations applicable to acquisitions of shares in listed companies are set out in questions 5 and 6 above.
As noted in question 6, under the MCL, companies are required to maintain a register of shareholders and make such registers available to shareholders during business hours, and in the case of public companies, the public. While this could be a source of disclosure of acquisitions in a company, as noted in question 6, in practice few companies are in compliance with this requirement.
More broadly, companies are required to file an annual return with Dica. Under the MCL, the annual return must list, for public companies, their 50 largest shareholders, and for private companies, all shareholders. Under the FIL, banks are also required to submit an annual report to CBM of all shareholders having a substantial interest in the bank and their details.
There are no public disclosure requirements in the case of the acquisition of shares in private companies.
Any person submitting a public bid (whether voluntary or mandatory) must inform both the HCMC and the target’s BoD in writing before any public announcement. A person acquiring or disposing shares in a listed company to which voting rights are attached must notify the issuer and the HCMC if such proportion reaches or exceeds the thresholds of 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66.6%. The same obligation applies to certain cases of acquisition, disposal and exercise of major proportions of voting rights, as well as to the acquisition or disposal of financial instruments.
The Securities Trading Act (“WpHG”) provides that any person whose shareholding in a German-listed company reaches, exceeds or falls below 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of the voting rights in such company must without undue delay notify the company and simultaneously BaFin. Voting rights include not only voting rights from a person’s own shareholdings, but also from shareholdings of subsidiaries, trustees, parties acting in concert and a few other parties as set out in the applicable anti-circumvention rules.
In addition, any person holding, directly or indirectly, financial instruments which give the holder the unconditional right to acquire, or discretion as to the right to acquire, shares to which voting rights are attached or which have a similar economic effect must without undue delay notify the company and simultaneously BaFin if the voting rights attached to such shares reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% of the voting rights in such company. The term “financial instruments” refers to, among other things, transferable securities, options, futures, swaps, forward rate agreements and contracts for difference.
Disclosure to the FSMA and the target publicly traded company is principally (there are exemptions) required whenever a natural or legal person acquires directly or indirectly voting securities of the target, representing 5 % or more of the total voting rights. This notification is also required if, as a result of the direct or indirect acquisition of securities conferring voting rights, the number of voting rights reaches or exceeds any multiple of 5% (i.e. 10 %, 15 %, 20 %, etc.) of the total voting rights. The articles of association of the target may include lower thresholds and thresholds between the statutory thresholds (the following thresholds can be included in the articles of association 1 %, 2 %, 3 %, 4 % and 7,5 %).
Further, there are specific disclosure requirements in cases of persons acting in concert and when, following a transfer, the amount of securities carrying voting rights falls below certain thresholds.
15.1 Public disclosure is not relevant in the context of target companies being private companies and is only relevant in the context of target companies being public companies (whether listed or unlisted).
15.2 In the context of public companies, for the purposes of determining public disclosure obligations, the shareholdings of any person or entity must be aggregated together with the shareholdings of all of their related persons or entities.
15.3 Any shareholder holding less than 5% of issued and paid-up voting share capital (on an aggregated basis) is not subject to any public disclosure obligations, unless:
- that shareholder and/or its related persons or entities acquire shares which take their total aggregated shareholding up to ≥5% of issued and paid-up voting share capital (in which case they must disclose publicly the fact of having become a “major shareholder” within seven calendar days of having completed such acquisition);
- that shareholder (being a natural person) also holds any governance or executive managerial office within the relevant public company (in which case they are deemed to be an “internal shareholder” or “insider” (an Internal Shareholder) and are thus obliged to disclose publicly any proposed acquisition or divestment of shares in the company, no later than three business days prior to implementing the proposed transaction); or
- that shareholder (being a company or other non-natural legal entity) has any of its representatives holding any governance or managerial office within the relevant public company (in which case they are deemed to be an Internal Shareholder and are thus obliged to disclose publicly any proposed acquisition or divestment of shares in the company, no later than three business days prior to implementing the proposed transaction).
15.4 Any shareholder holding ≥5% of issued and paid-up voting share capital (on an aggregated basis) is deemed to be a Major Shareholder, and must disclose publicly, with seven calendar days of completion, any acquisition or divestment by it or its related persons or entities which increases or decreases its total aggregated shareholding above or below each interval of an even 1%. Thus, for example:
- if a Major Shareholder holds 5.5% and then acquires an additional 0.3% to take it up to 5.8%, this acquisition will trigger no disclosure obligation; whereas;
- if a Major Shareholder holding 5.8% acquires an additional 0.3% to take it up to 6.1%, this acquisition must be disclosed within seven calendar days of completion.
15.5 In the case of Internal Shareholders, any acquisition or divestment of any shares in the relevant public company must be disclosed no later than three business days prior to the proposed date of implementing the proposed transaction.
If a person (acting alone or in concert with others) directly or indirectly acquires or disposes of shares of a listed company and reaches or crosses any of the thresholds of 3, 5, 10, 15, 20, 25, 33⅓, 50 or 66⅔% of the voting rights of the company, such person is obliged to make a disclosure to the target company and SIX. Separate disclosure duties exist for long positions (shares, long call, short put, etc.) and short positions (short call, long put, etc.). Netting of long and short positions is not permitted.
Public disclosure is required in the following instances:
- Public disclosure by legal entities and sole entrepreneurs of certain facts about their business (e.g. reorganisation, liquidation, increase/decrease of charter capital) in the Unified federal register of legally relevant information on business of legal entities, sole entrepreneurs and other economic agents (http://www.fedresurs.ru/).
- Public disclosure of information on acquisition of more than 20% of shares/ participation interest in a company and reorganisation of legal entities (including mergers, accessions, etc.) is required.
- Public companies and certain non-public companies having a considerable number of stakeholders should also disclose information about material facts (i.e. facts that if disclosed can materially affect the price of the issuer’s securities and their listed price), including, without limitation, information on:
- information on acquisitions / sale of shares (or obtaining of indirect control over votes granted by relevant shares, including, without limitation, under a voting or shareholders agreement) each time any of the following thresholds is reached: 5, 10, 15, 20, 25, 30, 50, 75 or 95% of the company’s shares;
- sending by a joint-stock company of notification on reorganisation to the state registration authority;
- acquisition / termination of control over a material controlled legal entity;
- persons that gain/ cease to exercise control over a joint-stock company;
- receipt /making of voluntary public offer by a person upon acquisition of more than 30% (50%, 75%) of shares of a public joint-stock company, mandatory public offer by a person that acquired more than 30% (50%, 75%) of shares of a public joint-stock company made to the remaining shareholders;
- mandatory redemption of shares by a person that acquired 95% of shares of a public joint-stock company following request for redemption by the remaining shareholders or a public offer made by the person that acquired 95% of shares;
- entering into transactions the value of which is equal to or exceeds 10% of book value of a joint-stock company’s assets.
Publication of notifications about material facts shall be done within 1 (one) day from the date when the relevant fact occurred – via a news service, and within 2 (two) days from the said date – on the joint-stock company’s web page in the Internet.
Disclosure is required by listed companies when the acquisition becomes price sensitive information (i.e., the price of the acquirer’s shares is likely to be influenced).
Private companies do not need to disclose information regarding acquisition. However, in case of these companies, the acquisition may become public as soon as the share transfer is registered with the Commercial Registry Office (in case of limited liability companies where the registration of this share transfer is mandatory).
Under the QFMA Mergers & Acquisitions Rules, a listed company must disclose the details of any individual who owns 5 percent or more of the shares.