At what ownership levels by an acquiror is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
Mergers & Acquisitions (3rd edition)
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.
The Companies Act does not prescribe public disclosure in the context of an acquisition. Should the acquirer reach the thresholds discussed below in questions 25 and 27, a notice disclosing intention to acquire shares may be circulated to the remaining shareholder(s) as applicable.
Public disclosure may be required by the applicable stock exchange upon which the target is listed. For example, if the company were listed on the BSX, the company would have to keep the BSX, shareholders of the company and other holders of its listed securities informed without delay, by way of public announcements and/or circulars, of any information relating to the company (or its group) that:
- is necessary to enable them and the public to appraise the financial position of the company and the group;
- is necessary to avoid the establishment of a false market in its securities; and
- might reasonably be expected materially to affect market activity in and the price of its securities.
Additionally, where an acquirer becomes a holder of 5% or more of a local company, the local company must notify the Exchange.
Although it depends on the nature of the company, in privately held companies a “control” situation (having 51% or more of the shareholding interest) will be required to be registered before the Chamber of Commerce within a month after it has occurred and therefore publicly available.
A person acquiring or disposing shares in a listed company or in a financial institution must notify (i) the issuer or the financial institution, as the case may be, (ii) the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia), and (iii) the Colombian Stock Exchange (Bolsa de Valores de Colombia - BVC) if the number of shares to be acquired or disposed reaches or exceeds 10% of the capital stock of such company. Such notification shall be accompanied with the corporate and financial documents set forth in the applicable law.
Reporting share ownership of 25% or higher: An acquirer shall publish a takeover bid when directly or indirectly, independently or jointly, acquires shares with the voting right of the target company so that, together with the shares it has already acquired, exceeds the threshold of 25% of the voting rights of the target company (control threshold).
After passing the control threshold and publishing the takeover bid, the acquirer is obliged to publish a takeover bid when, independently or jointly, directly or indirectly, the voting rights of the target company increase the percentage of voting rights by more than 10% (additional threshold).
The acquirer is obliged to submit to HANFA, within 30 days from the date on which the obligation to publish the takeover bid arose, the request for approval of the publication of the takeover bid, the takeover bid and other documentation required by law. HANFA shall issue a decision on the respective request within 14 days from the date of receipt of the request. The bid must be published in the Croatian Official Gazette and the stock exchange within seven days after receipt of HANFA’s decision approving the bid. The bid and any amendments thereto must be submitted to the target and to the stock exchange or the regulated public market on which the shares are traded. The bidder must also notify every shareholder of the content of the bid, including any amendments.
Reporting share ownership below 25%: Acquisitions of shares at levels below the 25% threshold triggering a mandatory takeover may need to be reported. Under the Securities Market Act, an individual or a legal entity that directly or indirectly acquires shares of a joint stock company, which acquisition results in the shareholder’s having voting rights exceeding a threshold of 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75%, must inform HANFA and the issuer in writing within 4 days of the acquisition. A similar notification obligation applies to a shareholder whose shareholding drops below any of such thresholds as a result of a disposal of shares. The share ownership report may trigger buying activity in the target’s shares.
There is no a common rule. It will always depend on different factors such as: the level of sophistication or complexity of the acquiror (for example if the acquiror is a company listed on a stock exchange). If it is a public offering of shares, it must be disclosed up to the first level of ownership. If the Target is a company in the financial sector, there are particular rules that must be applied.
If shares in a stock corporation that is listed on the Vienna Stock Exchange are being sold, any share transfer has to be reported within two trading days to the Vienna Stock Exchange, the Financial Market Authority and to the company whose shares are being transferred, if by such share transfer the shareholding of one shareholder reaches, exceeds or falls below 4, 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 75 or 90%.
Sec. 22 Takeover Act stipulates that in case of an acquisition of a direct stake in a publicly traded (target) corporation that exceeds 30 % of permanent voting rights, the Takeover Commission has to be informed immediately and an offer to acquire the remaining shares must be made within 20 trading days. The increase of such controlling stake by way of “creeping in” does not allow for circumvention of these public disclosure rules. Even when such controlling stake in excess of 30 % is being held through one intermediary holding company, the disclosure rules apply.
The Act on Takeover Bids stipulates that in case of an acquisition of the shares in the publicly traded company, the acquirer shall inform the Czech National Bank within 15 days from the date of creation of notification obligation about the public offer. In case that the Czech National Bank does not prohibit the publication of the public offer, the public offer shall be published within 15 business days or immediately after the delivery of the approval stating that the Czech National bank does not prohibit the publication of the offer document.
British Virgin Islands
There is no BVI regulation relating to the documentary requirements for public disclosure regarding ownership levels. Once applying for listings on a stock exchange BVI companies may amend their memorandum and articles of association so that their constitutional documents require disclosure of any stake building or acquisitions of shares above certain thresholds.
Other than for companies listed on the CSX, the Cayman Islands do not have any regulations relating to the making or content of any announcement.
While not strictly prescribed by the Companies Law or the LLC Law, and regardless of any applicable listing rules or regulation, any statutory merger or consolidation will require some form of disclosure statement. The Companies Law and LLC Law require each constituent company to enter into a written plan of merger. Such plan sets out certain prescribed information and, for more complex transactions, this is usually accompanied by a more detailed merger agreement.
For schemes of arrangement, alongside the applicable Court documents, the scheme circular must be provided to the scheme participants and include sufficient information so as to allow them to make an informed decision on the merits of the proposed scheme.
For a tender offer, there is no Cayman Islands prescribed documentation. However, listing rules or regulations may be applicable. For a squeeze-out, the Companies Law and LLC Law require that notice be given to dissenting shareholders.
For companies listed on the CSX, the Code requires a cautionary announcement to be published on the CSX's News Service and in the press preceding or during negotiations which may lead to an announcement of a firm intention to make an offer. A cautionary announcement must be made when an offer is under discussion and either the target is the subject of rumour and speculation or there is an abnormal movement in the price of the target’s shares traded on the CSX or any other exchange or negotiations or discussions are about to be extended to include more than a very restricted number of persons.
The Code further requires an announcement of a firm intention to make an offer to be published on the CSX's News Service and in the press either when the board of the target has been notified in writing of a firm intention to make an offer from a serious source, irrespective of the attitude of the board to the offer (responsibility for making the announcement rests with the target in such case) or immediately upon an acquisition of shares which gives rise to an obligation to make a mandatory offer under Rule 8 of the Code - being stakebuilding of 30% or more of the shares of the target (responsibility for making the announcement rests with the offeror in such case).
Regarding listed companies, the law requires the disclosure of shareholdings or voting rights to the AMF and the target when crossing certain thresholds (5%, 10%, 15%, 20%, 25%, 30%, 1/3, 50%, 2/3, 90% and 95%). Disclosure must occur within 4 trading days of the thresholds’ crossing. Such disclosures are then notified to the market by the AMF).
There are no public disclosure requirements in the case of the acquisition of shares in private companies. With respect to public, listed companies, disclosure must be made for transparency purposes once there is knowledge on the deal, while disclosure can be delayed subject to prior communications with the HCMC, and provided that legitimate interests related to the acquisition are protected, if all relevant delay requirements under the MAR are met, i.e. (a) immediate disclosure is likely to prejudice the legitimate interests of the issuer; (b) delay of disclosure is not likely to mislead the public; (c) the issuer is able to ensure the confidentiality of that information.
Furthermore, 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.
When the shareholding ratio of the shares held by an acquirer exceeds 5%, such acquirer must file a large shareholding report with the relevant Local Finance Bureau, which includes the following information: purpose of the shareholding, changes in the shareholding during the last 60 days, source of funding used for the acquisition of the shares and any material agreement relating to the shares.
Where the Takeover Code applies, the bidder must publicly disclose its opening position (including those of its concert parties).
Where an application is made to the Channel Islands Competition Regulatory Authorities (CICRA), notice of the application will be published by CICRA.
Otherwise there are no specific disclosure requirements in Jersey unless required by the target’s constitutional documents or by a foreign stock exchange if the target’s shares are listed.
There are no prescribed rules regarding public disclosure. Generally, it is up to the parties to decide as and when they want to disclose the offer to the public.
With respect to listed GBCs and Reporting Issuers, a public announcement is required to be published by:
- The board of the target company when a firm intention is made;
- The board of the target company when there is undue movement in its share price whether or not a firm intention is made;
- The offeror when there is undue movement in the target company’s share price before a firm intention is made and the FSC has reasonable cause to believe that such undue movement is caused by the offeror’s actions;
- The board of the target company when offeror has withdrawn its offer;
- The board of the target company or the offeror upon the FSC’s direction.
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.
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. In this regard note that a government appointed committee has now proposed to amend the Norwegian legislation by abolishing the target’s obligation to inform Oslo Stock Exchange in advance about the prospected listed target’s decision to delay disclosure. Instead, it is proposed that that such information together with the prospected listed target’s reasoning for delaying disclosure shall only be provided at the request of the surveillance authority. 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.
Public disclosure of shares ownership is only required by law in the case of a publicly traded company. Under the current Economic Groups Regulations, listed companies must inform to the Superintendency of Securities Market of the members of its economic group and a list of its holders of common shares that hold more than 4%, as well as any change to such structure. Consequently, if a person acquires 4% or more of the shares of a listed company or a company of its economic group, the listed company must inform of this event to the Superintendency of Securities Market.
In addition to this, Article 32 of the Securities Market Law establishes that listed companies must inform the Superintendency of Securities Market and the Lima Stock Market of any transfer of its shares made by any person or entity who directly or indirectly owns 10% or more of the company’s total share capital or of any person who becomes owner, or is no longer owner of, 10% or more of the total share capital of the listed company.
If a person or group of persons intends to acquire at least 35% of the voting shares of a public company in one or more transactions within a 12-month period, the acquirer is required to disclose such intention and make a tender offer. Further, if a person or group of persons which already holds at least 35% of the voting shares intend to acquire more than 50% of the voting shares of a public company, a similar tender offer requirement is imposed. Under the 2015 SRC Implementing Rules and Regulations, which the SEC began enforcing in March 2016, the acquisition of at least 15% of the equity shares of a public company or a corporation with assets worth at least PhP 50 million, and 200 shareholders with at least 100 shares each, triggers a disclosure action.
Isle of Man
Save where the target is listed on a foreign stock exchange, in which case the rules of the foreign stock exchange will apply, there are no specific requirements in the Isle of Man for public disclosure during an acquisition.
If the Takeover Code applies, Rule 8 requires the following public disclosure:
- a bidder must make a public Opening Position Disclosure following the start of an offer period or an announcement first identifying it as the bidder or identifying a competing securities exchange offeror.
- the target must make a public Opening Position Disclosure following the commencement of the offer period and, if later, after the announcement that first identifies any securities exchange offeror.
- any person interested in 1% or more of any class of relevant securities of a target or of any securities exchange offeror must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.
In the Isle of Man, ownership of shares of a 1931 Act becomes a matter of public record upon transfer. Under the 2006 Act, the register of shareholders is not a matter of public record.
In private M&A transactions, the situation varies depending on the target being a private limited liability company by quotas (sociedade por quotas) or by shares (sociedade anónima).
The transfer or encumbrance of quotas in sociedades por quotas are subject to registration and publication. Thus, the information about the owners of the quotas and the respective transfer or encumbrances of quotas is – upon its registration and publication – publicly available information.
The transfer or encumbrance of shares in sociedades anónimas is subject to registration with the company or another third party in their internal registrars and is not public.
A recently enacted law imposes the disclosure of the identity of the UBOs of a company, other personal information about such persons and the equity interest held – directly or indirectly – in the company. Some of this information is expected to be publicly available while sensitive information will be only available to the competent public authorities.
In public M&A deals, the situation is vastly different. Any shareholder that acquires a shareholding or is attributed with an equity interest representing at least 2%, 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the voting rights in a publicly traded company is required to inform the target company and the CMVM.
These thresholds may be crossed by adding any voting rights held by the potential acquirer to the voting rights of another shareholder the former may be attributed with. This attribution may arise from different types of arrangements, such as a shareholders’ agreement, derivative contracts, or agreements enabling them to jointly exercise significant influence over the company.
Once it receives the notice from the acquirer, the target company is required to disclose it publicly within 3 trading days.
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).
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.
Once a bidder has acquired 35% of the voting rights of the shares in a target company, the bidder is obliged to give notice to shareholders, this is also dealt with in question 25 below.
With respect to publicly listed companies, an offeror (as well as anyone else) is required to notify the Swedish Financial Supervisory Authority and the target company as soon as possible, but at the latest three trading days following the day the change in shareholding occurred, when such change in shareholding entails that the offeror’s holding (including e.g. shares held in treasury and shares held by subsidiaries) reaches, exceeds or falls below any of the following percentages of the target company’s total shares or voting rights:
- 5% and every subsequent 5%, up to and including 30%.
The disclosure requirement applies not only to shares, but also to depositary receipts entailing a right to vote for the shares which the depositary receipts relate to, financial instruments which entitle the holder to purchase already issued shares as well as financial instruments having an economic effect similar to that of financial instruments that entitle the holder to purchase already issued shares.
The Swedish Financial Supervisory Authority will make the relevant information public.
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. In addition, a specific disclosure duty at the same thresholds exists for persons who have the discretionary power to exercise the voting rights associated to shares of a listed company.
There is no statutory obligation requiring a private company or public company to publicly disclose information when acquiring a target company.
However, an acquisition of shares at every 5 percent of the voting rights in a listed company is required to be publicly disclosed. The acquirer needs to submit an acquisition form (the Report of the Acquisition or Disposition of Securities in a Business, or Form 246-2) to the public via the SEC system. This excludes certain types of acquisition, such as rights offerings, securities borrowing and lending, or Non-Voting Depository Receipt (NVDR), etc.
An acquisition of shares which reaches or exceeds 25 percent, 50 percent, or 75 percent of the voting rights in a listed company is subject to tender offer and disclosure of information to the public via both the SEC system the portal of the Stock Exchange of Thailand (the “SET”). Please see more details in the answer in item 18.
Publicly listed companies which are listed in the DFM or ADX should comply with the regulations of the SCA, while companies listed on NASDAQ Dubai are required to comply with the regulations of the DFSA. Disclosures are required under SCA rules if the ownership of a shareholder reaches 5% or more of the securities of a listed company on the DFM/ADX, and thereafter upon each 1% increment. Takeover rules and approvals apply if a shareholder’s ownership, together with any of its related parties, exceeds 50% or more of a listed company’s share capital. Any shareholder, together with any of its related parties, holding 30% or more of the share capital of a listed company that wishes to acquire any additional shares must submit a tender offer to SCA, which has the right to reject the tender offer if it is deemed to affect the interest of the market or the national economy. The Takeover Rules Module of the DFSA Rulebook requires a person who acquires 30% or more of a listed company’s voting rights to make a mandatory takeover bid for the whole company.
Subject to certain exceptions, any person who acquires 25% or more of the shares or voting rights of a target must make a public announcement. Further, irrespective of the percentage of shares or voting rights acquired, if an acquirer acquires ‘control’ over a target, then too, a public announcement is to be made. Any person who already holds 25% or more of the shares or voting rights of a target, and who in any financial year acquires shares or voting rights which entitle such acquirer to voting rights exceeding 5%, is also required to make a public announcement, subject to certain exceptions.
Further, any acquirer who acquires shares or voting rights in a target company which taken together with shares or voting rights, if any, held by him and by persons acting in concert with him in such target company, aggregating to 5% or more of the shares of such target company, need to disclose their aggregate shareholding and voting rights in such target company. And any holder of 5% or more of shares or voting rights needs to also disclose any change in their holding even if the change results in the shareholding falling below 5% provided such change exceeds 2% of the total shareholding or voting rights.
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:
(i) 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);
(ii) 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
(iii) 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:
(i) 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;
(ii) 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.
A target company generally is not obliged to disclose that it is exploring a sale or engaged in negotiations with a potential buyer or buyers prior to entering into a binding agreement. Similarly, potential buyers also have no general duty to disclose a potential acquisition unless they enter into a binding agreement that is material to the acquirer or commence a tender offer. Although it is not common in the U.S. market, some acquirers obtain “toehold” positions in the securities of the target company prior to making an offer. In these circumstances, the Exchange Act requires that the buyer file a Schedule 13D within 10 days of obtaining beneficial ownership of 5% or more of the equity securities of the target. The buyer is also required to amend the Schedule 13D promptly upon the occurrence of any material change in facts.
While neither buyers nor targets have a general obligation to publicly disclose a potential deal or negotiations relating thereto, U.S. public companies may not selectively disclose any such information to investors under Regulation FD, except to investors that agree to keep it confidential and not trade on the information. The Exchange Act also imposes a reporting obligation on public companies by requiring them to file a Form 8-K upon the occurrence of various events, as more fully described in Question 6. Finally, a company undertaking a securities offering will be obliged to disclose all material information in connection with the offering, which may include unrelated pending M&A activity.
There are generally no disclosure requirements in private M&A transactions. If an investor only acquires a minority stake in a public company, then the investor is required to publicly disclose through a Simplified Report on Shareholding Change (Simplified Report) if the acquiror directly or indirectly (e.g., by way of persons acting in concert) acquires 5% to 20% of the shares in a public company and such shareholding will not result in a change of control of the target company. The Simplified Report typically includes the identity of the acquiror and all Persons Acting in Concert, their current shareholding in the company, their history of trading the shares in the past 6 months, the purpose of their acquisition, and whether the acquiror intends to further increase its shareholding in the target company in the next 12 months.
When acquiring a controlling stake in a public company, the acquiror is generally required to publicly disclose a Detailed Report on Shareholding Change (Detailed Report). In addition to the disclosures required in a Simplified Report, a Detailed Report should include the shareholding structure of the acquiror, all persons acting in concert with the acquiror on a see-through basis, their financials from the past three years, source of funding, and their future plans to reorganize the target company. These disclosures are intended to identify the ultimate beneficial owner of the acquiror and demonstrate that the acquirer or its ultimate beneficial owner (if the acquirer is a SPV) has the economic capacity to acquire the target company without using certain types of leverage (other than bank and shareholder loans).
15.1 Acquiring shares of a non-listed company does not oblige the acquirer to make any public disclosure. However, certain information will be required from the acquirer to register the transfer of shares and update the corporate documents of the target company.
15.2 The CML sets forth certain minority ownership thresholds at which the acquirer should make a disclosure to the EGX as follows:
- An acquirer acquiring, in an open market transaction, 5% (or its multiples) of the issued shares or the voting rights of a Publicly Traded Company, and less than one-third, whether through one transaction or a series of transactions, must notify EGX and FRA within two days of executing the relevant transaction. The Public disclosure must include details on the acquirer, its related parties, the percentage of shares held by such acquirer post completion, and the number and type of shares subject of the acquisition.
If the acquirer acquires 25% or more of the issued shares or voting rights of a Publicly Traded Company but not exceeding one third, whether directly or through its related parties, its disclosure must include, details concerning its future investment plans, management plans and whether it has any intention to acquire more than 1/3 of issued shares or voting rights of the Publicly Traded Company.
- The public disclosure requirement listed under (i) above also applies in the event that the acquirer is a director of the board or an employee of the Publicly Traded Company and has acquired 3% (or its multiples) of the issued shares or voting rights of the Publicly Traded Company.
15.3 If an acquirer wishes to acquire one third or more of the shares or voting rights of a Publicly Traded Company, the latter must submit an MTO application to acquire up to 100% of its shares or voting rights to FRA for approval. Upon acceptance of the MTO application and information memorandum, the FRA should notify EGX of the MTO material terms, which are subsequently disclosed to the public on the EGX screens.
If the transaction requires merger control approval by CICRA the proposed transaction will be made public upon CICRA’s receipt of the application, as set out in paragraph 11 above.
Where the provisions of the Takeover Code apply, there are requirements for the bidder, target and certain persons interested in relevant securities to make a public opening position disclosure following the commencement of the offer period.
Where the target is listed on a stock exchange, the rules of the exchange will apply to the timing of the public disclosure.
Where no specific regulatory regime applies to the company or transaction, it is for the parties to decide as to when they want to disclose the offer to the public.
Acquisitions that result in a change in control of an Offshore Listing Vehicle may trigger the requirement to make a mandatory general offer to all shareholders of the company pursuant to the Takeover Code.
Please refer to the relevant Offshore Chapter for more detail on public disclosure ownership thresholds for each offshore jurisdiction.
Once a person holds more than 3% of the voting rights of a UK company whose shares are admitted to trading on a UK regulated market or a prescribed market (e.g. AIM) whether as a shareholder or through direct or indirect holding of financial instruments, that person is required under the Disclosure Guidance and Transparency Rules to disclose that interest. Disclosure is also required if the holding in question increases or decreases through each whole percentage point over 3%. The notification thresholds for a person holding an interest in a non-UK company (whose shares are admitted to trading on a regulated market and whose home state is the UK) are 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. Notification must be made on the standard form which can be obtained from the website of the Financial Conduct Authority (the UK regulatory for these purposes) within two trading days in respect of UK companies and four trading days in respect of non-UK companies.
In the context of a public takeover, once an offer period has commenced interests and dealings in “relevant securities” need to be disclosed under the Code. Relevant securities include, among other things, target securities subject to the offer and carrying voting rights, target equity share capital and securities convertible into or having subscription rights into either of these. Options in respect of and derivatives referenced to these securities or shares are also relevant securities.
Persons subject to the Code's disclosure regime and persons with interests in 1% or more of any class of relevant securities of the target company are required to disclose details of their interests or short positions in, or rights to subscribe for, any relevant securities of the target company. The disclosure must be made no later than 12 noon on the tenth business day after the commencement of the offer period.
Disclosure of dealings in relevant securities of the target company must be made by the bidder no later than 12 noon on the business day following the date of the relevant dealing. The procurement of an irrevocable undertaking to vote in favour of an offer by the bidder and a shareholder will not amount to a dealing provided certain criteria are satisfied (although if an irrevocable undertaking is entered into prior to the commencement of the offer period this must be disclosed and is usually done so in the announcement of an firm intention to make an offer).
Pursuant to the Cyprus Stock Exchange Law, every natural or legal person who directly or through a third party, acquires or disposes of a participation in a company which has been registered in the Republic of Cyprus and whose shares are listed on the Cyprus Stock Exchange or a regulated market of another Member State, by which the voting rights he holds reach or exceed the thresholds of five per cent (5%), ten per cent (10%), fifteen per cent (15%), twenty per cent (20%), twenty-five per cent (25%), thirty per cent (30%), fifty per cent (50%) and seventy five per cent (75%) (‘substantial participation”), the said person shall notify the company and simultaneously CySec as well as the Stock Exchange as regards to the shares that are listed on the Stock Exchange, the latest within the working day following the execution of the transaction or the day on which he acquired knowledge or should have acquired knowledge of the transaction, with a notification to each recipient.
The said notification shall include the following details:-
(a) the percentage of voting rights and share capital which the person who has the obligation held before and after the acquisition or disposal and, if possible, the chain of related enterprises through which he holds the voting rights;
(b) the date on which the acquisition or disposal was made; and
(c) the identity of the beneficiary of the securities, even if he does not have the right to exercise the voting rights, as well as the identity of the natural or legal person who has the right to exercise the voting rights on behalf of the beneficiary.
The core provisions on registration and public disclosure of ownership changes in Hungarian companies are set out in the Company Procedure Act and, in case of public companies, the Capital Market Act. Whether and at what ownership level disclosure is required generally depends on the form of the target company.
In case of a limited liability company (Kft), all shareholders, irrespective of their ownership level, are indicated in the company register which is publicly accessible via electronic means. The change of the shareholder of a limited liability company must be registered in the company register and publicly disclosed irrespective of the level of ownership it has acquired.
In case of a (private or public) company limited by shares (Zrt. and Nyrt.), the identity of a shareholder is not specifically disclosed in the company register. However, once the respective shareholder of a private company limited by shares holds more than 50 % of the votes, this fact and the identity of the shareholder is indicated in the company register which is publicly accessible. The rule also applies if such shareholder holds at least 75 % of the votes. Shareholders holding a smaller portion of the votes are not disclosed to the public via the company register. However, all shareholders of the company exercising shareholders’ rights are indicated in the book of shares of the company, which is publicly accessible and may be looked into by any third person at the registered seat of the company.
In case of public companies limited by shares (Nyrt.), the Capital Market Act prescribes special disclosure obligations which are applicable in addition to the above general provisions. Shareholders of a public company are required to notify the company and the Hungarian National Bank acting as supervisory authority if their participation in the votes in the company’s shareholders’ meeting reaches, exceeds or falls below the following ratios: 5, 10, 15, 20, 25, 30, 35, 40, 45, 50, 75, 80, 85, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99 %. At the same time, the company is required to notify the supervisory authority once it receives such a notification from a shareholder and to publish such notification. Pursuant to the Capital Market Act, separate disclosure requirements apply to the process of acquiring a participation in a public company limited by shares via a public takeover bid. For more details, please refer to point 16 below.
Under Article 2 (4) of the QFMA Mergers & Acquisitions Rules, each individual/entity who owns individually or with minor children or spouses ten percent (10%) of a listed company’s shares, must notify the QFMA and the QSE of any deal or act that will lead to an increase of this percentage upon the completion of the purchase.
Further, under Article 2 (5) of the QFMA Mergers & Acquisitions Rules, if an individual/entity or several allied individual/entities, having together 20% of listed company’s shares, want to undertake any act which leads to an increase of such percentage ownership up to an amount of 30% of the issued shares, theymust inform the QFMA and the QSE of any deal or act that will lead to an increase of this 20% figure immediately upon completion of the purchase. Any increase above 30% requires a public offer to be made.
In accordance with Article 147 of the Market in Financial Instruments Act (ZTFI-1) and pursuant to the Rules of the Ljubljana Stock Exchange a public company shall publish the information from the notice of changes in major holdings as soon as possible and at the latest on the third trading day after receipt of the notice from the acquirer. The thresholds of major holdings are the holdings of voting rights in each public company which belong to each individual shareholder and represent 5, 10, 15, 20, 25 percent, 1/3, 50 or 75 percent of total voting rights in a public company.
Article 24 of the Takeovers Act (ZPre-1) stipulates that in case of a planned acquisition of a direct stake in a publicly traded (target) company that exceeds 1/3 of voting rights, the Securities Market Agency (ATVP), the target company's management, the Slovenian Competition Protection Agency (AVK) and the public shall be notified. The offeror who has achieved the takeover threshold shall fulfil the obligations of notification and public announcement within three business days of the day in which such threshold was achieved.