At what stages of an acquisition is public disclosure required (whether acquiring a target company as a whole or a minority stake)?
Mergers & Acquisitions
The general concept is that any material information has to be disclosed, which are defined as information related to acts, facts or omissions of the target that can affect (i) the market price of the target’s securities or other securities backed by them; (ii) investors’ decisions to buy, sell, or preserve those securities; and (iii) investors’ decision to exercise any rights arising from the target’s securities or other securities backed on them. There are several different approaches to this rule, the most common of which is the disclosure at the time of execution of the definitive binding agreements. However, some more conservative players disclose the material information related to M&A deals at an earlier stage - for example, at the time of the receipt of proposals or execution of exclusivity agreements. The golden rules, of course, is that one must disclose the material information once there is a leak or a potential leak into the market.
The Companies Act does not prescribe public disclosure in the context of an acquisition. Any such public disclosure would likely be required by any applicable stock exchange upon which the target was listed.
British Virgin Islands
There is no BVI regulation relating to the documentary requirements for a public disclosure. 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.
The Cayman Islands do not have a regulation 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 merger 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 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.
ZL: Provided that the acquisition doesn’t concern listed companies, it’s not mandatorily required to make public disclosure except the documentation to competent authorities for governmental approvals and consents. In accordance with the Administrative Measures for the Takeover of Listed Companies，the acquirer is demanded to make public disclosure when the shares it holds in a listed company has reached five percent of shares issued by the company and every five percent increase afterwards. In terms of the Administrative Measures for the Material Assets Reorganization of Listed Companies, if the acquisition is in the form of material asset restructuring of a listed company and the listed company has reached a preliminary substantive intention with the counterparty and determined to enter into the process of material assets reorganization, it shall make public disclosure pertaining to the transaction and successive disclosure is required when the material assets reorganization gains advances such as the execution of reorganization framework or the approval opinions from competent authorities.
For private companies, there is no general obligation to disclose any acquisition in public. In transactions involving a public company, the disclosure obligations are governed by the applicable securities market legislation and stock exchange rules, and depending on the circumstances, the disclosure may become required, e.g. when the Board of Directors of the acquirer has decided upon the transaction or the relevant transaction document is executed.
Disclosure pursuant to Section 20 para 1 of the German Stock Corporation Act is required, as soon as an enterprise holds more than one fourth of the shares of a stock corporation. In that case, it shall promptly inform such company thereof in writing. As soon as any enterprise acquires a majority holding, it shall promptly inform such company thereof in writing according to Section 20 para 4 of the German Stock Corporation Act. Pursuant to Section 20 para 7 of the German Stock Corporation Act, rights arising from shares that are held by an enterprise that is required to make disclosure pursuant to Section 20 para 1 or 4 may not, for as long as such enterprise has not made such disclosure, be exercised by such enterprise, by an enterprise controlled by it or by any other person on behalf of such enterprise or an enterprise controlled by it.
Under the Securities Trading Act, any natural or legal person must notify both the target and BaFin as soon as such person’s direct or indirect shareholding in a listed target reaches, exceeds or falls below the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the voting rights. It should be noted that preference shares with no voting rights are not to be reflected in the calculation of these thresholds. The notification obligation is triggered not only if the relevant thresholds are reached or crossed as a result of a sale or purchase of shares, but also for any other reasons, including changes in the total number of voting shares or mergers. In calculating the thresholds, a person must include, among other things, voting rights stemming from: (i) shares owned by a subsidiary; (ii) shares owned by a third party but held for the account of the relevant person; (iii) shares held by a third party as collateral, unless the third party is entitled to exercise the voting rights attached to those shares; (iv) shares held by a third party who has granted the relevant person an usufruct (Nießbrauch), i.e. a specific charge giving the relevant person the economic benefit of the shares; (v) shares for which the relevant person has the power to unilaterally acquire title to shares (dingliche Option); (vi) shares for which the relevant person has obtained proxies from other shareholders, unless it has received specific instructions on how to exercise voting rights; and (vii) shares held by or attributed to others with whom the relevant person is acting in concert.
Furthermore, the ad hoc disclosure of inside information is important if the purchaser, seller or target is listed company or has listed securities. According the applicable Market Abuse Regulation (MAR) the disclosure requirement of insider information arises once the M&A transaction becomes probable (überwiegend wahrscheinlich) provided that the stock exchange price of the listed company can potentially be influenced in a relevant manner if the inside information becomes public. In a M&A process this is usually the case if the parties sign a letter of intent or memorandum of understanding. In such case the issuer usually postpones the disclosure until the signing of the Sale and Purchase Agreement (SPA). The issuer may take such decision if the postponement is in its legitimate interest because e. g. the negotiations would be negatively influenced by the disclosure and as long as he can secure that the inside information is kept confidential.
If a purchaser receives knowledge of an inside information regarding the target in a due diligence process it may in principal continue with the acquisition of shares in the target as long as he merely follows to its original plan.
In a public takeover the decision of the bidder to launch a takeover bid has to be disclosed under the Takeover Act. The same applies if a bidder has obtained control of a listed company and is therefore obliged to launch a mandatory takeover bid under the takeover act.
The acquisition of shares of companies limited by shares in Greece is in principle not subject to public disclosure, except for corporate approvals and registrations in case of a merger.
As concerns listed companies in Greece, Law 3340/2005 on market abuse and Decision No. 3/347/12.7.2005 issued by the Board of Directors of the Hellenic Capital Market Commission (HCMC) sets forth the obligation on behalf of the listed companies to disclose to the public any privileged information. The HCMC decision contains a non-exhaustive list of examples of information that may be considered privileged; the basic criterion for the characterization of such information as privileged being the importance of the decisions or events connected to the listed company and its operations. Thus, in case of a merger, for example, the relevant important steps must be disclosed to the public.
In general, it must be noted that due to sector specific regulatory approvals, in order for an M&A transaction to be affected, the relevant bodies must be informed, a procedure which may involve various levels of publicity.
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 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.
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.
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.
16. At what stages of an acquisition is public disclosure required (whether acquiring a target company as a whole or a minority stake)
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/). The relevant public disclosure shall be effected within 3 (three) business days following occurrence of the relevant fact.
- Publication in the magazine “Herald of state registration” of information on acquisition of more than 20% of shares/ participation interest in a company and reorganisation of legal entities (including mergers, accessions, etc.). Publication is supposed to be made immediately following acquisition.
- 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:
- 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.
The M&A Regulations require public announcements to be made:
- when a company is considering a potential takeover, an approach to such company has been made and the offeror and target company have reached an understanding, including the relevant conditions, that an offer will be made;
- where a firm intention to make an offer, not subject to pre-conditions, is notified to the target board from a serious source;
- where an offeror triggers a mandatory offer by acquiring (with persons acting in concert with it) more than 50% of a target company;
- where an offeror acquires, through one or a series of transactions and whether or not combined with shareholdings of parties acting in concert, shares resulting in a shareholding of 30% or more of the voting rights of the target (thereby being entitled to make an offer without approaching the target – a so-called, "permissive offer");
- where, following a bid approach, the entity's shares are the subject of rumour and speculation and there is a price movement of 20% or more above the lowest share price since the time of the approach, or of 10% or more in a single day;
- where, prior to a bid approach, the entity's shares are the subject of rumour and speculation and there is a price movement of 10% or more in a single day, with reasonable grounds indicating that the potential bidder's conduct has resulted in such movement;
- where negotiations or discussions in relation to a certain acquisition are extended to include more than a restricted number of people outside those who need to know in the companies concerned and their immediate advisers; and
- where the offeror is sought by the target to acquire more than 30% of the voting rights or where the target is seeking multiple offerors, and the target is the subject of rumour or speculation leading to a share price movement of either 20% or more above the lowest share price since the time of the approach or of more than 10% in a single day, or the number of potential offerors is about to be increased to more than a very limited number.
In all cases under the M&A Regulations, parties will be deemed to be "acting in concert" where they co-operate actively through some formal or informal agreement to be controllers of an entity, through acquiring shares in such entity.
As noted above, the announcement obligations lie solely with the offeror in instances prior to the approach of the target company, and primarily with the target company following such approach. It is the joint responsibility of both the offeror and offeree companies to make the public announcement required following the formal understanding of an offer between them.
No public disclosure requirements apply in the case of private acquisitions unless the acquirer is a public entity and the transaction is required to be disclosed under the CMA rules.
If a party to the transaction is a listed company, the company is subject to timely disclosure rules of the exchange. In Japan, these are standardized under the Japan Exchange Group, whose timely disclosure rules require listed companies to disclose when its management organ has decided to pursue the M&A and the proposed M&A constitutes important information with respect to the investment decisions of its investors. There is some ambiguity in this wording, but listed companies are generally considered to be required to make disclosure on entering into a legally binding memorandum of understanding to pursue the M&A.
Public disclosure is not required.
Publicly Listed Company
The Stock Exchange of Thailand (SET) requires the board of directors of a target company which has been contacted by an offeror, whether or not agreement has been reached on the making of a tender offer, to keep information which has not been disclosed to the public strictly confidential, to ensure that the persons concerned with negotiations keep the information regarding the negotiations confidential, and to ensure that the persons who act as representatives, intermediaries or financial advisors perform their duties responsibly and keep the information confidential. The target company is required to contact the SET immediately if it concludes that there may have been disclosure of the information on the negotiations which has not yet been officially announced to the public. If the information relating to the take-over is leaked, the target company is required immediately to disclose the information to the SET.
In the case of an acquisition of a minority stake and a secondary share sale, the target company is required to make public disclosure if there is a change, directly or indirectly, of its major shareholders (the term “major shareholder” is defined to mean a shareholder holding more than 10% of shares in the target company). This normally takes place upon completion of the acquisition.
In addition, when an acquirer has carried out one of the following transactions so that the number of securities held by it reaches or passes through 5 percent or a multiple of 5 percent of the target company’s shares (there are complicated rules applicable to disclosure in the case of the acquisition of convertible securities or warrants), the acquirer is required to report the transaction to the SEC:
- direct acquisition or disposal of shares or convertible securities of the target company;
- becoming or ceasing to be a related person; or
- becoming or ceasing to be a concert party.
Pursuant to Section 5 para (2) and para (3) of the Takeover Act, in public transactions the bidder must immediately inform the public and the target if its management board and supervisory board have taken the decision to launch an offer or a situation has arisen which results in being obliged to launch a mandatory offer (see question 24. below). Furthermore, a potential bidder has to announce the intention to make an offer if the target’s share price fluctuates considerably or if there are rumours about an offer or speculation that an offer is to be launched and there are reasons to believe that this is due to the preparation of an offer, the fact that an offer is being considered or the purchase of shares by the bidder. The announcement does not need to contain details about the intended offer.
The bidder must notify the Takeover Commission of its offer and provide the Takeover Commission with the offer document within ten trading days (if no extension is granted – up to forty trading days) after the bidder has announced its intention to launch an offer. The notification period for mandatory bids is twenty trading days and cannot be extended.
The bidder must publish the offer document (see question 20. below) together with the confirmation of an independent expert at the earliest on the twelfth trading day and no later than the fifteenth trading day after such documents are received by the Takeover Commission, if the publishing is not prohibited by the Takeover Commission. Such publishing triggers the offer period. The offer needs to be published in a national newspaper that is available throughout Austria or in the form of a brochure that is provided free of charge to the public by the target company at its registered office and by the bodies instructed to pay the consideration. If the offer documents were not published in full in the Official Gazette of the Vienna Newspaper, at least information where the offer documents can be obtained need to be published in such Official Gazette. If the bidder and/or the target company have a website, the offer document also has to be published on such websites.
The offer period has to be at least two weeks and maximal ten weeks (the Takeover Commission can extend such offer period under certain circumstances). The result of the bid must be published immediately after the expiration of the offer period. In case of a mandatory bid or a voluntary bid aimed at control of the target, the offer period is extended for three months from the date of announcing the result of the bid.
In addition to the above, if shares in a joint 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%.
A transaction involving a substantial shareholding, that is, an entitlement to exercise or control the exercise of ten percent or more of the votes at general meeting or the entitlement to appoint a majority of directors to the board of the target carries specific disclosure obligations as prescribed by the Listing Rules.
An issuer must promptly make a company announcement through the regulated market (i) when the issuer’s board is advised or otherwise becomes aware that a purchaser is being sought for such a substantial shareholding; (ii) when the issuer is subject of rumour and speculation; (iii) when the issuer’s board is advised or otherwise becomes aware of a firm intention to acquire a substantial shareholding; and (iv) when the issuer’s board is advised or otherwise becomes aware that an offer has been made to acquire a substantial shareholding.
Furthermore, an acquisition of shares to which voting rights are attached triggers an obligation on the shareholders to inform the company and the Listing Authority of the proportion of voting rights held following such acquisition where that proportion reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50%, 75% and 90%.
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 ten 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.
Where the target company is public, disclosure to the public is generally required within seven business days after completion (subject to a number of additional case-specific rules).
Where the target company is private, disclosure to the public is generally not required (except that any consequential amendments to the business registration particulars of the target company must be published on the National Business Registration Portal within 30 days as from the date of the change taking effect).
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.
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.
Public disclosure depends on the type of the target company (e.g. issues, non-issuer, limited liability company, joint stock company etc.).
In case of limited liability companies, any change in the shareholding structure must be recorded with the Romanian Trade Registry.
Such registration is not mandatory for joint-stock companies, although generally the shareholding structure is still registered with the Romanian Trade Registry.
Any person, may at any time, request information held by the Romanian Trade Registry in connection with a certain company.
In case any of the buyer or seller are publicly listed companies, capital markets rules shall apply, and the level of disclosure is usually high, in order to not affect the investors’ rights.
For a takeover, when the offer is made. Pre-bid agreements to accept an offer must also be disclosed and are therefore usually sequenced with the offer itself.
For a scheme of arrangement, they are typically disclosed when agreement on deal terms is reached between the offeror and target to proceed with the transaction – disclosure is not required under the Listing Rules (assuming either the buyer or target is listed) while the transaction proposal remains a confidential, incomplete proposal or negotiation.
In the context of a public acquisition, the Code stipulates that certain announcements must be made at various stages in the transaction. These include: (i) leak announcements, where persistent market rumour or a significant move in the target share price makes it necessary to notify the market that a possible offer is being contemplated; (ii) announcements of a possible offer, where a bidder is considering the making of an offer, but does not at that stage have a firm intention to do so; (iii) announcements of a firm intention to make an offer, where a bidder is essentially committing to the market that it will make an offer for the target; and (iv) periodic announcements updating the market on the results of the offer at key milestones during the offer period.
As noted elsewhere in this note, following an announcement of a firm intention to make an offer, a bidder has a relatively short timeframe within which it must publish an offer document setting out detailed terms of its proposed offer, together with information on how such offer can be accepted by target shareholders. If the offer is to be conducted by way of a scheme of arrangement, the abovementioned offer document is substituted for a scheme document. Scheme documents are produced by the target and set out details of the proposed offer, together with the documentation necessary for the convening of the meetings of target shareholders necessary to approve the scheme.
In addition to the above, there are various provisions in the Code, the DTRs and the Companies Act which require disclosure of stakes acquired in a listed company. Details of the documentation required in connection with an offer for a target company are set out in the response to question 20 below.
Disclosure under the Code
The Code requires public disclosure to be made in respect of positions held at the commencement of an offer period (an opening position disclosure) and of dealings during the offer period (a dealing disclosure). Disclosures relate to positions and dealings in the relevant securities of any party to the offer, other than a cash-only bidder. Details of the key disclosures required under the Code are set out below:
- Opening position disclosures: an opening position disclosure must be made by the bidder (and any competing bidder), the target and any person who is interested (directly or indirectly) in 1% or more of any class of relevant securities of any party to the offer.
- Dealing disclosures: dealing disclosures apply to dealings, during an offer period, in relevant securities of a party to the offer (other than a cash-only bidder) by the bidder, the target and any person who is (or as a result of any dealing becomes) interested (directly or indirectly) in 1% or more of any class of relevant securities of any party to the offer (other than a cash-only bidder) and any person acting in concert with the target or a bidder.
An opening position disclosure must be made by way of an announcement issued on the 10th business day following announcement of a potential offer (the precise time by which such an announcement must be made varies between bidders, the target and other relevant parties). A dealing disclosure must also be made, by way of announcement, where certain specified parties have acquired 1% or more the securities of any party to the offer, within a prescribed period of such dealing having taken place.
- In addition, on an open offer, it will be necessary to make announcements at key points during the offer timeline (eg on the first closing date of the offer and on any subsequent closing dates) setting out the level of acceptances which have been received.
Disclosure under the Companies Act
The Companies Act sets out circumstances in which a person who is interested in the securities of a public company must notify the company of his interest. The Companies Act also entitles a company to investigate the beneficial ownership of any of its shares, regardless of the percentage level of ownership, by the issue of formal notices under the Act.
Disclosures of voting rights held
In addition to the regime set out in the Code, a person must notify a company whose shares are admitted to trading on a regulated market of the percentage of its voting rights he holds whenever that percentage reaches, exceeds or falls below three per cent. and, incrementally, at every one per cent. threshold (above 3 per cent.) thereafter. In addition, a person must disclose any substantial economic interests in shares, based on the same percentage thresholds as above, held through derivatives such as contracts for difference and similar financial instruments.
In the context of a private acquisition, there is generally no duty to make any public disclosure, other than such disclosure as the seller and buyer may mutually agree among themselves.
Public disclosure is generally not required, with the exception of:
- Listed companies (as a general rule, it is necessary to file – as soon as practicable – formal notice with the Spanish Stock Exchange Commission notice about any fact or decision able to affect the shares quotation).
- Companies in regulated sectors like insurance, financial sector or energy.
In case of voluntary disclosure, it is advisable not before the transaction is completed (in case of transaction subject to conditions, when conditions are met), especially when third party consents have to be obtained or when third parties with right of information have to be informed.
In a merger transaction (both for joint-stock companies and limited liability companies), the shareholders and other stakeholders must be notified through an announcement made in the Trade Registry Gazette of Turkey about their right to audit the merger agreement, merger report and financial statements at least before 33 days before the approval by the general assemblies of the merger agreement. See our above explanations (under Question 5) regarding the conditions for avoiding such announcement. In any case, the merger transaction will take effect upon its registration with the competent Trade Registry, followed by an announcement in the Trade Registry Gazette of Turkey informing the creditors of merging companies.
In limited liability companies, once a share transfer transaction is approved by the general assembly (giving effect to the transaction), the transfer of shares must also be registered with the competent Trade Registry office and announced in the Trade Registry Gazette of Turkey.
In joint-stock companies, however, the acquisition of shares is, principally, not subject to any public disclosure mechanism. This being said, the direct or indirect acquisition of shares of a joint-stock company belonging to a group of companies must be registered with the competent Trade Registry and announced in the Trade Registry Gazette of Turkey where the shares subject to the transaction represent at least 5%, 10%, 20%, 25%, 33%, 50%, 67% or 100% of the total share capital. Otherwise, the voting rights of the acquirer will be suspended.
In case of listed companies, transactions performed by the main shareholder in relation to the shares of the company (once the threshold of TRY 250,000 per calendar year is reached) must be announced in the Public Disclosure Platform as an insider information (i.e. material information that may influence the value of the shares or the decisions of the investors) unless the disclosure is deferred by complying with certain principles set out under the legislation. Furthermore, in case the direct or indirect shareholding of a person exceeds or falls below 5%, 10%, 15%, 20%, 25%, 33%, 50%, 67% or 95% of the total number of shares or voting rights of a company, the situation must also be announced in the Public Disclosure Platform as a continuous information.