An acquisition of shares in a quoted company can be made in several ways. If the aim is to acquire all or a major part of the shares, the purchaser must often make use of a public offer directed towards the shareholders. Such offers are regulated both by law and agreements, namely Chapter 2 of the Act (1991:980) on Trade in Financial Instrumensts, Stockholm Stock Exchange registration contract Appendix 1, p 15-17 and the Trade and Industry Exchange Committee (Naringslivets Barskommitt‚ NBK).
In the act it is incumbent upon the person who directs an offer for a purchase or sale of financial instruments to an open circle to draw up a prospectus. The prospectus shall be submitted to the Financial Inspectorate for registration before it is made public. With regard to the detailed requirements for the contents of the prospectus, see the Financial Inspectorate's regulation (FFFS 1993:26) on a prospectus. The Financial Inspectorate only examines whether the prospectus contains prescribed information and undertakes no checks as to substantive checking of the information (see bill 1991/92:113 p 218 f).
The registration contract and NBK's recommendation regarding a public offering regarding a share acquisition contain rules about when information shall be submitted, how the offering is to be formulated and what the prospectus shall contain.
Information to the stock exchange shall be submitted at an early stage. The public announcement shall take place when the purchaser has decided to make a public offering. What such a press statement shall contain is clear from NBK's recommendation (II), p. 2.
With regard to the content of the offering, the principle of equal treatment should be noted. All holders of shares with identical conditions shall be offered an identical, equal payment per share. If the purchaser has acquired shares in the target company in a way other than through a public offering before the offering is announced, the terms in the offering may not be less favorable than those which applied to the previous acquisition. A precondition is, however, that the first acquisition is connected as to timing and purpose with the purchaser seriously considering making a public offering. If less than six months have passed between the acquisition and the offer, such a connection is assumed to exist. If the purchaser, after an offer has been announced, acquires shares in the target company according to conditions which are more favorable for the transferor than in the offering, those shall be increased in a corresponding manner. Nor, with regard to the period immediately after a public offering may the purchaser acquire shares on terms more favorable to the transferor than the offering without compensating those who responded to the offering. The equal treatment above only applies with regard to shares with identical conditions.
With regard to the requirements for the contents of the prospectus, see the appendix to NBK's recommendation. After the expiration of the reporting period, the purchaser shall announce the outcome of the offering and provide information as to whether he intends to extend the reporting period, request the redemption of remaining shares, etc.
Note also the supplement to NBK's recommendation for the situation where the public offering is made by a leading decision-maker in the target company.
The target company also has an obligation to provide information in connection with a public offering. Thus the target company's board of directors, if it has been informed that another company will make a public offering for acquisition of shares in the company, shall inform the stock exchange of the same. This obligation applies regardless of whether the person making the offer has informed the stock exchange or not.
In this context, the rules concerning a so-called hostile company acquisition should also be mentioned. The board of directors have a general legal duty to act in accordance with the interests of the corporation and its shareholders. From NBK's recommendation (II), p. 12, it is clear that the target company, after negotiations with the target company's board of directors or management about the offering to the target company's shareholders if a share transfer is discussed or a public offering to the target company's shareholders is made, may not take any action with respect to the corporation which is calculated to risk the issuing or continuance of the offering without the support of a decision by the target company's general meeting. However, the board of directors may always announce its views on the bid.
The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.
