Implementation of the Takeover Directive in Finland
- Finland
- 08/31/2006
- Roschier, Attorneys Ltd. - Finland
The Takeover Directive (Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids) (the “Takeover Directive”) has been implemented, mainly through revised provisions of the Finnish Securities Market Act (the “SMA”), into Finnish law as of 1 July 2006. The principal amendments made to the Finnish takeover regime relate to the requirement to make a mandatory offer, the offer consideration, the offer period, the role of the target board and competing offers, as described below.
The threshold triggering a mandatory offer has been reduced from two-thirds (2/3) to 30% of the votes in a target company, or where the offeror already holds more than 30% of the votes, to 50%. The obligation to launch a mandatory offer does not, however, apply in case such threshold has been exceeded by means of a voluntary offer for all securities that entitle to voting rights in the target company.
The offer price for mandatory offers is defined as the highest price paid by the offeror for the target securities during the six (6) months preceding the triggering of the obligation to make the offer. In the absence of such purchases, the price needs to correspond at least to the volume-weighted average price paid for the target securities in public trading during the three (3) months preceding said date. The SMA also imposes a minimum price for voluntary offers made for all securities that entitle to voting rights in the target company; the offer price needs to correspond at least to the highest price paid by the offeror during the six (6) months immediately preceding the announcement of the offer. A top-up obligation will apply both in the case of a voluntary and a mandatory offer if target securities are acquired by the offeror for a higher price than the initial offer price prior to the expiry of the offer or during a period of nine (9) months thereafter.
The duration of an offer period may not be shorter than three (3) or longer than (10) weeks. The period may, however, on special grounds, exceed said 10 weeks provided that this does not impede the operations of the target company for an unreasonably long period. The Financial Supervision Authority may at the target company’s request extend the offer period in order for the target company to convene a general meeting of shareholders to consider the offer. In case of such extension, the offeror is entitled to withdraw its offer.
Further, a new statutory requirement to the target board to issue a public statement regarding the impact of the offer has been introduced.
In case of a competing offer, the initial offeror will be entitled to amend the terms and conditions of its offer and to extend the offer period or to withdraw its offer. Investors that have already accepted the initial offer will also be entitled to cancel their acceptance.
The so called frustrating action rule and breakthrough rule of the Takeover Directive have not been implemented as such, but Finnish listed companies may nevertheless voluntarily adopt said rules in their Articles of Association.
Finally, the implementation of the Takeover Directive will involve the establishment of a new “takeover panel” to be operating in connection with the Finnish Central Chamber of Commerce. The panel will as a self-regulative body issue non-binding recommendations recording best practices and good conduct on the securities market in connection with public takeovers. A working group has been appointed to prepare recommendations to be subsequently approved by the panel. The panel is expected to be established during the fall 2006.
