The Finnish takeover regime, with its unusually high
threshold of two-thirds for mandatory bids, has for a long time
stood out as an exception from the takeover regimes of other
European jurisdictions. In connection with the upcoming
implementation of the EU Takeover Directive, Finland is
lowering the mandatory bid threshold and modernizing its
In May 2005, a working group appointed by the Ministry of
Finance published a report detailing amendments to Finnish
takeover legislation. The proposal includes the following
The threshold for a mandatory bid would be lowered to 30% of
the total voting participation of a listed company. A second
threshold of 50% would apply to shareholders holding more than
30% of the total voting participation.
New rules on the pricing of mandatory bids would be
introduced. Currently, the mandatory offer price is the fair
market price based on the historic performance of the shares.
Under the proposed rules the fair market price would be the
price paid by the bidder for the same shares in the six months
before the offer. This would also apply to a voluntary bid for
all shares and other securities entitling its holder to shares
in a listed company. Pricing of voluntary bids in situations
where the bidder does not have previous shareholding in the
target company would not be regulated.
An express obligation would be introduced for the board of
the target company to make public its opinion on the bid and
the reasons for its opinion.
An express obligation would be introduced for the bidder to
announce a bid only after ensuring that it can fulfil any cash
consideration, if such is offered, and after taking all
reasonable measures to secure the implementation of any other
type of consideration.
Finland would exercise the option conferred by the Takeover
Directive not to require Finnish companies to comply with the
Directive's so-called breakthrough rules. A self-regulatory
supervisory body with powers to issue guidelines on corporate
conduct based on the Takeover Directive would be set up with
the Finnish Central Chamber of Commerce.
Although not required by the Takeover Directive, rules on
the effects of a competing bid would be introduced. The
original bidder could react to the competing bid by extending
the offer period or amending the terms of the offer. A
shareholder could withdraw the acceptance of a bid if a
competing bid is announced during the offer period.
Tarja Wist and Samuel Isaksson