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 current regime.
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 amendments:
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