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Public takeover regime (part I)

Takeovers in Slovenia are regulated by the Slovenian Takeover Act (the STA, Zakon o prevzemih, Official Gazette RS No. 47/1997, 56/1999), which became effective on August 15 1997.

The STA applies to all public offers for the acquisition of securities that have been issued by a publicly held company. Specifically, the STA applies to the acquisition of the following shares:

  • shares listed on the organized securities market, or that have been issued via an initial public offering, or for which the bidder has obtained the agency's approval for further public sales;
  • shares issued in accordance with the statutory provisions regarding the privatization of companies, if the shares have been privatized via a public offering or if the issuer has obtained the agency's approval for further public sales;
  • shares issued in accordance with the statutory provisions regarding the privatization of companies, if the registered capital on the date the privatization is registered exceeds one billion Slovenian tolars ($4.88 million) and the number of shareholders exceeds 500.

The STA is based on the draft of the 13th EC Directive on Takeovers (KOM (97) 565). Since this draft directive contained only general regulations on takeovers, the STA has modelled itself on the British City Code on Takeovers and Mergers. Its fundamental principle is the equal treatment of shareholders of the same class. The STA applies regardless of whether the offer is mandatory or voluntary.

If a person acquires an amount of shares in a stock company which, together with the shares that person already holds in the same company, amounts to 25% of the share capital, that person is obliged to issue a mandatory bid under the STA rules. Should that person be a member of a group of people who, via syndicate agreement or any other arrangement, exercise their voting rights in a unanimous manner, then the same obligation applies to that group.

If by successfully issuing a takeover bid, a person has already acquired an amount of shares representing less than 45% of the share capital of a stock company and thereafter acquires another 5% of the share capital, that person is also obliged to issue a mandatory bid. A mandatory bid will not be necessary if the respective shares were acquired by inheritance or gift, the respective shares were acquired through merger proceedings, or a person has already acquired more than 45% of the shares of a company in the course of a mandatory bid.

Before issuing a takeover bid, the bidder has to inform the agency, the management board of the target company and the competition authority. As the agency oversees compliance with the STA, the bidder must also obtain the agency's prior approval.

After receiving the bidder's notification that the bidder is planning to issue a takeover bid, the management of the target company may not take certain measures without the approval of a shareholder resolution. It may not: increase the share capital, conduct business that is not within the company's usual scope, take actions or conduct business that could seriously jeopardize the financial situation of the company, acquire treasury shares, or take any measures intended to hinder the acceptance of the takeover bid or make the acceptance of the takeover bid for shareholders more difficult.

Apart from the STA, a number of other statutory rules apply to takeovers. The most important of these are the Slovenian Securities Market Act (Zakon o trgu vrednostnih papirjev, Official Gazette RS No.56/99) and the Slovenian Companies Act. The Securities Market Act contains provisions regarding publicity during takeovers and insider trading, whereas the Companies Act (Zakon o gospodarskih druzbah, Official Gazette RS No.30/93) contains provisions related to the internal organization and procedures of publicly held companies.

Decisions by the agency concerning authorizations, approvals or other matters can be appealed before the Supreme Court (Vrhovno sodisce). Furthermore, decisions by the agency may be appealed before the Constitutional Court (Ustavno sodisce) if an infringement of constitutional rights is alleged.

The STA stipulates minimum penalty fees for the violation of its provisions, which apply to companies or individuals, as well as to the responsible executive of a company. Furthermore, the shares that have been acquired in violation of the STA will not provide the acquirer with any voting rights.

Ordinary courts are competent to impose administrative penalties and establish the abandonment of voting rights.

In the event that a shareholder resolution is passed on the basis of abandoned voting rights, a claim demanding that the respective resolution be declared void must be brought forward by the shareholders of the company. Such objection must be made formally during the shareholders' meeting in order to entitle shareholders to file the claim with the competent court.

Markus Bruckmüller and Urska Gliha

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