On May 30 2006, the Serbian president signed into law the Takeover Act (Official Herald of the Republic of Serbia, 46/06), the first systematized legislation in Serbia of takeovers. The Act came into force on June 10 2006.
Previously, the principal rules governing takeovers were in a section of the Securities Act. The Takeover Act supersedes that, while the remainder of the Securities Act is scheduled to be replaced in six months by an entirely new securities law that was adopted at the same time as the Takeover Act.
Under the Takeover Act, a takeover bid must be launched by anyone whose stake in a company becomes greater than 25% of the overall number of votes carried by the target's voting shares. If the initial takeover bid procedure results in the acquisition of less than 75% of the company's voting shares, the bidder must launch a new takeover bid procedure for any further increase of the stake. However, when as a result of a takeover bid a shareholder acquires 75% or more of the target's voting shares, he must pursue a new takeover bid each time he acquires an additional five percent of voting shares or an additional three percent of voting shares within an 18 month period.
The prospective bidder must file a takeover bid request with the Securities Commission (SEC) within one business day of the relevant trigger event, and the SEC normally has two business days to make its decision. This period can be extended up to 10 days if the SEC needs to cooperate with the relevant anti-monopoly, anti-money laundering, or other bodies with the view to preventing disturbances on the organized market for securities.
The Takeover Law contains a number of exceptions to the requirement to launch a takeover bid, and these can be divided into two groups. The first group represents situations in which a takeover bid would be unwarranted because the acquisition of shares was a consequence of another legal process, such as inheritance, changes of the company's legal form, merger or bankruptcy. The second group comprises mainly those situations in which the Republic of Serbia or its agencies are selling shares they hold in banks, insurance companies and other commercial entities.
Once the SEC has approved the takeover bid, the short form bid must be published in one daily newspaper that covers the whole territory of Serbia with a circulation of at least 100,000. The minimum takeover bid duration is 21 days, while the maximum is set at 45 days. However, the latter period can be extended if there are changes in the takeover bid or a counter offer. In the first case, the total period (the initial bid period plus extensions to the bid) cannot exceed 60 days, while in the case of competing bids, the total period for both the original bid and the subsequent counter-bid(s) cannot exceed 70 days.