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Under Swedish law, a parent company owning more than nine-tenths of the shares with more than nine-tenths of the votes in a subsidiary has the right to redeem the remaining shares from the minority shareholders. The value of a minority share in such a situation must in principle correspond to the value of a majority share. If the parent company has acquired the greater portion of the shares through an offer to an extended group of persons for certain consideration, then the redemption sum shall be equivalent to that consideration, unless there is a special reason otherwise.

Minority shareholders in particular have claimed that the price for minority shares should be based on the value of the company itself and that the price quoted on the stock exchange is an unreliable basis for determining the real value. The Supreme Court has recently ruled that the consideration to be paid to the minority shareholder should, as far as possible, be the same as in a voluntary sale. The quoted price should be regarded as the real value of the shares for the purposes of the buy-out provisions. In practice this should lead to easier acceptance of takeover bids as well as to a faster and less expensive redemption process. Further, it should create equality between different categories of shareholders. However, the decision has been questioned by minority shareholders in particular.

Odd Swarting

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