PUBLIC OFFERS
The Securities Markets Act of 1989 (the "Securities Act") contains the main provisions relating to the securities markets in Finland. It applies, for example, to the issuance and marketing of securities to the public and to the trading of securities in Finland.
The provisions of the Securities Act concerning public offers may be divided into provisions concerning tender offers and redemption offers.
1. Tender Offers
Pursuant to the Securities Act, a party making a tender offer concerning publicly traded shares, or securities entitling to acquire such shares, must treat the holders of the securities covered by the offer equally. Publicly traded shares contain the shares of companies which are listed on the Helsinki Stock Exchange, Over-the-Counter (OTC) List and the Dealers' List. Pursuant to certain regulations issued by the Finnish Financial Supervision (the "FS"), a tender offer directed to a narrow group of specifically named holders of securities would not be treated as a public offer.
VI.1. Prospectus
The Securities Act specifically requires the filing of a prospectus with the FS prior to the publication of such a prospectus in connection with a tender offer. The FS has three (3) business days to approve the form and content of the prospectus. The Ministry of Finance has planned to issue more detailed requirements on the material to be included in the prospectus. Such issuance is not, however, expected to take place before the end of 1995.
After the approval of the prospectus by the FS, it must be made available to the public before the beginning of the tender offer and it shall be kept available during the entire offer.
VI.2. Other Means of Payment
A regulation issued by the FS specifies that a bidder may offer for instance to pay part or all of the purchase price in securities in lieu of cash. Such securities could consist of preferred or common stock of the bidder. If the purchase price is not cash, the bidder must provide essential and sufficient information for the evaluation of such offer, as defined in the Securities Act. According to the Securities Act a tender offer may be made conditional upon receiving acceptances entitling to a certain percentage of the shares or votes.
VI.3. Disclosure
When the offer period has expired, the bidder shall without delay publicly disclose the portion of ownership and voting rights that the bidder may acquire in the target company, if he were to acquire the securities offered for sale based upon the tender offer. The bidder must also take into consideration the securities previously owned by him and otherwise acquired by him.
The FS may grant an exception concerning the obligation to publish a prospectus or its content in connection with a tender offer.
It should be noted that the Securities Act does not contain any provisions concerning the role of the management of the target company during a tender offer or a redemption offer.
2. Redemption Offers
A shareholder who has acquired more than two-thirds of the voting rights in a publicly traded company after such company has gone public, is, unless an exception is granted by the FS, required to make an offer to redeem the remaining portion of the outstanding shares and other securities entitling their holder to receive shares, as provided by the Companies Act.
The Securities Act provides detailed rules on the calculation of the threshold amount. For example, the shares owned by pension funds of such a majority shareholder, or the shares of natural persons or legal entities acting in concert with the shareholder in question in exercising control in the company, shall be included for purposes of determining the two-thirds threshold amount. The shareholder is required to publish the obligation to make an offer to redeem without delay.
If the price which has been paid for the shares to the tender offerees would be lower than the price to be paid to redemption offerees, the offeror must pay the difference between these two prices to the parties who have accepted the tender offer prior to the expiration of the redemption offer. According to the Securities Act the redemption price shall be comparable to the market price in the calculation of which the weighted average of the market price of the securities over the preceding 12-month period shall be taken into consideration. Certain other circumstances, such as a possible higher price paid for such securities must be taken into consideration as well. Furthermore, the Securities Act contains detailed provisions on the conduct of the redemption process, including a requirement to publish a prospectus.
3. Purchase and Sale Obligation
Under the Companies Act, a Finnish parent company that alone or together with its subsidiary companies holds more than 90 % of the shares and voting rights of a subsidiary has the right to redeem the remaining shares from other shareholders of the subsidiary at market price. Furthermore, a shareholder whose shares may be redeemed has the right to demand that his shares be redeemed by the parent company. Such right and obligation to redeem the shares is not, however, applied if the parent company is a foreign company.
4. Ownership Reporting Requirements
Pursuant to the Securities Act, a shareholder who acquires or disposes of a holding in a publicly traded company (or a company whose shares are publicly traded in a member country of the European Economic Area) shall notify the company and the FS of the proportion of voting rights or the total amount of shares held, if they reach, exceed or fall below the thresholds of 10 %, 20 %, 33 %, 50 % or 66 %. Such notification shall be made also when a shareholder is a party to an agreement or another arrangement, which, when materialised, shall cause such thresholds to be reached, exceeded or fallen below.
When the proportion of voting rights or the aggregate amount of shares is calculated the votes possessed by certain other parties, such as the pension fund of the shareholder shall be taken into account. Notification shall be made, with certain exceptions, without delay and no later than within seven (7) days from the time the owner of the holding as listed above had constructive knowledge of the relevant acquisition or the disposal. The Ministry of Finance has issued a regulation providing detailed rules on the information to be published in this event.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The Securities Markets Act of 1989 (the "Securities Act") contains the main provisions relating to the securities markets in Finland. It applies, for example, to the issuance and marketing of securities to the public and to the trading of securities in Finland.
The provisions of the Securities Act concerning public offers may be divided into provisions concerning tender offers and redemption offers.
1. Tender Offers
Pursuant to the Securities Act, a party making a tender offer concerning publicly traded shares, or securities entitling to acquire such shares, must treat the holders of the securities covered by the offer equally. Publicly traded shares contain the shares of companies which are listed on the Helsinki Stock Exchange, Over-the-Counter (OTC) List and the Dealers' List. Pursuant to certain regulations issued by the Finnish Financial Supervision (the "FS"), a tender offer directed to a narrow group of specifically named holders of securities would not be treated as a public offer.
VI.1. Prospectus
The Securities Act specifically requires the filing of a prospectus with the FS prior to the publication of such a prospectus in connection with a tender offer. The FS has three (3) business days to approve the form and content of the prospectus. The Ministry of Finance has planned to issue more detailed requirements on the material to be included in the prospectus. Such issuance is not, however, expected to take place before the end of 1995.
After the approval of the prospectus by the FS, it must be made available to the public before the beginning of the tender offer and it shall be kept available during the entire offer.
VI.2. Other Means of Payment
A regulation issued by the FS specifies that a bidder may offer for instance to pay part or all of the purchase price in securities in lieu of cash. Such securities could consist of preferred or common stock of the bidder. If the purchase price is not cash, the bidder must provide essential and sufficient information for the evaluation of such offer, as defined in the Securities Act. According to the Securities Act a tender offer may be made conditional upon receiving acceptances entitling to a certain percentage of the shares or votes.
VI.3. Disclosure
When the offer period has expired, the bidder shall without delay publicly disclose the portion of ownership and voting rights that the bidder may acquire in the target company, if he were to acquire the securities offered for sale based upon the tender offer. The bidder must also take into consideration the securities previously owned by him and otherwise acquired by him.
The FS may grant an exception concerning the obligation to publish a prospectus or its content in connection with a tender offer.
It should be noted that the Securities Act does not contain any provisions concerning the role of the management of the target company during a tender offer or a redemption offer.
2. Redemption Offers
A shareholder who has acquired more than two-thirds of the voting rights in a publicly traded company after such company has gone public, is, unless an exception is granted by the FS, required to make an offer to redeem the remaining portion of the outstanding shares and other securities entitling their holder to receive shares, as provided by the Companies Act.
The Securities Act provides detailed rules on the calculation of the threshold amount. For example, the shares owned by pension funds of such a majority shareholder, or the shares of natural persons or legal entities acting in concert with the shareholder in question in exercising control in the company, shall be included for purposes of determining the two-thirds threshold amount. The shareholder is required to publish the obligation to make an offer to redeem without delay.
If the price which has been paid for the shares to the tender offerees would be lower than the price to be paid to redemption offerees, the offeror must pay the difference between these two prices to the parties who have accepted the tender offer prior to the expiration of the redemption offer. According to the Securities Act the redemption price shall be comparable to the market price in the calculation of which the weighted average of the market price of the securities over the preceding 12-month period shall be taken into consideration. Certain other circumstances, such as a possible higher price paid for such securities must be taken into consideration as well. Furthermore, the Securities Act contains detailed provisions on the conduct of the redemption process, including a requirement to publish a prospectus.
3. Purchase and Sale Obligation
Under the Companies Act, a Finnish parent company that alone or together with its subsidiary companies holds more than 90 % of the shares and voting rights of a subsidiary has the right to redeem the remaining shares from other shareholders of the subsidiary at market price. Furthermore, a shareholder whose shares may be redeemed has the right to demand that his shares be redeemed by the parent company. Such right and obligation to redeem the shares is not, however, applied if the parent company is a foreign company.
4. Ownership Reporting Requirements
Pursuant to the Securities Act, a shareholder who acquires or disposes of a holding in a publicly traded company (or a company whose shares are publicly traded in a member country of the European Economic Area) shall notify the company and the FS of the proportion of voting rights or the total amount of shares held, if they reach, exceed or fall below the thresholds of 10 %, 20 %, 33 %, 50 % or 66 %. Such notification shall be made also when a shareholder is a party to an agreement or another arrangement, which, when materialised, shall cause such thresholds to be reached, exceeded or fallen below.
When the proportion of voting rights or the aggregate amount of shares is calculated the votes possessed by certain other parties, such as the pension fund of the shareholder shall be taken into account. Notification shall be made, with certain exceptions, without delay and no later than within seven (7) days from the time the owner of the holding as listed above had constructive knowledge of the relevant acquisition or the disposal. The Ministry of Finance has issued a regulation providing detailed rules on the information to be published in this event.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
