Mergers & Acquisitions

Effectiveness of defense measures against a hostile take-over generally requires their implementation prior to a hostile bid.

The main and also most effective defensive measures to prevent a hostile bidder from successfully taking over a corporation must be implemented prior to a hostile bid and are subject to approval by the shareholders' meeting. The most effective measures are: (1) Restriction on transfer of registered shares providing the company with the right to refuse registration of a shareholder if his shareholdings exceed a certain percentage specified in the articles (usually between one and five percent of the total share capital). (2) Issuance of registered shares with voting privilege (the par value of preferred voting shares must amount to at least a tenth of the par value of common shares). (3) Restriction on exercise of voting rights, i.e. limitation of the number of votes a single shareholder may cast directly or indirectly, e.g. by proxy or otherwise. (4)