Takeover Board Becomes More Lenient Regarding Opting-Out Clause

Originally published on International Law Office

Introduction

The Securities and Stock Exchange Act provides for a mandatory offer obligation in the event that a shareholder or a group of shareholders acting in concert exceeds a threshold of 33.3% of the voting rights in a company listed on the stock exchange. All EU member states have also introduced such an obligation based on the EU Takeovers Directive (2004/25/EC) (which also provides for a mandatory bid threshold of 33.3%), although many of them provide for a mandatory bid threshold of 30%. However, Switzerland is the only country which provides for an opting-out mechanism (ie, the shareholders of a listed company can choose to opting out from the mandatory offer obligation). This is possible, among other things, when an opting-out clause has been included in the articles of association.