Original scientific paper

(Non)-Disclosure of Beneficial Ownership in Listed Companies and its Effect on Acquiring Company’s Control - New Forms of Hidden Ownership

Edita Čulinović Herc ; Pravni fakultet Sveučilišta u Rijeci
Antonija Zubović ; Pravni fakultet Sveučilišta

Abstract

Listed companies have more disclosure duties then closely-held companies. Among them is the duty to disclose changes in the corporate structure. If someone acquires a substantial block of shares with voting rights, this should be disclosed to the issuer as well as to the public. This in turn allows the market to react; the fact that one investor is passing one or more thresholds requiring him or her to disclose it, might be a signal that a takeover bid is about to be launched. But investor(s) who plan to take over the target company might be faced with an opposing board. The target company might prepare itself for the hostile takeover, either by looking for the better bidder (white knight) or otherwise. Since the bidder cannot offer less then the market price of share (in three months preceding the bid), the market also has a chance to react by raising the price of share. Higher market price of share would also mean that shareholders of the target company might count on the higher takeover premium. In order to narrow the time frame for reaction of the opposing board of the target company, the takeover bid must come as a complete surprise. This can be achieved by extensive use of cash-settled derivatives such as cash-settled equity swap.
The paper deals with the provisions of the Croatian Takeover Act and Croatian Capital Market Act regarding calculation of the voting rights, while noting differences between solutions accepted in these two acts. The presented issues are discussed in light of a reform of the EU Transparency Directive. Both provisions of the Proposal for a Transparency Directive and (some) EU Member States laws are analyzed in order to answer the question whether and which type of the cash-settled derivatives are calculated for the sake of disclosure duties, as well as for acquiring company control. In conclusion, the authors propose solutions to be adopted in the Croatian law in this respect.

Keywords

disclosure of major shareholdings; acquiring control; listed company; empty voting; hidden ownership; Croatian Takeover Act; Croatian Capital Market Act

Hrčak ID:

116270

URI

https://hrcak.srce.hr/116270

Publication date:

12.4.2013.

Article data in other languages: croatian

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