| Annotation |
Mandatory buyout of securities of minority shareholders at the request of a person (group of persons) holding a dominant controlling interest is an institute new to the theory and practice of national corporate law. In legislations of other countries of the world and in the legal doctrine, the institute of public offering is a mechanism which guarantees to shareholders that their rights are duly observed during redistribution of corporate control and acquisition and which helps maintain the balance of private and public interests in a joint stock company. It is typical for the situations when a public company exits the public market of securities. The purpose of the article is to analyze the history of the onset and establishment of the institute of public offering in some countries of the world, the mechanism of its implementation into national legislation and the law administration practice, and to formulate proposals for improvement of legal regulation of the procedure according to which public offering is exercised and the mechanism of forming a fair market price of the said buyout. It is established that regulation of the institute of public offering is closely associated with the concept of corporate control. The authors study two main models regulating the public offering procedure – the British and American ones. The right to forced buyout of shares from other shareholders of a company (squeeze-out) is examined inextricably in connection with the corresponding right granted to minority shareholders, which is to demand that the controlling shareholder buy their shares at a fair price (sell-out). The authors come to the conclusion that the national model of legal regulation of the procedure of forced share sale (squeeze-out) is based on the British (European) model of regulation of public offering. The targets for its improvement are to abolish the provision establishing the right to retrospective use of the squeeze-out procedure, and also to establish the mechanism for forming of a fair market buyout price, in particular, by introduction of the right of minority shareholder’s, investor’s reverse claim at the price of public offering, open auction for buyout of minority shareholding, special requirements to appraisers, as well as the mechanism for assessing the market value of a share. The introduction of squeeze-out and sell-out procedures should be preceded by establishment of a public (exchange) stock market in Ukraine. It is proposed to recognize a public irrevocable offering as a unilateral transaction, and public demand – as a non-normative legal act of individual action. |
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References
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List of legal documents
Legislation
1. Directive 2004/25/EEC of the European Parliament and of the Council of 21 Apr. 2004 on Takeovers bids. OJ L 142, 30.04.2004. P. 12-23 (in English).
2. City Code on Takeovers and Mergers of 18 January 1972 http://www.thetakeoverpanel. org.uk/wp-content/uploads/2008/11/code.pdf> accessed 15 May 2018 (in English).
3. Companies Act 2006. accessed 15 May 2018 (in English).
4. Securities Exchange Act of 1934, 48 Stat. 881 (June 6, 1934) (in English).
5. Kodeks spółek handlowych z dnia 15 września 2000 r accessed 15 May 2018 (in Polish).
6. Konstytutsiia Ukrainy [Constitution of Ukraine]: Zakon Ukrainy [the Law of Ukraine] vid 28 chervnia 1996 r. № 254k/96-VR (u redaktsii vid 2 chervnia 2016 r.). Vidomosti Verkhovnoi Rady Ukrainy. 1996. № 30. St. 141 (in Ukrainian).
7. Pro aktsionerni tovarystva [On Joint-stock Companies]: Zakon Ukrainy [the Law of Ukraine] vid 17 veresnia 2008 r. № 514-VI. Vidomosti Verkhovnoi Rady Ukrainy. 2008. № 50-51. St. 384 (in Ukrainian).
8. Pro vnesennia zmin do deiakykh zakonodavchykh aktiv Ukrainy shchodo pidvyshchennia rivnia korporatyvnoho upravlinnia v aktsionernykh tovarystvakh [On Amending Certain Legislative Acts of Ukraine on Increasing the Level of Corporate Governance in Joint Stock Companies]: Zakon Ukrainy [the Law of Ukraine] vid 23 travnia 2017 r. № 1983-VIII. Vidomosti Verkhovnoi Rady Ukrainy. 2017. № 25. St. 289 (in Ukrainian).
9. Pro vnesennia zmin do deiakykh zakonodavchykh aktiv Ukrainy shchodo sproshchennia vedennia biznesu ta zaluchennia investytsii emitentamy tsinnykh paperiv [On Amending Some Legislative Acts of Ukraine Concerning Simplification of Business and Encouragement of Investments by Issuers of Securities]: Zakon Ukrainy [the Law of Ukraine] vid 16 lystopada 2017 r. № 2210-VIII. Vidomosti Verkhovnoi Rady Ukrainy.2018. № 6-7. St. 38 (in Ukrainian).
10. Uhoda pro asotsiatsiiu mizh Ukrainoiu, z odniiei storony, ta Yevropeiskym Soiuzom, Yevropeiskym spivtovarystvom z atomnoi enerhii i yikhnimy derzhavamy-chlenamy, z inshoi storony [The Association Agreement between Ukraine, on the One Part, and the European Union, the European Atomic Energy Community and Their Member States, on the Other Part]. URL: zakon.rada.gov.ua/laws/show/984_011 (accessed: 15.05.2018) (in Ukrainian).
Cases
11. Hanson Trust PLC v. SCM Corp. (1985) 774 F. 2d 47 accessed 15 May 2018 (in English).
12. Report of the High Level Group Company Law Experts on Issues Related to Takeover Bids (Brussels, 10 January 2002) accessed 15 May 2018 (in English).
13. Postanova Natsionalnoi komisii z tsinnykh paperiv ta fondovoho rynku Ukrainy № 624-SKh-1-E [Resolution of the National Securities and Stock Market Commission of Ukraine 624-СХ-1-Е] vid 19 sichnia 2018 r. URL: https://www.nssmc.gov.ua/documents/ pro-rozglyad-skargi-publtchnogo-aktsonernogo-tovaristva-dtek-dnproenergo-vd-30- 01-2018-v-8201-18-na-postanovu-pro-nakladennya-sankts-za-2/ (accessed: 15.05.2018) (in Ukrainian).
Bibliography
Authored books
14. Alan J Dignam and David Allen, Company Law and the Human Rights Act 1998 (Butterworths 2000) (in English).
15. Carney W J, Merger and Acquisitions. Cases and Materials 15 (Foundation Press 2000) (in English).
16. Johnston Al, The City Take-over Code (Oxford University Press 1980) (in English).
17. Kenyon-Slade Stephen, Mergers and Takeovers in the US and UK: Law and Practice (Oxford University Press 2004) (in English).
18. Popov A, Obyazatel’noe predlozhenie: zashchita prav i interesov aktsionerov pri pogloshchenii [Mandatory Offering: Protection of the Rights and Interests of Shareholders during Acquisition] (Infotropik Media 2012) (in Russian).
19. Skog Rolf, Does Sweden Need a Mandatory Bid Rule? A Critical Analysis (SUERF Amsterdam 1997) (in English).
20. Franks Julian and Mayer Colin and Rossi Stefano, ‘Spending Less Time with the Family: The Decline of Family Ownership in the United Kingdom’ in A History of Corporate Governance around the World: Family Business Groups to Professional Managers (National Bureau of Economic Research Conference Report 2005) (in English).
21. Shitkina I, Korporativnoe pravo: uchebnyy kurs [Corporate Law: Course of Study] (KNORUS 2011) (in Russian).
Journal articles
22. Armour J et al ‘The Evolution of Hostile Takeover Regimes in Developed and Emerging Markets: An Analytical Framework’ (2011) 52 Harvard International Law Journal 233 (in English).
23. Johnston An, ‘Takeover Regulation: Historical and Theoretical Perspectives on the City Code’ (2007) 66 Cambridge Law Journal 423 (in English).
24. Yoran (Jurkevitz) Aaron, ‘Advanced Defensive Tactics Against Takeover Bids’ (1973) 21 Am. J. Comp. L. 531 (in English).
25. Pepin Michelle, ‘Exclusivity of Appraisal – the Possibility of Extinguishing Shareholder Claims, 42 Case’ (1992) W. Res. L. Rev. 955 accessed 15 May 2018 (in English).
26. Stepanov D, ‘Pogloshchenie, osushchestvlyaemoe putem priobreteniya krupnogo paketa aktsiy, i vytesnenie minoritarnykh aktsionerov’ [‘Acquisition by Purchase of a Large Shareholding and Squeeze-Out of Minority Shareholders’] (2006) 3 Khozyaystvo i pravo 9 (in Russian).
Websites
27. Cooke Stephen, ‘Buying out minority shareholders’ (Practical Law, 2018) accessed 10 May 2018 (in English).
Thesis abstracts
28. Kibenko O, ‘Suchasnyi stan ta perspektyvy pravovoho rehuliuvannia korporatyvnykh vidnosyn: porivnialno-pravovyi analiz prava YeS, Velykobrytanii ta Ukrainy’ [‘Current State and Prospects of Legal Regulation of Corporate Relations: Comparative Legal Analysis of the EU, UK and Ukrainian Law’] (dys d-ra yuryd nauk, Natsionalna yurydchnay akademiia Ukrainy im Yaroslava Mudroho 2006) (in Ukrainian).
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