New Takeover Law Came Into Force

UniCredit Bank d.d.
Summary: 
New law on the takeover of companies in the Federation of Bosnia and Herzegovina (F BiH) came into force on 15 October 2015.
Fri, 16/10/2015

The Parliament of the Federation of Bosnia and Herzegovina (FBiH) has adopted the law on takeovers of companies, which came into force on 15 October 2015.

The most important changes are as follows:

Takeover threshold:

  • Control takeover threshold: The bidder or the persons who act with him (hereinafter: bidder) are required to publish the tender offer if his share in capital exceeds 25% of total shares with voting rights in target company.
  • Additional takeover threshold: The bidder who has reached the control threshold of 25% and has published the tender offer is required to publish another tender offer if his share increases by more than 10%.
  • Final threshold: The bidder who has reached the threshold of 25% and has published the takeover offer is required to publish another tender offer if his share exceeds 75% from all shares with voting rights in the target company, regardless of percentage of increase of his share.

Exempted from obligation to publish another tender offer are beneficial owners who have published the second tender offer after reaching the additional takeover threshold and beneficial owners who have reached the final threshold (75%) in the first tender offer. Beneficial owners who obtain shares from inheritance, increase of capital by closed issuance of shares with approval by the Shareholders Assembly, public tender offer, bankruptcy proceedings, enforcement proceedings over pledged shares, merger of companies, ownership transformation, and dividends received in shares etc. are also exempted from the obligation to publish the tender offer.

Voluntary tender offer:

  • Bidders who don’t meet requirements to publish obligatory tender offer are allowed to publish the voluntary tender offer. In order to publish the voluntary tender offer the bidder and persons who act with him/her are required to notify the Securities Commission, the issuer and the stock exchange.
  • After the notification is sent, publishing of the tender offer becomes mandatory.

Tender offer announcements:

  • Announcement that the obligation to publish the tender offer occurred, the bidder must publish  at the latest on the next day after the occurrence.
  • If the issuer has their headquarters in F BiH, the announcement must be published in two daily newspapers widely spread in FBiH.
  • If the issuer has  their headquarters in Republic of Srpska (RS)  and the tender offer procedure is maintained in F BiH, the announcement must be published in at least one newspapers widely spread in FBiH and at least one newspapers spread in RS.
  • The bidder is also required to simultaneously notify the Securities Commission, the issuer and the stock exchange on the occurrence of the obligation.
  • The bidder is required within 30 days from the occurrence to submit the request for approval of the tender offer to the Securities Commission.
  • The bidder is required to publish the tender offer within 7 days upon receipt of the approval.
  • The bidder is required to submit the tender offer to the issuer, the stock exchange, the CSD and to brokerage house that will conduct the procedure latest the next day upon receipt of the approval.
  • The issuer is also required to notify shareholders and issuer´s employees latest the next day upon publishing of the tender offer.

Takeover price:

  • The takeover price cannot be below the highest price by which the bidder bought shares within one year from the date of occurrence of obligation to publish the offer. The takeover price must be also higher than the weighted average price of all transactions with the respective security concluded in the market in the past three months.
  • If the bidder had not bought the shares within one year, the takeover price must be higher than the average price of shares.

Takeover compensation:

  • Takeover compensation can be paid in cash, exchange securities or combined. Instead of cash, the bidder can deliver bank guarantee.  Exchange securities must be deposited at the special purposes account within the CSD.

Contract with the brokerage house:

  • The bidder must conclude the contract with the brokerage house which will conduct the takeover procedure in line with the Law.

Tender offer lifecycle:

  • The tender offer period lasts 28 days from the date of publishing. Amendments to the tender offer extend the offer period for 7 days.

Squeeze out:

  • The bidder who obtains 95% of total shares arising from the tender offer is allowed to redeem shares of minor shareholders within three months upon the end of the tender offer.

Minor shareholders redemption rights:

  • If the bidder obtains 95% of shares arising from the tender offer, minor shareholders can request redemption of their shares by the bidder within three months upon end of the tender offer.

 

Impact on investors: New law on the takeover of companies in the Federation of Bosnia and Herzegovina came into force as of 15 October 2015.