Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
To increase the chances of success, a bidder can acquire an initial stake in the target company prior to launching an offer. Although pre-launch stakebuilding is generally permitted under Austrian takeover law, a shareholder is under an obligation to fulfil certain notification requirements if the thresholds described below are met or exceeded. As a consequence, stakebuilding involves the risk of generating publicity.
In 2013, the Transparency Directive Amending Directive (Directive 2013/50/EU) introduced stricter disclosure requirements, including for instance a reporting obligation regarding cash-settled equity swaps, which makes it harder to carry out a creeping increase of control over a listed company.
Under the Austrian Stock Exchange Act 2018, Section 130, any person directly or indirectly acquiring or selling shares in a company listed on a regulated market is required to inform the Austrian Financial Market Authority and the exchange operating company if their shares carrying voting rights reach, exceed or fall below the thresholds of 4%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75% and 90%.
These material shareholding disclosure thresholds only apply to shareholders who hold an interest in a company whose registered office is in Austria. The personal scope of application includes individuals, legal persons, registered partnerships without legal personality and investment funds. The aim of the provision is to ensure the functioning of the capital market and to provide a reliable basis for shareholders concerning decisions about the acquisition and sale of shares.
The material shareholding disclosure thresholds mentioned above are compulsory. However, the Stock Exchange Act 2018, Section 130 para 1, makes it possible to include a threshold of 3% in a company's articles of incorporation (in addition to the thresholds given in the paragraph, as described in 4.2 Material Shareholding Disclosure Thresholds, above), which also requires the company to publish the provision of the articles of incorporation on its website and to inform the Austrian Financial Market Authority.
Dealings in derivatives are permitted.
Any financial instrument is subject to disclosure and/or filing and reporting obligations as specified in the section regarding material shareholding disclosure thresholds. There are no specific statutory competition rules covering derivatives. Neither are there any for other financial instruments.
National merger control will in principle only be triggered in case an option right is exercised in order to acquire shares unless such option right itself comes with considerable and material influence as regards the target entity and its management.
The Austrian Takeover Act, Section 7, states that the offer document must contain certain minimum content: for instance, the terms of the offer and information regarding the bidder. In addition, details of the bidder's intention with regard to the future business operations of the target company and, to the extent it is affected by the offer, of the bidder company must be disclosed. Furthermore, information regarding the continued employment of employees and management, including details of any material changes to terms and conditions of employment, must also be provided.
In the event of a voluntary takeover offer to acquire control, the bidder's intention will be obvious, as the aim of the offer is to acquire a controlling interest in the target by exceeding the minimum acceptance threshold of 50% of the permanent voting shares. As mentioned above, there are material shareholding disclosure thresholds in the Stock Exchange Act 2018, Section 130. If, however, these thresholds are exceeded, the disclosed information does not have to include the bidder's intention or the rationale behind the acquisition.