Government Adopts New Mergers and Acquisitions Bill

Ljubljana, 20 April

The government has adopted a new mergers and acquisitions bill, which will completely overhaul and upgrade the existing legislation in this field, and fully transpose the EU directive on takeover bids.

The bill removes the peculiarities related to transition that the 1997 act includes; it clearly defines the roles of all stakeholders, including the state, and improves the protection of small shareholders, Economics Minister Andrej Vizjak told the press on Thursday.
Vizjak said the most important aspect of the new law would be the expansion of takeover provisions from listed companies to non-public companies with at least 250 shareholders and a share capital of at least SIT 1bn (EUR 4.2m).
Moreover, the bill redefines the calculation of the voting rights of individual entities in the target companies, whereby the authorities are able to determine whether a shareholder already exceeds the takeover threshold.
The takeover threshold remains at 25% of the voting rights, but Vizjak said the government initially thought about raising the figure to one third of the voting rights. This option will be examined after the law is passed, he said.
The relevant EU directive leaves it up to the individual member states to determine the threshold. Slovenia has one of the lowest threshold, and Vizjak voiced the hope that it will soon be brought on par with the EU average.
The bill moreover defines a "fair price", which is considered as the price that the acquirer is offering, whereby it is not lower that the highest price that the acquirer or associated companies that act in sync with it have paid for the relevant securities 12 months prior to making their bid.
If one year after the publication of the takeover offer the acquirer purchases securities of the target company at a higher price that that of the takeover offer, it has to pay the sellers the difference in the purchase price.
According to Vizjak, the bill also includes a new definition of "entities that act together", which should make it easier for the securities market watchdog to prove violations.
As far as defence mechanisms are concerned, the bill says that management board of the target company must be neutral, however, it can keep defence mechanisms that had been in place before.
The bill places special emphasis on small shareholders, although according to Dusan Psenicnik, who heads the working group for corporate law at the Economics Ministry, the existence of the obligation to make a takeover offer gives them the right to sell their shares at a premium.
Additionally, the entity that should have made the takeover offer but has failed to do so can be prevented from voting at the AGM, whereupon the voting rights of the remaining (small) shareholders are appropriately raised.

Government Adopts New Mergers and Acquisitions Bill

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