272 5 Equity and Shareholders’ Capital
Decision
rightsThe general meeting will
decide on the issuing of
new shares (the board
may have been authorised
to decide on it).
Possibly, the general
meeting may have to de-
cide on the waiving of
pre-emption rights (the
board may have been
authorised to decide on it
or pre-emption rights may
not apply).^682
The general meeting may
have to decide on the
amendment of articles of
association.Each shareholder has discretion to sell
shares or keep them; no obligation to sell
shares to the offeror.Right to
contest reso-
lutions ex
postLimited rights to contest
resolutions taken by the
general meeting.Withdrawal
rightsIn some jurisdictions, limited withdrawal
rights depending on the governing law.^683
Other reme-
dies ex postUse of remedies that gen-
erally apply to the actions
of board members.Lack of market for shares:
The exceeding of a threshold may trigger a
statutory duty to make a mandatory bid.
The exceeding of a threshold may trigger a
duty to make a mandatory bid under articles
of association (poison pill).
The exceeding of a threshold may trigger a
squeeze-out right and/or a sell-out right.
Smaller free float may lead to delisting.
Price:
Rules on valuation of shares in the event
that rules on mandatory bids, squeeze-out
right or sell-out right become applicable.The terms of the share exchange offer may be constrained by the articles of asso-
ciation of the target. Articles of association can lay down an additional duty to
make a mandatory bid or provide for sell-out rights. Such clauses serve three pur-
poses.
First, provisions on mandatory bids or sell-out rights can serve as a takeover
defence (section 18.4) by making the takeover more expensive.
Second, sell-out rights can protect minority shareholders in the event of a sud-
den reduction in the free float. For example, the articles of association of Nokia
(^682) Article 29(1) of Directive 77/91/EEC (Second Company Law Directive).
(^683) Article 13 of Directive 2004/25/EC (Directive on takeover bids).