5.11 Shares as a Means of Payment 273Corporation, a Finnish company, provide for sell-out rights in the event of a take-
over.^684
Third, such clauses complement the statutory provisions that implement the
provisions of the Directive on takeover bids.
The Directive provides that the obligation to launch a mandatory bid does not apply where
“control has been acquired following a voluntary bid made in accordance with this Direc-
tive to all the holders of securities for all their holdings”.^685 The articles of association may
require the making of a bid even where control has been acquired in that way or lay down a
lower threshold. Furthermore, the Directive on takeover bids only requires squeeze-out
rights and sell-out rights where a certain high threshold has been exceeded “following a bid
made to all the holders of the offeree company’s securities for all of their securities”.^686 The
articles of association of the company may provide for a lower threshold and give share-
holders a sell-out right even where the threshold has been exceeded in other ways than fol-
lowing a bid.
Special remarks: fairness. Whereas shareholders decide on the terms of merger,
the target company’s shareholders will not decide on the terms of a share ex-
change offer. As the offeror is basically free to decide on the terms of the offer,
the target’s shareholders are in a weaker bargaining position than shareholders in a
formal merger would be.
If the target is a listed company, this question has been addressed by the regula-
tion of public takeover bids in general and the principle of fairness in particular. A
substantial part of tender offer regulation is based on the underlying notion of
fairness. However, fairness is a subjective notion, and there are differences be-
tween different countries’ laws.^687
The provisions of the Directive on takeover bids are designed to promote fair-
ness in various ways (equivalent treatment,^688 restrictions on partial offers,^689 equi-
table price in mandatory bids,^690 sell-out right at fair value^691 ).
There can be differences between Community law and US law. (a) For example, Rule 14e–
5 prohibits, in connection with a tender offer for equity securities, a bidder from purchasing
or arranging to purchase any of the target’s securities outside of the tender offer. Although
the provisions of the Directive on takeover bids do not expressly prohibit the offeror from
(^684) Article 13 of the Articles of Association of Nokia Corporation.
(^685) Article 5(2) of Directive 2004/25/EC (Directive on takeover bids).
(^686) Articles 15(1) and 16(1) of Directive 2004/25/EC (Directive on takeover bids).
(^687) Ogowewo TI, The Underlying Themes of Tender Offer Regulation in the United King-
dom and the United States of America, JBL 1996 pp 463–481.
(^688) Article 3(1) of Directive 2004/25/EC (Directive on takeover bids).
(^689) Article 3(1)(a) of Directive 2004/25/EC (Directive on takeover bids): “... all holders of
the securities of an offeree company of the same class must be afforded equivalent
treatment ...”; Article 5(1): “... Such a bid shall be addressed ... to all the holders of
those securities for all their holdings ...” Article 15(2): “Member States shall ensure that
an offeror is able to require all the holders of the remaining securities to sell him/her
those securities at a fair price ...”
(^690) Article 5(4) of Directive 2004/25/EC (Directive on takeover bids).
(^691) Article 16 of Directive 2004/25/EC (Directive on takeover bids).