Breach of the Mandatory Bid Rule: Minority Shareholders’ Protection in the Public vs. Private Enforcement Debate

The mandatory takeover bid has been broadly investigated in the literature. The economics of such control acquisition and the pros and cons of the mandatory bid rule are nowadays well-established. Uncertainty still reigns with respect to the fundamental question whether private law remedies are available to minority shareholders in the case of a breach of the duty to make a takeover bid. Statutory law across Member States is essentially silent on this matter, and at a supranational level the CJEU’s case law does not offer valid precedents. European policymakers rely on public enforcement mechanisms, while an action for damages against the bidder is not made available or only reluctantly accepted by the courts. Italy is an outlier, allowing today – after the consolidation of the principles expressed in the leading case Fondiaria-SAI – the recourse to private enforcement remedies. This article shows that, for the purpose of good functioning and competitiveness of capital markets, private enforcement plays an important role against violations of the mandatory bid rules. Thus, public enforcement, which often proved to be ineffective or bypassed especially in cases of acting in concert, should be complemented by the recognition of civil liability of the bidder for breach of the duty to launch a takeover bid. Furthermore, the legal regime of such liability is outlined, thereby investigating the (contractual or tortious) nature of the bidder’s liability and the operativeness of such a regime (e. g., amount of damages, application of compensatio lucro cum damno rule).

Ensino médio, o ensino pela metade: Geografia da negação de um direito

Who are the victims of not abiding with the laws that determine the State’s offer of compulsory and free education to all young people from 15 to 17 years in Brazil? Starting with this question, based on Pnad/IBGE data from 2001 to 2015, this article delineates a brief profile of these individuals, whose contingent comprises more than 1.5 million young people. In absolute numbers, they belong to the poorest part of society, are predominantly blacks, and residents of urban areas of the Northeast and Southeast regions, especially in SP, MG and BA. In percentage terms, they are also the poorest and black, live in rural areas of the Northeast, Midwest and North, in the States of MS, RO and MT. Another finding of the survey indicates that neither the legislation requiring the mandatory bid of such young people nor the Fundeb implementation were able to accelerate the pace of growth of enrollments during the period. Despite this, there are important indicators of inclusion, clearly expressed by the incorporation of portions of the population historically more distant from school, such as the young people belonging to the poorest Brazilian population, race/color black and residents in rural areas.

Non-frustration Rule and Mandatory Bid Rule – Cornerstones of European Takeover Law?

With the non-frustration rule and the mandatory bid rule, the Takeover Bid Directive contains two principles which have strongly influenced British takeover law for approximately 50 years. However, the changes of the economic and legal framework of the market for corporate control which have occurred since the adoption of the Directive call into question the legitimacy of both principles. Although the non-frustration rule is capable of disciplining board members, it generates misguided incentives and is, at the most, suitable as a disciplining tool of last resort. The dominant idea of relying on increasing shareholder activism and of trusting the shareholders to discipline the board (also in a company with dispersed ownership) is compelling in principle; however, as active shareholders often seek the short-term maximisation of returns, misguided incentives cannot be avoided in this context either. In view of these findings, the article explores the ways of structuring NFR optionality. It submits that only the shareholders should be given the possibility to opt out of the strict NFR – which would continue to serve as the default rule and that such an opt out should only be possible for a limited period of time. With respect to the mandatory bid rule, its justification is becoming increasingly difficult since the exploitation of the offeree company by the controlling shareholder is more or less excluded by obligations to disclose information, by shareholder activism and by the reform of the Shareholder Rights Directive. In view of the foregoing, this paper argues for reform of the Directive’s mandatory bid rule making it a mere default rule.