Protection of Minority Shareholders: Mandatory Bid or Partial Bid Rule.

Abstract

This contribution shows the idea that the mandatory bid rule is likely to be protective for minority shareholders, as minority shareholders have an opportunity for early exit from company prior to the shift of control and to receive reward from ‘control premium’. Although the mandatory bid rule decreases market uncertainty, and due to its high price results reduces amount of inefficient takeovers; it minimises takeover activity as well, hence reduces chances for minority shareholders to obtain an access to ‘control premium’. Nobody can give firm guarantee that price in mandatory bid will be fair. Moreover, officially represented approach of the European Court of Justice is that it does not recognize minority shareholders’ rights protection as general principle of the EU Community law. Therefore, adoption of partial bid in takeovers under compulsory supervising authority regulation using methods of consultation widely is proposed.