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No Private Rights of Action to Force Mandatory Tender Offer in Germany
20 September 2013
The German Federal Supreme Court recently held that minority shareholders do not have private rights of action to enforce the statutory obligation of a person acquiring control to make a mandatory tender offer. Minority shareholders can neither claim the payment of consideration nor damages or default interest from the person acquiring control if such person fails to make a mandatory tender offer.
In accordance with the EU Directive on Takeover Bids, the German Securities Acquisition and Takeover Act requires any person acquiring direct or indirect control of a company listed on a regulated market in Germany to make a mandatory tender offer for all outstanding shares of the target.
The court found that the primary purpose of the German Securities Acquisition and Takeover Act is to protect the functioning of the securities market at large and not the interests of individual shareholders. Therefore, minority shareholders have to rely on the BaFin for enforcement and the automatic suspension of the rights attached to any shares that are attributable to the person acquiring control.
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