Takeovers in Finnish Law

1. Takeovers in Finnish Law 14 September 2002 DNJV Frankfurt Ari-Pekka Saanio Attorneys at law Borenius & Kemppinen Ltd.

2. Index • Phases • Securities Markets Act • Companies Act • Equal treatment of shareholders • Role, competence and duties of Board of Directors • Fair market price (Companies Act and Securities Markets Act)

3. 1. Phases • 0% 1/3 or 50% 2/3 90% 100% • Voluntary Poison pill Duty of Squeeze-out of • transactions redemption redemption minority shares • - flagging - equal treatment according to according to • - disclosure of shareholders the Securities the Companies • - pricing - pricing Markets ActAct • - equal treatment - pricing • of shareholders • - pricing

4. 2. Securities Markets Act • Voluntary/mandatory redemption • Tender offer document, necessary content • Duty of redemption • at 2/3 of votes • redemption procedure • pricing rules

5. 3. Companies Act • Squeeze-out • Right to redeem / duty to redeem at 90% of votes and shares • Registration of the redemption right • Demand to redeem based on the redemption right • Trustee representing absent minority shareholders • Transfer of ownership of the minority shares • Pricing and any dispute relating thereto

6. 4. Equal treatment of shareholders • Companies Act • General principle in accordance with the Companies Act • Separate provisions for minority shareholders protection (specific circumstances) • Traditional interpretation: prohibition to favour certain shareholders or an outside interest group • Protects also the majority shareholders • Binding by and between the company, its statutory organs and shareholders

7. 4. Equal treatment of shareholders – cont. • Securities Markets Act • Principle of equal treatment of shareholders according to the Securities Markets Act • right to sell/offer for redemption • pricing and other conditions • binding to third parties (acquirer)

8. 5. Role, competence and duties of Board of Directors • Duties • Duty of loyalty and prohibition to take an action which is likely to result in an unjust benefit to the company or to a (certain) shareholder • Duty of care • General competence (any matters that do not belong to the shareholders’ meeting or the Managing Director / CEO, specifically all unusual and far-reaching decisions)

9. 5. Role, competence and duties of the Board of Directors – cont. • In practice • The Board of Directors has the best knowledge regarding the target company • Finnish law does not include any specific provisions nor case law regarding the position of the Board of Directors in a takeover situation  general principals and provisions regarding the competence of the Board are to be applied.

10. 5. Role, competence and duties of the Board of Directors – cont. • Does the Board of Directors have a duty to act at all? • Conflict of interest

11. 6. Fair market price • Companies Act:“In determining the redemption price of shares, the arbitrators shall take into account all the relevant circumstances of each individual case.”

12. 6. Fair market price – cont. • Securities Markets Act, Chapter 6, Section 7:“The redemption price shall be the going price. In determining the going price, attention shall be paid to the average price paid for the security in public trade during the 12 months preceding the commencement of the redemption duty weighted by the volume of the trade as well as to any higher price paid by the party under the duty of redemption or another person, organization or foundation referred to in Section 6, as well as any special circumstances.”

13. Ari-Pekka Saanio • Attorneys at law Borenius & Kemppinen Ltd. • Yrjönkatu 13 A, FIN-00120 Helsinki • Tel. +358 9 615 333 • Fax +358 9 615 33 499 • ari-pekka.saanio@borenius.fi • www.borenius.fi