Näringslivets Börskommitté (NBK), the Swedish Industry and Commerce Stock Exchange Committee, has completed a review of the Swedish takeover rules which apply to regulated markets in Sweden (Nasdaq OMX Stockholm and Nordic Growth Market). Draft revised rules were published in June, with the final draft being submitted to the NASDAQ OMX.

Of most interest are the changes regarding price differences between Class A and Class B shares. Under the new rules, it is expected that bidders will be prevented from paying more for shares that have preferential voting rights. About half of Sweden’s listed companies have two or more classes of shares with different voting rights but the same financial rights. The FT reports that a group of 24 Swedish and international investment groups has written on two occasions (in 2007 and again in 2009) to NBK, highlighting the widespread criticism of shares carrying different voting entitlements, which could be used as a defence against takeovers and said that “influence ought to be proportionate with the risk capital invested in the company”.

Other key changes from the current rules are:

• More stringent requirements for ‘pre-announcements’;
• More stringent rules for the withdrawal of bids;
• Restrictions on the right to modify bids that have been launched;
• More stringent requirements for independence when issuing a fairness opinion;
• Clearer rules for the role played by the target company Board;
• Rules for handling conflicts of interest in the target company Board; and
• Restrictions on the bidder’s right to make a new offer.

In the next stage, NBK intends to propose that the rules should be extended to cover additional market places, and also more stringent legislative provisions as regards the introduction of an additional threshold for mandatory offers.

Last Updated: 24 August 2009