In Vivendi/Telecom Italia, the transaction consisted of the acquisition of control by a minority shareholder over a listed company with a widely dispersed share capital. In Electrabel although holding close to 50% of CNR’s shares, due to the wide dispersion of the remaining shares and past attendance rates at CNR’s shareholders’ meetings, Electrabel enjoyed a stable majority at such meetings. This is true for the situations where a shareholder is highly likely to achieve a stable majority at shareholders’ meetings or if the remaining shares are widely dispersed. The ability to appoint the majority of the board of directors, which is in charge of the company’s strategic decisions, is one of the most common forms of de facto control. There are various factors which may be relevant in deciding whether de facto control exists. While de jure control requires review of shareholdings (more than 50 per cent), de facto control is a much broader concept, which looks at other possible influence over the undertakings that would result in control. It follows, therefore, that these shareholders must reach a common agreement in determining the commercial policy of the JV.Ĭontrol, whether sole or joint, can be exercised on a de jure or de facto basis. Therefore, joint control is characterized by the possibility of a deadlock situation resulting from the power of two or more parent companies to reject proposed strategic decisions. Joint control exists where two or more undertakings have the power to block strategic commercial decisions of an undertaking. Sole control might also result from the acquisition of a “qualified minority” of the share capital with ability to veto strategic commercial decisions. An acquisition which does not include a majority of the voting rights does not normally confer control even if it involves the acquisition of a majority of the share capital. It is not in itself significant that the acquired shareholding is more than 50% of the share capital or that it is 100% of the share capital. Sole control is acquired on a legal basis where an undertaking acquires a majority of the voting rights of a company. The essence of the definition lies in the words “decisive influence on an undertaking” (Article 3(2) EUMR), i.e., its strategic decisions such as business plans, budget, investments, appointments of management, etc.Ĭontrol of an undertaking may be acquired by a single undertaking leading to a sole control, or jointly by two or more undertakings leading to a joint control. Whether the control of an undertaking is acquired or not is determined on a case-by-case basis. A notion of control and its interpretation serves as a starting point of any concentration control analysis, as a concentration should be deemed to exist in case a change of control takes place.
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