Vol. 552 No. 1
70 Mr. C. Lenihan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will consider changing stock market or takeover rules in order that minority share holders, as with a company (details supplied), can hold on to their shares, even if the majority of share owners exercise their option to sell. [11309/02]
Company law has been drafted in a way which seeks to both protect the interests of minority investors and which also encourages economic activity.
Section 8(3) of the Irish Takeover Panel Act, 1997 requires the panel to make rules to provide that where a person or persons acting in concert acquire effective control of a company, that is, where they control not less than 30% of the company's voting rights, the person or persons in control are required to make an offer for all of the remaining shares of the company. The purpose of this is to protect minority shareholders so that they do not get locked into holding shares in a company, the effective control of which is exercised by another party.
Under section 204 of the Companies Act, 1963, a company that receives acceptance of an offer to acquire 80% of another company's share capital is empowered to acquire the shares of the remaining shareholders of that company. There is an option for such minority shareholders to make an appeal to the courts against any such mandatory acquisition of shares. The rationale behind this compulsory acquisition provision is that it is often not an attractive proposition for a purchasing company to acquire less than 100% of the share capital of another company and acquisition schemes that are economically desirable might not proceed if this provision did not exist.
The provisions of section 204 of the Companies Act, 1963, and the question of minority rights in a takeover were considered by the Company Law Review Group. The review group is a statutory body comprising a wide range of interested parties established to consider issues relating to the updating and amendment of the Companies Acts. The review group, in its first report published earlier this year, recommended that the 80% threshold for triggering compulsory acquisition should remain.
Having regard to all of these factors I do not propose to amend the provisions of the Companies Acts in the manner suggested by the Deputy.
