Publication date: 08.07.2024
I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.
The main features of squeeze-out:
- Controlling Shareholding: An individual or group of shareholders owns the majority of a company's shares (usually more than 90%).
- Redemption procedure: By law (often the law of the country where the company is incorporated), the controlling shareholder has the right to buy out the shares of other shareholders at a fair price.
- Redemption conditions: Usually, the redemption of shares must be carried out at a fair market price, determined by an independent expert or on the basis of an appraisal.
- Legal restrictions and protection: Most countries have legal restrictions on the terms of the squeeze-out, as well as mechanisms to protect the rights of smaller shareholders to ensure fairness and protect their interests.
Merger squeeze-out:
This type of squeeze-out occurs in the context of a merger between two companies, where one of the companies (usually the acquiring company) intends to buy out the minority shares after the merger is completed. Key aspects include:
- Takeover procedure: Two joint-stock companies merge, which usually requires the approval of shareholders and regulators.
- Squeeze-out announcement: After the merger is completed, the acquiring company may announce its intention to buy out minority shares (less than 100% of the shares) owned by the target company.
- Redemption conditions: The value of the shares to be redeemed must correspond to the fair market value, usually determined with the help of an independent appraiser.
Corporate squeeze-out:
In this case, the squeeze-out takes place on the basis of corporate decisions of the company, which already has a controlling stake. Key aspects include:
- Controlling Shareholding: A company or group of shareholders has control of a majority of the shares (usually more than 90% or 95%).
- Squeeze-out announcement: The owner of a controlling stake announces his intention to buy out the minority shares from all other shareholders.
- Terms of Redemption: Again, the value of the shares being redeemed must correspond to fair market value, usually determined by an independent appraiser.
- the general step-by-step description looks something like this:
- Announcement of intent to buy out: A controlling shareholder (or group of shareholders) who owns more than 90% or 95% of the company's shares announces its intention to buy out the shares of all other (minority) shareholders.
- Notification to shareholders: All shareholders of the company are notified of the intention to buy back shares and the terms of this buy back. This is usually done through official letters or announcements detailing the procedure, terms and conditions.
- Redemption of Shares: After obtaining the necessary approvals and approvals, the controlling shareholder or the company carries out the actual redemption of the shares of all minority shareholders in accordance with the terms that have been announced.
- Payment and transfer of ownership: Minority shareholders receive remuneration for their shares according to the set price. The shares are then withdrawn from circulation and ownership of them passes to the controlling shareholder or company.
The rights of shareholders in the event of a squeeze-out:
Protection of the rights of minority shareholders is an important component in the squeeze-out process, as this procedure can lead to the buyout of their shares against their will. In different jurisdictions, this protection may include different aspects, here are some of them:
- Fair value of shares: Legislation often requires that the price at which shares of minority shareholders are redeemed correspond to the fair market value of those shares. Usually, this value is determined by an independent appraiser based on objective criteria.
- Public announcement and consultation: The controlling shareholder or company is required to notify all shareholders of the intended buyout, allowing minority shareholders to express their views and possibly consult with legal or financial advisors.
- Right to information: Minority shareholders have the right to receive all necessary information about the terms and process of the squeeze-out, including the company's valuation and the grounds for buying back their shares.
- Voting rights: It is important that all shareholders, including minority shareholders, have equal access to vote at general meetings where squeeze-out decisions are made.
Legal services for business:
The services of a lawyer for a business are extremely important during the squeeze-out procedure, as it is a complex legal process that requires compliance with various legal norms and the protection of the interests of all participants, including minority shareholders. Here are the aspects that a lawyer can cover in this context:
- Legal analysis of the situation: A lawyers online can conduct a detailed legal analysis of all aspects of a squeeze-out, including legal requirements for share valuation, shareholder meeting procedures, information rights for minority shareholders and other important issues. Lawyers can also provide legal advice on legal risks and opportunities to protect the rights of minority shareholders.
- Preparation of documentation: A lawyer services can prepare all necessary documentation for the squeeze-out announcement, including the notice of intent to repurchase shares, the terms of the repurchase, company valuations, and other legal documents.
- Representation at shareholders' meetings: In some cases, a business lawyer may represent the interests of minority shareholders at general shareholders' meetings where squeeze-out decisions are made. A business lawyer can help defend the rights of shareholders and ensure that the process is fair.
- Negotiations and Mediation: In some cases, types of legal services may negotiate with the controlling shareholder or company in order to reach a compromise on the terms of the squeeze-out. They can also use mediation to resolve disputes without going to court.
- Court proceedings: If necessary, the online lawyer advice can provide business protection lawyer of the interests of minority shareholders in the event of wrongful or unfair actions by the controlling shareholder or the company. The cost of legal services will depend on the complexity of the procedure.
Squeeze-out allows controlling shareholders to exercise full control over the company, but it is also subject to strict regulations to protect the rights of smaller shareholders and ensure fair conditions for the redemption of their shares. Therefore, online assistance of a lawyer in the squeeze-out process can greatly facilitate and ensure the protection of the rights of minority shareholders, ensuring compliance with legal norms and procedures, as well as the most fair result for all participants in the process.
