The definition of the all holders rule
The sec regulation that requires tender offer should be available to all owners of the same class of security. All Holders rule is specified in rule 14D-10 of the Law on trading in securities of 1934, which determines the equality of holders of securities. This rule is especially important during the proposed takeover, ensuring that any tender offers acquirer, can be directed only by those shareholders in favor of the absorption.
Breaks all-holders rule
For example, if company ABC has sent a proposal to repurchase its shares of class B, all holders of this class must be allowed to participate in the buyback. Sec does not require ABC to redeem the offers to shareholders of other classes.
The consequence of all-holders rule is that attention is paid to all holders of the securities, which will Express your securities should be higher or “best price”. This is intended to prevent the holders of the securities receive a lower price for their securities in the tender offer.
A tender offer is when an investor offers to buy shares each shareholder of a public company at a certain price at a certain time. The investor usually offers a higher price per share than the price of the company’s shares, providing shareholders a greater incentive to sell their shares. For example, the fair value of the stock is $10 per share. The investor wants to take over the company issues a tender offer for $12 per share on the condition that he acquire at least 51% of the shares.
All holders rule is intended to level the playing field for small investors. Without this, a potential buyer may ask the institutional investors to buy their shares at a premium, freezing on small investors.
The Best Price Rule
The best rule of price in the same section of code sec works to prevent it. It provides that the consideration offered to any security owner in the tender offer must be equal to the greatest attention is paid to any other security holder. The best price rule is intended to ensure equal treatment of all holders of securities in the tender offer.
in December 2006, the rules were changed to the following: “consideration of any holder of securities for the securities transferred in the tender offer, a high attention is paid to any other security holder for securities tendered in the tender offer.” Was instituted safe Harbor in the rule for compensation arrangements approved by the Committee of independent Directors.