Comparative Analysis of the Squeeze-Out Procedure in Ukraine and the EU
Abstract
The introduction of the squeeze-out procedure into Ukrainian law took place several years ago. It was due to the implementation of Directive 2004/25/EC of the European Parliament and of the Council of April 21, 2004 on takeover bids as part of the implementation of the Association Agreement between Ukraine and the European Union. However, the resonance of this institution in Ukrainian legislation has not only continued to grow but is also gaining momentum. The purpose of squeeze-out is to balance the interests of majority and minority shareholders. However, there are ongoing discussions in the legal profession regarding the possibility of a possible violation of the subjective rights of minority shareholders in the event of forced deprivation of their ownership of shares, the setting of the share price, and the compliance of the procedure for the compulsory sale of minority shareholders' shares with the principle of inviolability of property rights. The institute of compulsory redemption of minority shareholders' securities at the request of a person (group of persons) holding a dominant controlling stake is new to the theory and practice of domestic corporate law. In the legislation of other countries and legal doctrine, the institute of public offer is a mechanism that guarantees shareholders' rights in the process of redistribution of corporate control and takeovers and ensures a balance of private and public interests in a joint-stock company. It is characteristic of a public company's exit from the public securities market. Given the relative novelty of the relevant procedure in Ukraine, as well as its controversy, it is advisable to study it in more detail. In particular, the author believes that it is advisable to consider the squeeze-out procedure in Ukraine in comparison with the EU for a deeper study. The purpose of the article is to analyze the history of the emergence and development of the squeeze-out institute in selected countries of the world, the mechanism of its implementation in national legislation, law enforcement practice, and to identify proposals for improving legal regulation and implementation. The leading scientific method used by the author in this study is the comparative method. The main objective of the article is to compare squeeze-outs in the EU and Ukraine. The author used the comparative method to obtain the results disclosed in the article and its conclusions. It was the application of the comparative method that made it possible to identify common and distinctive features in Ukrainian and European legislation, as well as to identify differences in the implementation of forced buyouts in EU member states.
References
[2] Carney, W. J. (2000). Merger and Acquisitions: Cases and Materials. United States: Foundation Press.
[3] Chen, C., Zhang, W., and Wan, W. (2018). Regulating squeeze-out techniques by controlling shareholders: The divergence between Hong Kong and Singapore. Journal of Comparative Law Studies, 18 (1): 185-216.
[4] Doroshenko, L., and Pylyavets, V. (2020). Determining the fair price of mandatory sale of shares. Journal of Kyiv University of Law, 3: 156-162.
[5] Follert, F. (2020). Squeeze-Out and Business Valuation in Germany – A Law and Economics Analysis of Judicial Decision-Making. Accounting, Economics, and Law: A Convivium. Available at: https://www.degruyter.com/document/doi/10.1515/ael-2020-0118/html
[6] Franks, J., Mayer, C., and Rossi, S. (2005). Spending less time with the family: the decline of family ownership in the United Kingdom. In Randall K. Morck, A History of Corporate Governance around the World: Family Business Groups to Professional Managers (pp. 581-611). Chicago: University of Chicago Press.
[7] Hodge O'Neal, F. (1961). Arrangements which protect minority shareholders against squeeze-outs. Minnesota Law Review, 1294: 537-557.
[8] Khanna, V., and Varottil, U. (2015). Regulating squeeze-outs in India. The American Journal of Comparative Law, 63 (4): 1009-1051.
[9] Kolohoida, O., and Stafiichuk V. (2018). Procedure for the compulsory sale of shares (squeeze-out): legislation and law enforcement practice. Law of Ukraine, 6: 111-131.
[10] Le Bars, B., and Guyon, Y. (1998). Les associations de défense d'actionnaires et d'investisseurs. Paris: LGDJ, 544p.
[11] Martin, L. (2018). Shareholders’ guide: What are squeeze-out and sell-out rights? BBVA. Available at: https://www.bbva.com/en/shareholders-guide-squeeze-sell-rights/
[12] Polosenko, K. (2022). Compulsory sale of shares at the request of the majority under the new rules. New Ukrainian Law, 6: 118-120.
[13] Rodzynkiewicz, М. (2012). Code of Commercial Companies and Partnerships. Commentary. Warszawa: REA, 1368 p.
[14] Żaba, М. (2020). The squeeze-out regulation in the Polish Code of Commercial Companies. International Journal of Law and Society, 49-56.
[15] Case law, BGH, 12.01.2016 - II ZB 25/14. (2016). Available at: https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BGHandDatum=12.01.2016andAktenzeichen=II%20ZB%2025%2F14
[16] Case law, BVerfG, 07.08.1962 - 1 BvL 16/60. (1962). Available at: https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BVerfGandDatum=07.08.1962andAktenzeichen=1%20BvL%2016%2F60
[17] Case law, BVerfG, 23.08.2000 - 1 BvR 68/95, 1 BvR 147/97. (2000). Available at: https://dejure.org/dienste/vernetzung/rechtsprechung?Gericht=BVerfGandDatum=23.08.2000andAktenzeichen=1%20BvR%2068/95
[18] Cash settlement in case of squeeze-out. (2016). Available at: https://www.simmons-simmons.com/en/publications/ck0ajxlrqnebo0b33qu63yy0p/22-cash-settlement-in-case-of-squeeze-out
[19] Commercial Companies Code. (2000). Available at: https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20000941037/T/D20001037L.pdf
[20] Companies Act (2006). Available at: https://www.legislation.gov.uk/ukpga/2006/46/contents
[21] Constitution of Ukraine, No. 254k/96-ВР. (1996). Available at: https://zakon.rada.gov.ua/laws/show/254%D0%BA/96-%D0%B2%D1%80?lang=en#Text
[22] Court sentence, №65/6/A/2005, File P 25/02. (2005). Available at: https://isap.sejm.gov.pl/isap.nsf/download.xsp/WDU20051241043/T/D20051043TK.pdf
[23] Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids. (2004). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32004L0025
[24] Explanatory Note to the Draft Law of Ukraine ‘On Amendments to Certain Legislative Acts of Ukraine on Improving Corporate Governance in Joint Stock Companies’. (2015). Available at: https://ips.ligazakon.net/document/GH1RY68A?an=3
[25] Law of Ukraine, № 1983-VIII ‘On Amendments to Certain Legislative Acts of Ukraine on Improving Corporate Governance in Joint Stock Companies’. (2017). Available at: https://zakon.rada.gov.ua/laws/show/1983-19#Text
[26] Law of Ukraine, № 2465-IX ‘On joint stock companies’. (2023). Available at: https://zakon.rada.gov.ua/laws/show/2465-20#top
[27] National Depository of Ukraine. (2023). Squeeze-out: copies of public irrevocable claims. Available at: https://www.csd.ua/index.php?option=com_easytableandview=easytabl%20eandid=48andItemid=342andlang=ua
[28] Royal Decree 1066/2007 on the regime for public takeover bids for securities. (2007). Available at: https://www.boe.es/buscar/act.php?id=BOE-A-2007-14483
[29] Securities Acquisition and Takeover Act. (2001). Available at: https://www.gesetze-im-internet.de/wp_g/BJNR382210001.html
[30] Stock Corporation Act. (1965). Available at: https://www.gesetze-im-internet.de/aktg/
[31] The City Code on Takeovers and Mergers. (1970). Available at: https://www.thetakeoverpanel.org.uk/wp-content/uploads/2023/02/The-Take-Over_Bookmarked_20.2.23.1.pdf?v=20Feb2023
[32] Transformation Act (UmwG). (1994). Available at: https://www.gesetze-im-internet.de/umwg_1995/
Non-Exclusive License under Attribution 4.0 International Public License (CC BY 4.0):
This ‘Article’ is distributed under the terms of the license CC-BY 4.0., which lets others distribute, remix, adapt, and build upon this article, even commercially, as long as they credit this article for the original creation. ASERS Publishing will be acknowledged as the first publisher of the Article and a link to the appropriate bibliographic citation (authors, article title, volume issue, page numbers, DOI, and the link to the Published Article on ASERS Publishing’ Platform) must be maintained.