Are minority shareholders truly protected by the Mandatory Bid Rule in most European Countries?

MBR is triggered when a shareholder goes over 30% (most common threshold) of ownership, then she must be ready to offer an equitable price to the rest. MBR is present in most countries around the world, but important exceptions are the US and South Korea!

Unique GCGC governance conference Columbia Law School to discuss different governance setups across countries. A cool mix of law and finance scholars together.

3 learnings prepping the discussion:

#1 MBR started in the UK in 72 with the aim of truly protecting minority shareholders from potentially abusive controlling sh. HOWEVER, now, it may operate as an antitakeover devise. Controlling shareholders can protect themselves from silent accumulation of ownership by others.

#2 After the adoption of this rule in a country, Lee, Kim & Kim 2003 find clear bunching below the MBR threshold. Many shareholders buy shares to be right below… I interpret this bunching as a cost.

#3 As a company, if you have shareholders right below the threshold, they are clearly potential buyers — just waiting for the right and opportunistic timing to jump the fence.