Takeovers and acquisitions in Lithuania: minority shareholders’ rights

Shareholders who are regarded as minority shareholders have certain rights in Lithuania which should be taken into account when planning a company takeover or taking possible anti-takeover measures within your own company.

Protecting minority shareholders’ rights

In Lithuania, protection of rights of minority shareholders is regulated by the Civil Code, the Law on Markets in Financial Instruments and the Law on Securities.

Minority shareholders of public companies are offered protection through a mandatory tender offer. As laid down in the Law on Securities, if a natural or legal person acquires at least 40 per cent of all shares of voting rights in the company (the issuer), which gives him a certain degree of control of the company, this person must announce and implement a mandatory takeover bid to protect the minority shareholder rights.

Moreover, if minority shareholders have evidence that the decision made by the majority disregards the good governance of the company, was made in bad faith and maliciously, minority shareholder (owner of at least one share) can file a civil claim in court for the invalidation of said decision.

Greenmailing

This power possessed by minority of shareholders should be taken into account for it can also be used in bad faith. Greenmail is a term that refers to the money which is paid by a target company to another company (also called corporate raider) that has for example acquired majority of the target company's stock. In this particular scenario the greenmail payment would be made in an effort to stop the unfavourable actions made by new minority shareholders. It should be also noted that rules of notification don´t apply unless a person acquires either directly or indirectly a holding in a stock company in an amount which ensures at least 5% of the voting stocks.


Please do not hesitate to contact us if you have any questions about minority shareholders rights in Lithuania or you want to protect your company from possible corporate raids.

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