CORPORATE TAKE-OVER LAW
Filing of ownership information.
Registration of take-over offers.
Filing of solicitation materials.
Fraudulent and deceptive practices.
Limitations on offerors.
Administration, rules and orders.
Fees and expenses.
Application of chapter.
Application of securities law.
In this chapter:
“Division" means the division of securities.
“Equity security" means any shares of stock or similar securities, or any securities convertible into such securities, or carrying any warrant or right to subscribe to or purchase such securities, or any such warrant or right, or any other security which, for the protection of investors, is deemed an equity security pursuant to rule of the division.
“Offeror" means a person who makes or in any way participates in making a take-over offer and includes all affiliates and associates of that person, and all persons acting jointly or in concert for the purpose of acquiring, holding or disposing of or exercising any voting rights attached to the equity securities for which a take-over offer is made. “Offeror" does not include any bank or broker-dealer loaning funds to an offeror in the ordinary course of its business, or any bank, broker-dealer, attorney, accountant, consultant, employee, or other person furnishing information or advice to or performing ministerial duties for an offeror, and not otherwise participating in the take-over offer.
“Offeree" means a record or beneficial owner of a security that an offeror acquires, or offers or proposes to acquire, in connection with a take-over offer.
“Take-over offer" means the offer to acquire or the acquisition of any equity security of a target company, pursuant to a tender offer or request or invitation for tenders, if after the acquisition thereof the offeror would be directly or indirectly a beneficial owner of more than 5 percent of any class of the outstanding equity securities of the issuer. “Take-over offer" does not include an offer or acquisition of any equity security of a target company pursuant to:
Brokers' transactions effected by or through a broker-dealer in the ordinary course of its business.
An exchange offer for securities of another issuer, if the offer is exempted from registration under ch. 551
and does not involve any public offering under the securities act of 1933.
An offer made to not more than 10 persons in this state during any period of 12 consecutive months.
An offer made to all the stockholders of the target company, if the number of its stockholders does not exceed 100 at the time of the offer.
An offer if the acquisition of any equity security pursuant thereto, together with all other acquisitions by the offeror of securities of the same class during the preceding 12 months, would not exceed 2 percent of that class of the outstanding equity securities of the issuer.
An offer by the target company to acquire its own equity securities.
“Target company" means a corporation or other issuer of securities:
Which is organized under the laws of this state or has its principal office in this state;
Which has substantial assets located in this state;
Whose equity securities of any class are or have been registered under ch. 551
or predecessor laws, or are registered under section 12 of the securities exchange act of 1934 or which is an entity identified in s. 551.201 (3)
Which has at least 100 record holders of securities qualifying under par. (c)
who are residents of this state or which has at least 5 percent of the securities qualifying under par. (c)
held by residents of this state.
See also s. DFI-Sec 21.01
, Wis. adm. code.
State regulation of tender offers. Moylan, 58 MLR 687.
Challenges to state takeover laws: Preemption and the commerce clause. 64 MLR 657 (1981).
The corporate take-over game: A continuing search for constitutional state take-over regulation. Pelisek and Christiansen, WBB July, 1986.
Regulation of tender offers in Wisconsin and the effect of Great Western v. Kidwell: The day of reckoning approaches. Harth, 1978 WLR 833.
Risks and rewards of regulating corporate takeovers. (Symposium) 1988 WLR 353 (1988).
Filing of ownership information. 552.03(1)(1)
Any person who, after acquiring directly or indirectly the beneficial ownership of any equity security of a target company, is directly or indirectly a beneficial owner of more than 5 percent of any class of the outstanding equity securities of the issuer shall, within 10 days after such acquisition, file with the division on a form prescribed by the division a statement containing the following information and such additional information as the division by rule prescribes:
The identity and background of all persons on whose behalf the acquisition of any equity security of the target company has been or is to be effected.
The source and amount of funds or other consideration used or to be used in acquiring any equity security, including a statement describing any securities which are being offered in exchange for the equity securities of the target company, and if any part of the acquisition price is or will be represented by borrowed funds or other consideration, a description of the transaction and the names of the parties thereto.
If the purpose of the acquisition is to gain control of the target company, a statement of any plans or proposals which such person has, upon gaining control, to liquidate the target company, to sell its assets, to effect its merger or consolidation, to change the location of its principal executive office or of a material portion of its business activities, to change its management or policies of employment, to materially alter its relationship with suppliers or customers or the communities in which it operates, or to make any other major change in its business, corporate structure, management or personnel and other material information that would affect the shareholders' evaluation of the acquisition.
The number of shares or units of any equity security of the target company of which each such person and each associate of such person and each person included as an offeror is the beneficial owner or which each such person has a right to acquire, directly or indirectly, together with the name and address of each such person.
Material information as to any contracts, arrangements or understandings with any person with respect to any equity security of the target company, including transfers of any equity security, joint ventures, loan or option arrangements, puts and calls, guarantees of loan, guarantees against loss, guarantees of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements or understandings have been entered into.
If the target company is an issuer the acquisition of whose equity securities is subject to the requirements of s. 13 (d) of the securities exchange act of 1934, any person may file with the commissioner a signed copy of the statement prescribed therein in lieu of the statement prescribed in sub. (1)
Any person may file with the division, in lieu of the statement prescribed in sub. (1)
and unless otherwise ordered by the division, a statement containing the person's name and address, the number of shares or units of any equity security of the target company which are beneficially owned directly or indirectly by the person and each of the person's associates, the date of their acquisition and such other information as the division may by rule prescribe, if the person certifies that such securities were acquired by the person in the ordinary course of the person's business and not for the purpose or having the effect of changing or influencing the control of the issuer nor in connection with or as a participant in any transaction having such purpose or effect, and that the person does not intend to make a take-over offer involving the target company.
If any material change occurs in the facts set forth in the statement, the person filing the statement shall, within 10 days thereafter, file with the division an amendment describing the change, in accordance with rules adopted by the division.
Each person required to file any statement or amendment thereto with the division under this section shall send a signed copy of such statement or amendment by certified mail to the target company at its principal office not later than the date of filing.
No person required to file any ownership statement under this section, who is delinquent in the filing of such statement, may file a registration statement relating to a proposed take-over offer for a period of 60 days after the date of filing of the ownership statement, except as may be permitted by order of the division.
Registration of take-over offers. 552.05(1)(1)
It is unlawful for any person to make a take-over offer involving a target company in this state, or to acquire any equity securities of a target company pursuant to the offer, unless the offer is effective under this chapter or is exempted by rule or order of the division. The division may by an exemption order, with or without petition of the offeror, permit a take-over offer to be made without prior registration under this chapter if the offeror's purchase of any securities tendered incident to the offer is conditioned upon subsequent registration under this chapter. The division may hold a hearing under sub. (4)
with respect to the registration of a take-over offer which is subject to an exemption order. Before a take-over offer becomes effective under this chapter, the offeror shall file with the division a registration statement containing the information prescribed in sub. (2)
, and send a copy of the registration statement by certified mail to the target company at its principal office and publicly disclose the material terms of the proposed offer, not later than the date of filing of the registration statement.
The registration statement shall be filed on forms prescribed by the division, and shall be accompanied by a consent by the offeror to service of process specified in s. 551.611
and the filing fee specified in s. 552.15 (1)
, and shall contain the following information and such additional information as the division by rule prescribes:
All of the information specified in s. 552.03 (1)
, any part of which may be incorporated by reference to the extent that it was previously filed.
Three copies of the proposed take-over offer, including all material terms thereof, in the form proposed to be published or sent or delivered to security holders of the target company.
Material information concerning the organization and operations of any offeror which is a corporation, including the year, form and jurisdiction of its organization, a description of each class of its capital stock and long-term debt, a description of the business done by the offeror and its subsidiaries and any material changes therein during the past 3 years, a description of the location and character of the principal properties of the offeror and its subsidiaries, a description of any material pending legal or administrative proceedings in which the offeror or any of its subsidiaries is a party, the names of all directors and executive officers of the offeror and their material business activities and affiliations during the past 3 years, and financial statements of the offeror for its 3 most recent annual accounting periods and any current period.
Material information concerning the identity and background of any offeror who is not a corporation, including the offeror's material business activities and affiliations during the past 3 years, and a description of any material pending legal or administrative proceedings in which the offeror is a party.
The division may require the offeror to file any other documents, exhibits and information that the division deems material to the take-over offer, and the division may permit the omission of any of the information specified in sub. (2)
if the division determines that such information is not required for the protection of offerees. The division may by order summarily delay the effective date of the offer if the division determines that the registration statement does not contain all of the information specified in sub. (2)
or does not provide full disclosure to offerees of all material information concerning the offer.
A take-over offer becomes effective 10 days after the date of filing the registration statement with the division unless delayed by order, or unless prior thereto the division calls a hearing with respect to the offer. The division may call a hearing if it is necessary or appropriate for the protection of offerees in this state. Within 5 days after the filing of the registration statement, the target company, acting through its board of directors, may petition the division to hold a hearing with respect to the take-over offer, except that the target company may not request a hearing if it has requested a hearing with respect to the take-over offer under a law of any other state similar to this chapter. The petition shall set forth the specific basis asserted under sub. (5)
for denying, delaying or requiring amendment of the registration statement. Within 72 hours after the petition is filed the division shall either call a hearing or notify the target company in writing or by telephone or telegraph why a hearing was not called. If a hearing is called by the division and the target company subsequently requests a hearing with respect to the take-over offer under a law of another state similar to this chapter the division shall dismiss any hearing proceedings under this chapter. If a hearing is called, the offer is not effective until registered by order of the division, except that the division may issue an exemption order permitting a conditional take-over offer under sub. (1)
Any hearing called by the division under this section shall be held within 20 days of the date of filing of the registration statement under sub. (1)
, and any determination made following the hearing shall be made within 30 days after the filing, unless extended by order of the division for the convenience of the parties or for the protection of offerees in this state, but an extension may not exceed offering period limitations relating to take-over offers prescribed by the securities exchange act of 1934 or rules and regulations under that act, if the take-over offer is subject to the securities exchange act of 1934. If, following the hearing, the division finds that the take-over offer fails to provide for full and fair disclosure to offerees of all material information concerning the offer, the offer will not be made to all stockholders on substantially equal terms, the offer is in violation of ch. 551
or this chapter or the offeror is delinquent in the filing of an ownership information statement or has filed an ownership information statement that contains a false statement of a material fact or omits to state a material fact necessary to make the statements made not misleading, the division may, by order, deny registration of the offer, prohibit the offeror from filing a registration statement relating to a proposed take-over offer involving the target company for a period of up to 180 days or permit the take-over offer to be amended and by order register the amended take-over offer.
If the division does not enter an order denying or postponing registration under sub. (5)
, the division shall, by order, register the take-over offer or amended take-over offer. Registration of the take-over offer is not approval of the take-over offer by the division.
Notwithstanding s. 552.01 (6) (d)
, this section applies only to a target company that, as of the earlier of the initial public disclosure of the take-over offer by or on behalf of the offeror or the distribution of solicitation materials relating to the take-over offer by or on behalf of the offeror, meets the requirements of any one of the following:
The target company does not have any of its securities registered under section 12 of the securities exchange act of 1934.
The target company has at least 51 percent of its securities specified in s. 552.01 (6) (c)
held of record by residents of this state.
The target company has at least 33 percent of its securities specified in s. 552.01 (6) (c)
held of record by residents of this state, has its principal office in this state and its business or operations have a substantial economic effect in this state.
See also ss. DFI-Sec 21.01
, Wis. adm. code.
Filing of solicitation materials. 552.07(1)(1)
Copies of all advertisements, circulars, letters or other materials published by the offeror or the target company, soliciting or requesting the acceptance or rejection of the take-over offer, shall be filed with the division and sent to the target company or offeror, respectively, not later than the time copies of such solicitation materials are first published or used or sent to security holders of the target company.
Solicitation materials used in connection with a take-over offer shall not contain any false statement of a material fact or omit to state a material fact necessary to make the statements therein not misleading. The division may by rule or order prohibit the use of any solicitation materials deemed false or misleading.
History: 1971 c. 300
; 1995 a. 27
See also s. DFI-Sec 25.01
, Wis. adm. code.
The registration and filing requirements of ss. 552.05
do not apply to a take-over offer subject to this chapter if the division determines by order that another jurisdiction has statutes or rules which are applicable to the take-over offer and are being applied which afford protection to security holders located in this state substantially equal to the protection afforded security holders by this chapter. The issuance of an order under this section does not prohibit the division from participating in any proceeding in the other jurisdiction to the extent necessary to protect security holders in this state.
History: 1981 c. 16
; 1995 a. 27