Drafting Drag along Triggers in International Shareholders Agreements
Drafting cross-border drag-along triggers requires verifiable voting thresholds, explicit cash valuation floors, and deeded power-of-attorney execution clamp mechanics.
UK Companies Act 2006 Section 979
Meaning
Statutory right for a majority bidder to force the remaining minority shareholders to sell their shares after a successful takeover bid. The uk companies act 2006 section 979 provides a clean exit for the acquirer by allowing them to reach one hundred percent ownership once they have secured ninety percent of the stock.
Squeezeout Power
The bidder must have acquired or agreed to acquire at least ninety percent in value of the shares and ninety percent of the voting rights to trigger the process. This power is intended to prevent a small group of holdout shareholders from blocking the full integration of the target company into the group of the buyer.
Notice Requirement
A formal notice must be sent to every remaining shareholder within a strict timeframe after the ninety percent threshold is met. This document informs the minority holders that the bidder is exercising their right to acquire the shares on the same terms as the original offer. The shareholders then have a limited period to challenge the process in court if they believe the offer was not made in good faith.
This notification process must be followed exactly to ensure the transfer of shares is legally enforceable.
Share Acquisition
The bidder pays the consideration to the company to be held in trust for the minority shareholders if they do not respond. This ensures that the shares are transferred to the bidder immediately and the minority holders can claim their payment later.