Public Offering of Securities (OPV) and Takeover Bid (OPA)

Posted on Sep 9, 2024 in Law & Jurisprudence

OPV

Market: Stock Exchange

The first distinction to make regarding the law is whether the securities are listed or unlisted. Article 61, later developed by OPventa, regulates securities not admitted to trading on a securities market. This is because in the 90s, companies went public before making a public offering of securities, thinking that the announcement of the actions would lead to greater equity placements. According to stock market law, the implementation of structuring an IPO should be applicable to values within the primary market.

For any issue of securities to be offered to the public, it must be officially registered in the stock market. For an issue to be registered with the CNMV, the following is necessary:

  • Send a letter communicating the intention to offer the public a number of shares.
  • Submit documents of the agreements of the general meeting, the characteristics of securities issued, and rights and obligations.
  • Provide an audit.
  • Implement the brochure subject to the Ministry of Economy models.

One issue that may arise is that no rule of stock market law states that the bidder must be the issuing company itself. Until now, we have been talking about something that is an off-market system because if traded through the market, it is normal. In any case, the law does not distinguish between the two values. You may have a person taking quoted shares and offering them for sale at a price lower than the market price, organizing an IPO.

The difference between OPV for listed and unlisted securities are formal differences. The difference is simply whether they are traded in primary or secondary markets. The obvious: shares must be issued. When the share is not listed (primary market), the values are made available to the public, put into service, and later quoted on the secondary market. That is, the IPO market is not unique to the primary market.

We could conclude the purposes of an IPO:

  • Privatization: Iberia, Telefonica… there was a wave.
  • Companies are encouraged to go public because it is normal to produce an IPO that produces new shareholders (the minimum number is 100). The more shares, the more liquidity.
  • Greater liquidity.
  • Divestitures occur when companies decide to drop very important packets.

Definition of the concepts of the IPO:

  • Check with the CNMV and fill in the brochure provided by the CNMV.
  • This is a structured, regulated offer; it must meet all the formalities.
  • Any public offering is divided into three sections:
    • National or international tranche: A portion of the shares must go to Spain.
    • Stretch for non-professionals: Non-professional investors, it’s called retail. Problems that arise: when people think you are offering something very good, they buy more than what you want (oversubscription).
    • Institutional tranche: Public institutions that are in the country.

Advertising

You cannot post a single ad without the approval of the Commission. During the offering period, the company publishes the “research,” a summary of the company’s benefits that must go through the committee. If the offer relates to shares listed on stock exchanges, it is subject to tight marking to avoid encountering problems that threaten supply.

Entities qualified to carry out management activities, placement, and underwriting of an IPO.

  • If these activities are reserved for one: savings accounts, credit unions, banks can bear the OPV. Assurance (which fail to drop) is reserved for banks.

OPA

The opposite operation, where people try to acquire a significant percentage (25-30%), should be done as follows.

Regulated for the first time in 1848, up to 91. It is never mandatory, but when people try to purchase a significant percentage of the capital of the company, it forces them to make a bid. (When they should make a bid)

Cases in which there is a natural or legal person who may have a non-sought percentage:

  • For example: Buy another company which holds shares in another company which holds shares of another company that also should make a bid or sell within six months.

Where a natural person or legal entity has 50% or more of the capital and tries to modify the statutes of the company, they cannot do it without making a takeover bid that affects all shareholders. Where a company requests the CNMV to exclude their shares from the stock market, the CNMV is going to put as the obligation of a takeover bid where the price is set taking into account the theoretical value, the net asset value, the average price, and the price if there has been a takeover. With these four parameters, the CNMV will set the price for this company that wants to exclude the shares from the quote.

Recruitment of the securities markets.

The typical stock market business is trading securities; transactions will be considered by title transfers of sale (Article).

Features of this business:

  • Defined object: You can only buy and sell securities previously admitted to trading.
  • Typical Procurement: Contracts are made in compliance with the time and conditions under the rules of each market.
  • Public procurement: It is carried out in the stock market; therefore, prices are public and must be declared.
  • Through intermediaries: People cannot buy and sell shares directly; a middleman must intervene. The stock transmission cannot be done by a commercial notary unless trading is suspended.

Irreinvindicabilidad of the shares acquired: Vindication is claiming, and what is not claimable is called irreinvindicable. It is a basic principle of the value system. The person who buys shares cannot have their ownership of the shares claimed. The typical class of the market is the normal sale of shares. In our laws, there are different kinds of trading: credit, forward transactions (prohibited from 40).