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the shares of other shareholders. Thus, in principle, acquiring manage-
ment control of a public company shall trigger the mandatory offer.
Management Control
Art. 26 CML specifies the events which confer management con-
trol. Accordingly, shareholders (acting individually or in concert with
third persons, directly or indirectly) holding more than fifty percent of
the voting rights or the right to choose or nominate the majority of the
members of the board of directors are deemed to hold management
control. Despite the absence of a share transfer, the CML treats obtain-
ing management control through agreements executed between share-
holders equally as a trigger event for mandatory offers. Obtaining a
majority of the voting rights in the presence of privileged shares grant-
ing their holders the privileged right to elect or nominate board mem-
bers may not however suffice to gain management control. In this case,
such share purchases shall not be considered within the scope of Art.
26 CML.
Other Events Triggering a Mandatory Offer
The Board may oblige the controlling shareholders who cause the
company to be deprived of a concession related to its scope of activi-
ties, or whose license to operate under the Banking Law No. 5411 is
revoked, or whose shareholding rights, management and audit is con-
ferred to the Savings Deposit Insurance Fund (Art. 25/4 CML).
Similarly, the Board is authorized to request mandatory offers in the
event investment companies transform into a different company type
(Art. 25/5 CML). Art. 33/4 CML further authorizes the Board to oblige
controlling shareholders of public companies who will be delisted to
make a mandatory offer.
Sanctions
CML provides for two sanctions in the event the mandatory offer
obligation is not respected. Pursuant to Art. 103/3 CML, in the event
the Board grants an additional time period, if the shareholder fails to
make a mandatory offer when that period lapses, the Board may sanc-
tion the shareholder with an administrative monetary fine up to the
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