Law on the Takeover of Joint Stock Companies – Unofficial Consolidated Text (NN, Nos. 109/07, 36/09, 108/12 and 148/13)

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LAW ON THE TAKEOVER OF JOINT STOCK COMPANIES
(Official Gazette Nos. 109/07, 36/09, 108/12, 90/13 – Constitutional Court Decision No.: U-I-4469/2008 and others, 99/13 – Constitutional Court Decision No.: U-I-2470/2010 and others, 148/13) (unofficial consolidated text) GENERAL PROVISIONS
Article 1.
(1) This Law regulates the conditions for making offers to acquire target companies, the takeover procedure, the rights and obligations of participants in the takeover process, and the supervision of the takeover of target companies.
(2) This Law transposes Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids (OJ L 142, 30. 4. 2004.) into the legal order of the Republic of Croatia.
DEFINITIONS
Article 2.
(1) For the purposes of this Law, certain terms have the following meanings:

1. target company is:
   a) a joint stock company with its registered office in the Republic of Croatia:
   – whose voting shares are admitted to trading on a regulated market in the Republic of Croatia within the meaning of the Capital Market Act, or – whose voting shares are admitted to trading on a regulated market of a Member State but not on a regulated market in the Republic of Croatia, b) a joint stock company with its registered office in another Member State whose voting shares are admitted to trading on a regulated market of that Member State within the meaning of Article 4(1)(14) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Directives 85/611/EEC and 93/6/EEC of the Council and Directive 2000/12/EC of the European Parliament and of the Council on the repeal of Directive 93/22/EEC (OJ EU No. L 145 p. 1.),
2. takeover bid is a publicly announced offer, mandatory or voluntary, addressed to all shareholders of the target company for the acquisition of all voting shares, subject to and in the manner prescribed by this Law. A takeover bid may simultaneously be addressed for the acquisition of preferred shares without voting rights,
3. acquirer is a natural or legal person that acquires or has acquired voting shares of the target company,
4. offeror is a natural or legal person that is obliged under the provisions of this Law to publish a takeover bid or has published its intention to publish a takeover bid,
5. voting shares are all issued shares of the target company carrying voting rights,

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6. depository is a central clearing and depository company or a credit institution with its registered office in the Republic of Croatia,
7. Agency is the Croatian Financial Services Supervisory Agency (HFSA),
8. Member States are states of the European Economic Area.
GENERAL PRINCIPLES
Article 3.
(1) In the takeover process and in exercising rights and obligations, participants must adhere to the following principles:

1. shareholders of the target company holding shares of the same class to which the takeover bid relates have an equal position in the takeover process,
2. shareholders of the target company to whom the takeover bid relates must have sufficient time and information to make an informed decision on the takeover bid,
3. the management and supervisory board of the target company must act in the best interests of the target company during the takeover process,
4. the offeror and the target company must conduct the takeover process as quickly as possible, and the target company must not be prevented from conducting its business for longer than prescribed,
5. trading in the shares of the offeror, target company, and other participating companies must not cause market disruption,
6. the offeror may publish a takeover bid only after having fully secured the monetary consideration and other types of consideration prescribed by this Law.
   (2) When conducting procedures in accordance with this Law, the Agency acts exclusively in the public interest.
   PUBLICATION
   Article 4.
   (1) When this Law prescribes an obligation to publish, the publication must be made through the market operator of the regulated market on which the target company's shares are admitted to trading and in "Narodne novine" (Official Gazette).
   (2) The obligation to publish through the market operator of the regulated market on which the target company's shares are admitted to trading is deemed fulfilled by submitting the notice referred to in Article 9(3) and Article 10(2) of this Law, which the market operator is obliged to publish promptly on its website. The obligation to publish in "Narodne novine" is deemed fulfilled if, before the expiry of the deadline, the advertiser has accepted the order for publication in the next following issue. (3) Prior to the publication referred to in paragraph 2 of this article, the market operator may use information from the received notice solely for the purpose of deciding whether to suspend trading in the target company's shares. (4) Exceptionally from the provision of paragraph 2 of this article, in cases of modification of a takeover bid, competing bids, and withdrawal of a takeover bid, the obligation to publish is deemed fulfilled by publication through the market operator of the regulated market on which the target company's shares are admitted to trading. (5) Whenever, in accordance with this Law, there is an obligation to publish in "Narodne novine", proof of acceptance of the publication order and proof of publication are submitted to the Agency without delay. (6) Except in cases of mandatory publication prescribed by this Law, the offeror and persons acting together with it as well as members of the management and supervisory board of the target company are prohibited from any other communication with the public. ACTING IN CONCERT
   Article 5.
   (1) Persons acting in concert are natural and/or legal persons that cooperate with each other based on an agreement, express or implied, oral or written, aimed at acquiring voting shares, jointly exercising voting rights, or preventing another person from conducting a takeover process, or that cooperate with the target company based on an agreement, express or implied, oral or written, aimed at preventing another person from conducting a takeover process. (2) The following persons are deemed to act in concert:
7. persons linked only by circumstances relating to the acquisition of shares, such as:
   – time or period in which they acquired shares, – place of acquisition, – method of acquisition, – provisions in the acquisition agreements, – value of acquired shares, – other circumstances indicating consistency in acquisition or common intention of persons,
8. members of the management or supervisory boards of companies acting in concert,
9. members of the management or supervisory boards with companies in which they are members,
10. persons who proposed to the general meeting of the target company the appointment or dismissal of members of the management or supervisory board, or other decisions requiring a three-quarters majority of votes present at the general meeting and who voted in favor of adopting such decisions.
    (3) Legal persons, as well as natural and/or legal persons, act in concert when one of them directly or indirectly controls another or other legal persons.
    (4) A natural and/or legal person is deemed to control a legal person if it has:
11. directly or indirectly more than 25% of the share capital of the legal person, or
12. directly or indirectly more than 25% of voting rights in the general meeting of the legal person, or
13. the right to manage the business and financial policies of the legal person based on powers from the statutes or agreements, or
14. directly or indirectly predominant influence over business conduct and decision-making.
    (5) Trading companies act in concert if they are interconnected within the meaning of the Companies Act.

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(6) Exceptionally from paragraphs 4 and 5 of this article, controlling and subsidiary persons in a control relationship as defined in paragraph 4, or interconnected companies as defined in paragraph 5, are not deemed to act in concert with respect to the target company, when the subsidiary or interconnected company is:
– an investment fund management company, domestic or with its registered office in another Member State, established and operating in accordance with regulations governing the establishment and operation of investment fund management companies, and funds managed by it hold or acquire voting shares of the target company, – a pension fund management company, domestic or with its registered office in another Member State, established and operating in accordance with regulations governing the establishment and operation of mandatory and voluntary pension fund management companies, and funds managed by it hold or acquire voting shares of the target company. The exception in the first sentence of this paragraph applies provided that the aforementioned subsidiary or interconnected company, independently of the controlling person or interconnected companies, exercises voting rights from shares held by funds managed in accordance with regulations governing the establishment and operation of investment fund management companies and pension fund management companies. (7) The independence condition in paragraph 6, second sentence, is deemed fulfilled if the following conditions are met:

1. the controlling person must not interfere with the exercise of voting rights belonging to the investment fund management company or pension fund management company referred to in paragraph 6, either by giving direct or indirect instructions, or in any other manner,
2. the investment fund management company or pension fund management company referred to in paragraph 6 must independently and without interference from the controlling person exercise voting rights from assets under its management.
   The conditions in points 1 and 2 of this paragraph apply mutatis mutandis to the interconnected companies referred to in paragraph 5.
   (8) For the purposes of paragraph 7, point 1, and paragraph 10 of this article, direct instruction is any instruction from the controlling person or other controlled company and its controlling person, as well as any instruction from the interconnected company referred to in paragraph 5, specifying how the investment fund management company or pension fund management company referred to in paragraph 6 exercises voting rights in a specific case. Indirect instruction is any general or specific instruction from the controlling person or other controlled company and its controlling person, as well as any instruction from the interconnected company referred to in paragraph 5, regardless of form, that restricts the independence of the investment fund management company or pension fund management company referred to in paragraph 6 in exercising voting rights for the purpose of achieving certain business interests of the controlling person or other controlled company and its controlling person, as well as the interconnected company referred to in paragraph 5. (9) Exceptionally from paragraphs 4 and 5 of this article, controlling and subsidiary persons in a control relationship as defined in paragraph 4, or interconnected companies as defined in paragraph 5, are not deemed to act in concert with respect to the target company, when the subsidiary or interconnected person referred to in paragraph 5 is an investment firm, investment fund management company, or credit institution that holds voting rights from shares of the target company which it manages as part of portfolio management services, provided that the investment firm, investment fund management company, or credit institution:
   – holds a license for providing portfolio management services issued by the Agency or the competent authority of a Member State, – can exercise voting rights only upon receiving client instructions in written form or using electronic means, or, if it can exercise voting rights without client instructions, by applying appropriate measures ensuring that portfolio management services are provided independently of other services under conditions equivalent to those prescribed by regulations governing the establishment and operation of investment firms, investment fund management companies, and credit institutions, – exercises voting rights independently of the controlling person or interconnected company referred to in paragraph 5, provided that the conditions in paragraph 7 of this article are met. (10) The exceptions in paragraphs 6 and 9 of this article do not apply when the investment fund management company, investment firm, or credit institution manages voting rights from shares of the target company belonging to its controlling person or other controlled company and its controlling person, or interconnected company referred to in paragraph 5, whereby those voting rights cannot be exercised independently by the management firm, investment firm, or credit institution at its own discretion, but must be exercised upon direct or indirect instruction from the controlling person or other controlled company and its controlling person, or interconnected company referred to in paragraph 5. (11) The exceptions in paragraphs 6 and 9 of this article apply mutatis mutandis to the following subsidiary persons or interconnected companies:
   a) investment fund management or pension fund management companies with registered offices in third countries that hold operating licenses and would, if domiciled in the Republic of Croatia, seek licenses for providing open-ended fund public offering and/or pension fund services, in accordance with regulations governing the establishment and operation of investment and pension funds, and b) companies with registered offices in third countries that hold licenses for providing portfolio management services and would, if domiciled in the Republic of Croatia, seek licenses for providing portfolio management services, in accordance with regulations governing the establishment and operation of investment firms, fund management companies, and credit institutions. The exceptions in this paragraph apply provided that the independence conditions of such companies prescribed by the law of the third country are identical to those in paragraphs 6 to 9 of this article. (12) For the purposes of paragraph 11 of this article, independence conditions prescribed by the law of the third country where the legal entity referred to in paragraph 10 is domiciled are deemed identical to those in paragraphs 6 to 9 of this article if the third-country regulations stipulate that the legal entity referred to in paragraph 11 must be autonomous in all cases and independently exercise voting rights from assets under its management, regardless of the controlling person or any other subsidiary of the controlling person, and must disregard the interests of the controlling person or any other subsidiary in every case of conflict of interest. (13) The controlling company of the subsidiary referred to in paragraph 6, or interconnected company referred to in paragraph 5, is obliged, upon request by the Agency and in connection with the