Definition
A mandatory bid rule requires a person who acquires control of a public company to extend a tender offer to all remaining shareholders at a defined minimum price. Common in non-U.S. jurisdictions:
- EU — typical threshold 30%; minimum price is the highest price paid by the acquirer in the prior 6–12 months
- UK Takeover Code — Rule 9 mandatory offer at 30%
- Hong Kong — 30%
- Australia — 20%
- Canada — varies by province; 20% in many
Why it matters
Mandatory bid rules protect minority shareholders by ensuring everyone gets the chance to exit at the price the controlling acquirer paid. They’re the structural alternative to the U.S. partial-tender-offer / two-tier framework.
U.S. distinction
The U.S. has no federal mandatory bid rule. State law occasionally imposes equivalents (e.g., fair-price provisions), but partial offers and creeping control changes are technically permitted under federal law subject to the Williams Act disclosure regime.