What is required upon the acquisition of 10% of the voting shares of a company?

What is required upon the acquisition of 10% of the voting shares of a company?

• A. File a report and issue a press release
• B. Notify the company board of directors
• C. Obtain shareholder approval
• D. Conduct an independent audit

Answer: (A)

When an individual or entity acquires 10% of the voting shares in a company, it triggers specific disclosure requirements to ensure transparency in the market. Filing a report with regulatory bodies is necessary because this acquisition may influence the company's control dynamics and potentially affect other shareholders. This requirement is critical for maintaining fair and equitable securities markets.

Issuing a press release is also part of this process to inform the public about significant changes in share ownership, which can impact share price and investor sentiment. Transparency is key to upholding the integrity of financial markets and protecting investors' interests. Therefore, the requirement to file a report and issue a press release upon acquiring 10% of the voting shares ensures that all stakeholders are informed and that the market operates efficiently and fairly.