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All-Holders Rule: A Comprehensive Guide to Its Legal Definition
Definition & Meaning
The all-holders rule is a regulation established by the Securities and Exchange Commission (SEC) that mandates equal treatment of all holders of a specific class of securities. According to this rule, when a company makes a tender offer for its shares, it must extend the offer to every holder of that class of shares, ensuring that no shareholder is excluded from the opportunity to participate. This rule is codified in 17 CFR 240.14d-10 and aims to promote fairness in securities transactions.
Table of content
Legal Use & context
The all-holders rule is primarily relevant in the context of securities law, particularly during tender offers, mergers, and acquisitions. It ensures that all shareholders receive the same offer, which is crucial for maintaining trust and transparency in financial markets. Individuals and companies involved in securities transactions may need to understand this rule when drafting or responding to tender offers. Users can utilize legal templates from US Legal Forms to assist in preparing documents related to tender offers and compliance with this rule.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A publicly traded company decides to buy back its shares. According to the all-holders rule, the company must offer the same price and terms to all shareholders, ensuring that no one is left out of the offer.
Example 2: If a company is acquired and makes a tender offer for its shares, it must extend that offer to all shareholders of the target company, providing equal opportunity to sell their shares at the offered price. (hypothetical example)
Relevant laws & statutes
The all-holders rule is codified under 17 CFR 240.14d-10. This regulation outlines the requirements for tender offers and ensures that all security holders are treated equally during such offers.
Comparison with related terms
Term
Definition
Difference
All-Holders Rule
Requires equal treatment of all security holders in a tender offer.
Focuses on fairness in tender offers.
Tender Offer
A public offer to purchase some or all shareholders' shares at a specified price.
Does not inherently require equal treatment unless specified by the all-holders rule.
Pro Rata Offer
An offer where shares are purchased in proportion to the number of shares held.
May not apply equally to all holders like the all-holders rule.
Common misunderstandings
What to do if this term applies to you
If you are involved in a tender offer or are a shareholder in a company making such an offer, ensure that you understand your rights under the all-holders rule. If you believe your rights are not being honored, consider consulting with a legal professional. Additionally, you can explore US Legal Forms for templates that can help you navigate the documentation and compliance related to tender offers.
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