What triggers a mandatory bid in regulatory practice?

A mandatory bid is triggered by a breach of effective control, which occurs when an individual or entity obtains a controlling interest in a company, typically exceeding a specified percentage of shares, without making an offer to all shareholders. This regulatory measure is designed to protect minority shareholders by ensuring that they have the opportunity to exit their investment at a fair price when there is a significant change in ownership or control of the company.

When a controlling interest is acquired, it is perceived that the new controlling party will have the power to make decisions that could adversely affect the interests of minority shareholders. Thus, requiring a mandatory bid ensures transparency and fairness, enabling shareholders to benefit from the premium typically associated with control transactions.

In contrast, the other options do not directly trigger mandatory bids. Failure to disclose information might lead to regulatory penalties or enforcement actions, but it does not automatically invoke a requirement for a bid. Insufficient shareholder votes might affect corporate governance but would not compel a mandatory offer to other shareholders. Finally, absent industry approval does not impact the triggering of mandatory bids, as such approvals usually relate to regulatory compliance and not to control transactions per se.