RESTRICTED VOTING-RIGHTS AND TAKEOVERS

Stock options serve to reduce the risk of share price volatility. A fair price for a stock option is in general computed on the basis of the Black-Scholes-formula. Stock options can also be used as instruments on the market for corporate control. In this case the prices and other conditions for stock options may vary considerably from those that are typical of stock options as financial instruments. The paper answers the question whether the conditions for such options can be considered to be fair in the sense that chances and risks are allocated evenly between the parties involved. This is a legal requirement of using stock options in a friendly take-over when voting rights of the acquired company are restricted. An actual case serves as the background for this paper.