All Holders Rule - Explained
What is the All Holders Rule?
Written by Jason Gordon
Updated at July 9th, 2021
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Table of Contents
What is the All-Holders Rule?How Does the All-Holders Rule Apply?Academic Research on The All Holders RuleWhat is the All-Holders Rule?
The all-holders rule is one that advocates equal treatment of all security holders by a firm. This rule forbids a firm from making a public offering of a new issue, rather, the firm must make a tender offering which will be made accessible to all holders of the same class of stock. This rule which specializes in the equal treatment of securities holders is contained in Article 14, Paragraph 10 of the Securities Exchange Act of 1934. The all-holders rule is a regulation by the Securities and Exchange Commission. It specifies that all holders of identical class of security have access to an equal offer for purchase.
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How Does the All-Holders Rule Apply?
The all-holders rule is a rule that stipulates that all owners/holders of stocks in the same category should have the same option for purchase. This rule opposes the public offering of new issues, rather, a tender offering is an acceptable practice. The all-holders rule is part of the 1934 Securities Exchange Act According to this rule, all holders of stocks in the same category are entitled to 'best price' and equal remuneration. Small investors with securities price lower that other securities participating in an offer are beneficiaries of the All-Holders rule. This rule creates equivalent treatment or conditions for these small investors. The best price rule is similar to the All-Holders rule as they are both contained in the Securities Exchange Act of 1934. The all-holders rule is a regulation of the Securities and Exchange Commission in the United States that prevents small investors from being freezed in a stock market.
Academic Research on The All Holders Rule
- During the tender offer (Or some other time near it): Insider transactions under the all holders/best price rule, Ebert, M. D. (2002). Vill. L. Rev., 47, 677.
- Structuring transaction outside all holders/best price rule, Khmelnitskiy, M. (2003). Fordham J. Corp. & Fin. L., 9, 501.
- Mergers and the market for corporate control, Manne, H. G. (1965). Journal of Political economy, 73(2), 110-120.
- During the tender offer (Or some other time near it): Insider transactions under the all holders/best price rule, Ebert, M. D. (2002). Vill. L. Rev., 47, 677.
- A Case of When Rather Than What: Tender Offers under the Williams Act and the All Holders and Best Price Rules, Fleming, R. A. (2002). S. Ill. ULJ, 27, 263.
- -A Snapshot of the Takeover Decade: Polaroid Corp. v. Disney-Whether a Target Corporation has Third Party Standing to Assert a Violation of the All-Holders Rule, Kershenbaum, J. (1991). W. New Eng. L. Rev., 13, 63.
- The uneasy case for corporate reorganizations, Baird, D. G. (1986). The Journal of Legal Studies, 15(1), 127-147.
- Does a Target Corporation Have Standing to Sue under the All Holders Rule-The Third Circuit Says No in Polaroid Corp. v. Disney, Grigsby, P. M. (1989). U. Cin. L. Rev., 58, 717.
- Getting US Security Holders to the Party: The SEC's Cross-Border Release Five Years On, Carron, B. A., & Davidoff, S. M. (2005). Pa. J. Int'l Econ. L., 26, 455.
- Issuing costs to existing shareholders in competitive and negotiated underwritten public utility equity offerings, Bhagat, S., & Frost, P. A. (1986). Journal of Financial Economics, 15(1-2), 233-259.