Concert party (business)

A concert party, in a business context, generally refers to a group of individuals or entities acting in a coordinated manner concerning a company or its shares, without necessarily forming a legally binding agreement. Their collective actions, whether formal or informal, are aimed at achieving a common objective, often related to influencing the control or management of the company.

The key element of a concert party is the understanding, either explicit or implicit, that the members will cooperate to pursue a shared goal. This cooperation can manifest in various ways, including:

• Joint acquisition of shares: The members may collectively purchase shares in a company, with the intention of accumulating a significant stake and influencing its direction.
• Agreed-upon voting strategy: The members may coordinate their voting rights on shareholder resolutions to achieve a desired outcome.
• Joint nomination of directors: The members may work together to nominate and elect directors who align with their vision for the company.
• Shared lobbying efforts: The members may jointly lobby the company's management or other stakeholders to advocate for specific changes or initiatives.

The existence of a concert party can have significant implications for regulatory oversight and corporate governance. In many jurisdictions, regulations require disclosure of beneficial ownership and coordinated action, particularly when certain thresholds of shareholding are reached. These regulations aim to ensure transparency and prevent individuals or groups from gaining control of a company without proper disclosure or compliance with takeover rules.

The determination of whether a concert party exists often requires careful consideration of the facts and circumstances. Regulators and courts may examine evidence of communication, coordination, shared investment strategies, and common objectives to determine if a group of individuals or entities is acting in concert. Evidence is often circumstantial, relying on patterns of behaviour and inferred agreements.

Failure to disclose the existence of a concert party when required by law can result in significant penalties, including fines, injunctions, and even criminal charges.