Squeeze-out price in Cyprus: can minority shareholders sue?

In short

They can sue the bidder within six months, but must prove the price unfair on objective criteria. In the Muskita case goodwill was not enough, and the claim failed.

Klitos Platis, advocate

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Minority shareholders who are forced out of a listed Cyprus company can go to court over the price, and the Court of Appeal has now set out what such a claim needs in order to succeed. On 27 October 2026, in Frou-Frou Investments Ltd v. Muskita Investments Ltd, it dismissed a claim that had run since 2011 over the €0.84 a share paid in the squeeze-out of Muskita Aluminium Industries Plc.

The trial court had found that the price was not fair, because the company’s goodwill had been left out of it, and had awarded the minority €50 each in nominal damages. The Court of Appeal set that aside. A price set in a mandatory bid is presumed fair, and goodwill is not the kind of evidence that can displace the presumption.

What happened

The minority refused the offer, and were bought out at the same price anyway. On 27 April 2011, with the approval of the Cyprus Securities and Exchange Commission, Muskita Investments Ltd, MDG Holdings Ltd and Dimos Mouskis made a mandatory public offer for up to 100 per cent of Muskita Aluminium Industries Plc, then listed on the Cyprus Stock Exchange, at €0.84 a share.

When the offer closed the bidders held 95.74 per cent. Four shareholders, holding 657,500 shares between them, had not accepted, considering the price too low. On 4 July 2011 the Commission approved the bidders’ exercise of the squeeze-out right, and on 28 July 2011 the bidders took the remaining shares, paying €0.84 for each.

The four sued. They said the fair and real value of a share was at least €2.155, and claimed the difference, more than €860,000 in all, together with valuation and advisory costs and punitive damages. They also sued the members of the company’s board.

The right to sue is real, and short

The Law gives the squeezed-out shareholder six months to dispute the price. Section 36(7) of the Takeover Bids Law, Law 41(I)/2007, allows holders whose securities were transferred to the bidder to take legal action against the bidder and dispute the consideration offered.

The action must be brought within six months of the bidder’s announcement under section 36(6), which is the announcement that the consideration has been paid and the shares transferred. The proceedings do not stop the transfer: the shares pass to the bidder either way, and the dispute is only about money.

The bidders argued that section 36(7) was too vague to found any claim at all, because it says nothing about the standard against which the price is to be measured. The Court of Appeal rejected that. The Law transposes Directive 2004/25/EC on takeover bids, and the Directive leaves it to each Member State to decide which courts resolve disputes. A rule that made the bid price final, with no access to a court, would not sit with the Directive.

How the price is presumed fair

A mandatory bid price is presumed fair, and the presumption can be rebutted, but only on objective grounds. The Directive defines the fair price in a mandatory bid as the highest price the bidder, or those acting in concert with it, paid for the same securities over a set period before the bid. Section 18(1) of the Cyprus Law fixes that period at the twelve months before the decision to bid is announced.

The Directive then presumes that the consideration in a mandatory bid is also fair for the purposes of a squeeze-out. The Court of Appeal applied two judgments of the Court of Justice of the European Union, both given after the trial: Euromin Holdings (Cyprus), C-735/19, of 10 December 2020, and YO v. SVEMA TRADE, C-567/24, of 27 November 2025.

Read with those judgments, a minority shareholder may dispute the price in a national court and try to prove a higher value. The proof, however, has to rest on objective criteria of the kind the Directive itself lists, such as:

the average market price over a particular period;
the liquidation value of the company;
other objective valuation criteria generally used in financial analysis.

The court also noted that Cyprus has not used the Directive’s option to let the supervisory authority adjust the fair price by published criteria. There is therefore no Cyprus-specific list to widen what counts.

Why goodwill lost the case

Goodwill is subjective, so it cannot show that the bid price was unfair. The trial judge had accepted that the company had goodwill of real significance in 2011, because the value of its reputation and clientele was not negligible. The judge could not put a figure on it, but held that leaving it out made €0.84 unfair.

The Court of Appeal held that this was wrong. Goodwill is not among the circumstances the Directive recognises, and has not been made a criterion in Cyprus, so the existence of unquantified goodwill could not rebut the presumption. The minority’s own valuation evidence did not help: the trial court had rejected their expert report, and the Court of Appeal agreed that no expert had given an opinion reliable enough to fix a fair price.

To win a higher price, a squeezed-out shareholder needs a figure for the true value reached by an accepted objective method.

The directors were not liable, and the costs turned

Section 36(7) points at the bidder, not at the board. The claim against the directors failed at trial and on appeal. The court held that the action lies against the bidder only, and that where the bidder is a company the Law gives no ground to proceed against its directors, since it creates no personal liability for them.

A claim for the dividends attached to the shares, about €163,000, failed because it had never been pleaded. The court did accept that the action had not been brought in bad faith. The costs, however, went the other way:

the minority lost the trial costs they had been awarded, which had been set on the scale of €100,000 to €500,000, and were ordered to pay the bidders’ costs instead;
they were ordered to pay €8,100 on their own appeal, and €5,000 on the bidders’ appeal;
one of the bidders recovered €9,000 plus VAT on his counterclaim for the advisory fees he incurred in defending the claim.

What this means in practice

For a minority shareholder facing a squeeze-out, the six months are for building a valuation, not only for filing. What wins the claim, on this judgment, is an independent valuation that reaches a figure by an objective method recognised in financial analysis, such as market price over a period or liquidation value. Before suing, it is worth asking:

whether the bid price was the highest price paid by the bidder and its concert parties in the twelve months before the bid, since that is where the presumption starts;
whether there is objective evidence that the market price was manipulated or distorted by exceptional events;
whether an expert can stand behind a single figure, since “it must be worth more” is not enough on its own.

The trap for the non-specialist is the goodwill argument. It is the most natural thing to say about an established business with a strong name, and it is exactly the argument the Court of Appeal has ruled out, so the valuation has to be built on objective criteria instead. Suing the directors as well adds cost without adding a defendant who can be made to pay under section 36(7), and every head of claim, dividends included, has to be in the pleadings from the start.

For a bidder or a controlling shareholder, the judgment is reassurance with a condition. A price fixed by the Law’s own rule, and supported by an independent report, is hard to attack. A bidder that pays less than its own highest price in the preceding twelve months, or relies on a market price it knows to be distorted, is in a different position.

Our corporate and commercial lawyers advise on public offers and squeeze-outs, and our page on shareholder disputes in Cyprus covers the remedies available to minorities in private companies, where the takeover rules do not apply.

A squeeze-out claim in Cyprus is now a valuation case, and it is won with an objective figure that displaces the presumption of a fair price.

Questions we are asked

Can a minority shareholder in Cyprus challenge the price paid in a squeeze-out?

Yes. Section 36(7) of the Takeover Bids Law, Law 41(I)/2007, allows holders whose shares were transferred to the bidder to take legal action against the bidder and dispute the consideration, within six months of the bidder’s announcement that the consideration was paid and the shares transferred.

Is the price in a mandatory bid presumed fair?

Yes, but the presumption can be rebutted. In Frou-Frou Investments Ltd v. Muskita Investments Ltd (27 October 2026) the Court of Appeal, following the Court of Justice of the European Union, held that it can be rebutted only on objective criteria of the kind used in financial analysis, such as the average market price or the liquidation value. Goodwill, being subjective, does not count.

Can the directors be sued personally over a low squeeze-out price?

Not under section 36(7). The Court of Appeal held that the action lies against the bidder only, and that where the bidder is a company the Law gives no ground to proceed against its directors.

Sources

Klitos Platis

Advocate, Partner

Kleanthous & Platis LLC, Cyprus
Published 7 November 2026

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