Legal Definitions - all-holders rule

The all-holders rule is a regulation set by the Securities and Exchange Commission (SEC) that has two main applications:

1. It prohibits a company from offering shares to only some of the holders of a particular class of shares. In other words, if a company wants to issue new shares, it must offer them to all shareholders of that class, not just a select few.
2. It requires a tender offeror (a company or individual attempting to acquire a controlling interest in another company) to make their offer to all shareholders of the target company, not just a select few.

For example, let's say Company A has two classes of shares: Class A and Class B. If Company A wants to issue new shares of Class B, it must offer those shares to all current holders of Class B shares, not just a select few. Similarly, if Company B wants to acquire a controlling interest in Company C, it must make its offer to all shareholders of Company C, not just a select few.

The all-holders rule is designed to promote fairness and transparency in the securities market by ensuring that all shareholders have equal access to information and opportunities.