Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

10 January 2002

Commission publishes Expert’s Report on Takeover Bids




-
The Commission has published a report by a high level group of company law experts set up by the Commission on takeover bids. The report specifically addresses the issues which the European Parliament had asked the Commission to examine during negotiations over the Commission’s previous proposal for a Takeover Bids Directive

The report contains detailed recommendations on the three issues which had been identified by the European Parliament for further harmonisation:

  • how to ensure the existence of a level playing field in the EU concerning the equal treatment of shareholders across all Member States
  • the definition of the notion of an 'equitable price' to be paid to minority shareholders
  • the right for a majority shareholder to buy out minority shareholders ('squeeze-out procedure')

    The key proposals of the report are that:

  • after announcement of the bid, the board of the offeree company should not be permitted to take actions frustrating a takeover bid on the basis of a general meeting authorisation given prior to the bid. Listed companies should be required to disclose complete information about their capital and control structures, for instance in their annual reports, listing particulars and prospectuses
  • where a takeover offer succeeds at least to the extent of acquiring 75% or more of the risk-bearing share capital in the offeree company the bidder should be entitled to control the constitution and board of that company accordingly, notwithstanding any constitutional or structural provisions in the company which would prevent the exercise of such control
  • where a takeover bidder acquires control, the price to be offered under the bid as required under the Directive for the remaining shares should normally be the highest price paid by the bidder during a period of 6 to 12 months up to and including that acquisition of control
  • where a bidder acquires in excess of a threshold (to be set at between 90 and 95%) of the shares in the offeree company, or alternatively 90% or more acceptance of the offer, he should be entitled to buy out the minority at a fair price (presumed to be the offer price where there is a 90% or more acceptance of the offer); and where a bidder acquires in excess of a proportion of the share capital (similarly to be set at between 90 and 95%) the minority should be able similarly to require that their shares are bought out at a fair price by the bidder.

    The previous proposal for a Directive on Takeover Bids was rejected by the European Parliament in July 2001 after twelve years of negotiations, various amendments and a difficult conciliation procedure which had finally led to a compromise between representatives of the European Parliament and the Council. A new proposal is awaited for mid 2002.

    See full report and the press release of the high level group for a short summary.
    See also the Commission press release

    © European Commission


  • < Next Previous >
    Key
     Hover over the blue highlighted text to view the acronym meaning
    Hover over these icons for more information



    Add new comment