04 March 2003

Competitiveness Council: No Progress on Takeover Directive

EU Member States are still divided over the European Commission's proposal for a new Directive on Takeovers, especially as regards the issue of multiple voting rights. The Competitiveness Council held an exchange of views on the matter, but no significant new points were raised during the debate.

The Commission's latest proposal introduces the so-called “breakthrough rule”, whereby a bidder who acquires a sufficient proportion of shares in a company may override structural defence mechanisms. However, some countries claim that multiple voting rights will not be scrapped altogether, something that the Commission argues would create “legal complications”.

The Council took note of the Presidency's report on the progress made so far on the proposal for a Directive on takeover bids as well as of delegations' concerns on individual aspects of a Presidency compromise proposal, in particular with regard to the balancing of Articles 9 and 11.

The Presidency has tabled on 14 February 2003 a compromise proposal on most of the Articles under discussion. No formal agreement has yet been reached on any of the Articles under examination. The core outstanding issue in the search of a global compromise is the appropriate balance to strike between, on the one hand, Article 9, which aims at ensuring that it is for the shareholders to decide on defensive measures once a takeover bid has been made public, and, on the other hand, Article 11, which provides for the neutralisation, both during and following a successful takeover bid, of measures that could be seen as pre-bid defensive mechanisms.

The Council instructed the Permanent Representatives Committee to pursue work on this file as a matter of priority. The Greek Presidency plans to present a compromise proposal on these outstanding issues within the next few months.

Speaking after the Council, Commissioner Bolkestein recalled that 'If appropriate legal solutions could be found to neutralising shareholders' multiple voting rights in a vote by shareholders to change a company's articles of association after a successful bid, the Commission would not be opposed.'

Council results
Compromise Proposal on 14 February 2003
Council dossier on Takeover Bids from 21 February
Commission press release

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