The Commission presents a review of the application of Directive 2004/25/EC1 on takeover bids, in accordance with Article 20 of the Directive. The report:

describes the impact of the Takeover Bids Directive and how it has been complied with; identifies the main issues emerging from the application of the Directive and draws a number of conclusions.

The review of the operation of the Takeover Bids Directive shows that, generally, the regime created by the Directive is working satisfactory. No structural compliance issues have emerged in relation to the application of the legal framework in Member States. Stakeholders are generally satisfied with the clarity of the rules included in the Directive and the adequacy of their enforcement and consider the Directive be useful for the proper and efficient functioning of the market. The external study commissioned considers that the Takeover Bids Directive has contributed to improvements in relation to its objectives.

Nevertheless, there are areas where the rules of the Takeover Bids Directive merit some clarification in order to improve legal certainty for the parties concerned and the effective exercise of (minority) shareholder rights.

The concept of "acting in concert": this could be clarified on EU level, in order to provide more legal certainty to international investors as to the extent to which they can cooperate with each other without being regarded as "acting in concert" and running the risk of having to launch a mandatory bid. Clarification could, for instance, be provided through the development of guidelines, from the Commission and/or ESMA. Such clarification would give greater opportunity to shareholders to hold boards accountable for their actions and promote good corporate governance standards in listed companies in the EU. However it should not limit the ability of competent authorities to oblige control seeking concert parties to accept the legal consequences of their concerted action. Possible initiatives in this area would be in line with the goals of the Commission's Green Paper on the EU Corporate Governance Framework and its Communication “Towards a Single Market Act" to promote longer term, sustainable ownership to the benefit of sustainable growth of the European market. The Commission intends to announce what measures it intends to take in this area in October 2012.

National derogations to the mandatory bid rule: the review shows that there is a wide variety of national derogations to the mandatory bid rule and that it is not always clear how the general principle of the Directive, which requires the protection of minority shareholders in situations of change of control, is respected when a national derogation applies. As a possible way forward, the Commission intends to carry out further investigation on how minority shareholders are protected when a national derogation to the mandatory bid rule applies. More information is indeed needed on the scope of application of national derogations to the mandatory bid rule, on the extent to which national derogations limit the protection of minority shareholders in situations of change of control and, when relevant, what alternative mechanisms exist in national law to protect minority shareholders in situations of change of control. If, following the investigation, the protection of minority shareholders proves to be inadequate, the Commission will take the necessary steps (e.g. through infringement procedures) to restore the effective application of this general principle of the Directive.

Exemption to the mandatory bid rule : the review shows that the exemption to the mandatory bid rule included in the Takeover Bids Directive, for situations where control has been acquired following a voluntary bid for all shares of the company, has created a possibility for offerors of getting round the mandatory bid rule by acquiring a stake close to the mandatory bid threshold and then launching a voluntary bid for a low price. As a consequence, the offeror would cross the mandatory bid threshold without giving minority shareholders a fair chance to exit the company and share in the control premium. This technique is clearly not in line with the objective of the Directive to protect minority shareholders in situations of change of control, although it does not appear to breach the letter of the Directive. Examples in national legislation, such as additional mandatory bid thresholds or minimum acceptance conditions to takeover offers, show that there are ways to prevent the use of this technique. The Commission will take the appropriate steps to discourage the use of this technique across the EU, such as through bilateral discussions with the Member States concerned or Commission Recommendations.

Board neutrality and breakthrough rules: with regard to the optional Articles 9 and 11 of the Takeover Bids Directive, the review shows that although the board neutrality rule (Article 9) is transposed by a relatively large number of the Member States, this is not the case for the breakthrough rule (Article 11). However, the lack of application of the optional rules does not seem to have been a major obstacle to takeover bids in the EU, given that stakeholders have indicated that there are sufficient possibilities of breaking through takeover defences. In light of this and considering also the lack of economic evidence available to justify changing the situation, it does not, therefore, seem appropriate at this stage to propose to make the optional articles of the Directive mandatory.

Inadequate protection of employees : employee representatives have indicated that they are not satisfied with how the Takeover Bids Directive protects the rights of employees in a takeover situation, in particular with respect to the risk of changes in work conditions and job availability. The Commission will pursue its dialogue with employee representatives with a view to exploring possible future improvements. It will also investigate further the experience gained in practice with the provisions of the Directive which require disclosure of the offeror's intentions as regards the future business of the company and its employment conditions and the view of the offeree company's board on this, as well as disclosure of information concerning the financing of the bid and the identity of the offeror.

Member States, the European Parliament, the European Economic and Social Committee and other interested parties are invited to submit their views on this review.

COM(2012)0347
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PURPOSE : to lay down measures coordinating the rules on takeover bids relating to company securities in a regulated market.

LEGISLATIVE ACT : Directive 2004/25/EC of the European Parliament and the Council on takeover bids.

CONTENT : this Directive coordinates the rules on takeover bids for the securities of companies governed by the laws of the Member States, where all or some of those securities are admitted to trading on a regulated market. This directive does not apply to takeover bides where a company's securities are, at the holder's request, repurchased or redeemed, directly of indirectly, out of the assets of those companies. Action taken by such companies to ensure that the stock exchange value of their units do not vary significantly from heir net asset value will be regarded as equivalent to repurchase or redemption.

The directive lays down certain common principles and a number of general requirements which Member States will have to respect through detailed implementing rules.

The general rules are as follows :

- all holders of the securities of an offeree company of the same class must be afforded equivalent treatment; moreover, if a person acquires control of a company, the other holders of securities must be protected;

- the holders of the securities of an offeree company must have sufficient time and information to enable them to reach a properly informed decision on the bid. Where it advises the shareholders, the board of the offeree company must give its views on the effects of implementation of the bid on employment and location of the company's place of business;

- the board of the offeree company must not deny the shareholders the opportunity to decide on the merits of the bid;

- false markets must not be created in the securities of the offeree company, of the offeror company or of any other company concerned by the bid, in such a way that the rise or fall of the prices of the shares become artificial and the normal functioning of the market is distorted;

- an offeror must announce a bid only after ensuring hat he can fulfil any cash consideration and after taking all reasonable measures to secure any other type of consideration;

- an offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities.

The following points must be noted :

- minority shareholders must be protected when control of their companies has been acquired. The person who has acquired control of a company must make an offer to all the shareholders for all of their holdings at an equitable price in accordance with a common definition. The latter encompasses the following: if, after the bid is made public and before it closes for acceptance, the bidder buys any shares at above his offer price, he will have to increase his offer price to at least match the highest price he has paid;

- Member States are free to ensure more protection for shareholders, such as the obligation to make a partial bid where the offeror does not acquire control o the company or the obligation to announce a bid at the same time as control of the company is acquired;

- there are optional arrangements on the provisions on defensive measures by the offeree company and obligations of its board as well as the breakthrough provisions. Whereas an offeree board must obtain the prior authorisation of the general meeting of shareholders before taking any defensive action which may result in the frustration of the takeover bid, the opt-out means that a Member State may choose not to require companies to apply these provisions. At the same time, however, companies in that Member State are allowed to "opt in" and apply the provisions if they chose to do so;

- breakthrough provisions state that any restrictions on the transfer of securities by shareholders in the offeree company will not apply vis-à-vis the offeror during the time allowed for acceptance of the bid. Multiple voting securities will carry one vote only at the general meeting which decides on any defensive measures. Where rights are being removed under the breakthrough provisions of Article 11, equitable compensation must be provided for any loss incurred by the holders of those rights;

- where the company has a two-tier board structure, 'board' means both the management and supervisory board;

- the time allowed for acceptance of a bid may not be less than two weeks not more than ten weeks from the date of publication of the offer document. This can be extended under certain circumstances.

ENTRY INTO FORCE : 20/05/2004.

DATE FOR TRANSPOSITION : no later than 20/05/2006.

Directive 2004/25
OJ L 142 30.04.2004, p. 0012-0023

T5-0571/2003
OJ C 091 15.04.2004, p. 0029-0109 E

T5-0571/2003

Debate in Parliament

A5-0469/2003

A5-0469/2003

2510

CES0589/2003
OJ C 208 03.09.2003, p. 0055-0057

2490

2462

COM(2002)0534
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OJ C 045 25.02.2003, p. 0001-0017 E

COM(2002)0534
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