The Takeover Directive''
2004/25/EC
is an

EU Directive The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been ...

dealing with

European company law European company law is a part of European Union law, which concerns the formation, operation and insolvency of companies (or corporations) in the European Union. The EU creates minimum standards for companies throughout the EU, and has its own c ...

's treatment of mergers and acquisitions. It concerns the standards takeover bidders must comply with in how long a bid stays open to, who they offer to, and the information companies must give to the public about the bid. The most controversial provision, which eventually was made optional, was the requirement of the board of directors of a target company to be neutral in the bid process.

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*art 3, general principles including the equal treatment principle for shareholders *art 4, the requirement on member states for an authority to monitor takeovers (e.g. in the UK, this is the

Takeover Panel The Panel on Takeovers and Mergers, or more commonly The Takeover Panel, is the United Kingdom's regulatory body charged with the administration of The Takeover Code. It was set up in 1968 and is located in London, England. Its role is to ens ...

) *art 5, the requirement to make a mandatory bid for everyone's shares, and giving an equitable price *art 6, minimum requirements for information on a bid being made *art 7, member states can set between 2 and 10 weeks as a limit for the period for acceptance of a bid *art 8, bids should be made public without material errors or misrepresentations *art 9, board neutrality rule, no frustrating action may be taken without specific post-bid shareholder approval. Directors may, however, still seek out another more favourable bidder (or ‘white knight’) or complete measures begun pre-bid that fall into a company's ordinary course of business. *art 9(2) board can search for a more favourable suitor *art 9(5) board should give its views on a bid *art 11, non compulsory opt in rulesImplemented by

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...

, ss 966-972 in

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary lega ...

Gives breakthrough provisions to defeat, (a) share structures making minority shareholders have disproportionate voting rights (b) limitations on share ownership (c) restrictions on share transfers in the company's articles or a share holder agreement. *art 12, bnr is optional in art 9(2), and neither is art 11. *art 20, directive provisions will be reviewed in 2011.

Notes

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References

PL Davies Paul Lyndon Davies QC, FBA (born 24 September 1944) is Allen & Overy Professor of Corporate Law Emeritus at the University of Oxford, Emeritus Fellow of Jesus College, Oxford and Emeritus Professor of Law at the London School of Economics, whe ...

, E-P Schuster and E Van de Walle de Ghelcke, 'The Takeover Directive as a Protectionist Tool?' (2010
EGCI Working Paper
*

D Kershaw David Kershaw is a Professor of Law at the London School of Economics, specialising in company law. As well as the author of a leading company law textbook, Kershaw's expertise focuses on accounting principles for companies, for which his work ...

, ‘The Illusion of Importance: Reconsidering the UK’s Takeover Defence Prohibition’ (2007) 56 International & Comparative Law Quarterly 267 Mergers and acquisitions

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References