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The Takeover Directive - and Its Implementation In Germany, UK and Sweden

Hamnered, Malin LU (2012) JURM02 20121
Department of Law
Abstract
One of the main purposes in EU is increased competiveness on the European market and to achieve the goal; the European Commission made a proposal of a Directive on Takeover Bids which would facilitate the takeover activity in EU. Takeover activities essentially signify when a company purchases shares in another company which occasionally also leads to a takeover of the control of the target company. The proposed Directive was inspired by the UK regulation on Takeover Bids "the Takeover Code" and contained several rules that would obstruct the use of defensive measures applied in relation to impeding an offer. For example, the proposal of the Directive contained a board neutrality rule requiring that the board of the offeree company cannot... (More)
One of the main purposes in EU is increased competiveness on the European market and to achieve the goal; the European Commission made a proposal of a Directive on Takeover Bids which would facilitate the takeover activity in EU. Takeover activities essentially signify when a company purchases shares in another company which occasionally also leads to a takeover of the control of the target company. The proposed Directive was inspired by the UK regulation on Takeover Bids "the Takeover Code" and contained several rules that would obstruct the use of defensive measures applied in relation to impeding an offer. For example, the proposal of the Directive contained a board neutrality rule requiring that the board of the offeree company cannot take any defensive measure in order to frustrate a bid unless it is supported by the shareholders. In addition, the Directive contained a breakthrough rule aimed to neutralize pre-bid measures, e.g., striking out multiple voting rights by using the ’one share - one vote’ principle.

Owing to Member States’ different regulations on takeovers, the Directive based on Anglo-Saxon regulation, was strongly criticized by the European Parliament and several Continental Member States and especially by Germany. The corporate structure in Germany is, unlike the UK’s focus on shareholder value, instead focused on the company and its stakeholders. Several authors have also claimed that the Directive might damage companies in Member States using dual class share system (i.e., companies with shares carrying different amount of votes).

As a reaction to the criticism, the Commission amended the Directive and made the breakthrough rule and the board neutrality rule voluntary. The implementation of the Directive thus varied among the Member States since some States including Germany chose to refrain from the adoption of the board neutrality rule. Moreover, none of the Member States (except for the Baltic States) implemented the breakthrough rule which was a disappointment for the Commission since the rule is significant for the achievement of increased competitive market. Another purpose with the Directive is a mutual regulation on takeover bids in EU but since the Member States have implemented and interpreted the Directive differently; neither is this purpose accomplished.

With this project I intend to illuminate some of the purposes behind the Takeover Directive and to clarify why they have not been able to be achieved. In addition, I will examine the implementation of the Directive by a comparison between Sweden, the UK and Germany and explore whether the implementation of the Directive has affected the Member States’ national law. Finally, owing to the Member States’ various regulations of corporate governance, legal structure and market economy; I will explain the problems with a mutual regulation on takeover bids in the EU. (Less)
Abstract (Swedish)
Ett viktigt syfte inom EU är ökad konkurrens på den Europeiska marknaden och för att målet ska uppnås föreslog den Europeiska Kommissionen ett Direktiv som reglerar uppköpserbjudanden vilket skulle bidra till förenklade förvärv av företag på den gemensamma marknaden. Företagsförvärv innebär huvudsakligen att ett företag köper aktier av ett annat företag vilket även ibland kan leda till övertagande av kontrollen i målbolaget. Det föreslagna Direktivet var inspirerat av den engelska regleringen av uppköps-erbjudanden "the Takeover Code" och innehöll vissa regler som försvårar införandet av försvarsåtgärder som i regel används för att försvåra ett bud. Som exempel på sådana regler kan nämnas styrelseneutralitetsregeln som kräver att styrelsen... (More)
Ett viktigt syfte inom EU är ökad konkurrens på den Europeiska marknaden och för att målet ska uppnås föreslog den Europeiska Kommissionen ett Direktiv som reglerar uppköpserbjudanden vilket skulle bidra till förenklade förvärv av företag på den gemensamma marknaden. Företagsförvärv innebär huvudsakligen att ett företag köper aktier av ett annat företag vilket även ibland kan leda till övertagande av kontrollen i målbolaget. Det föreslagna Direktivet var inspirerat av den engelska regleringen av uppköps-erbjudanden "the Takeover Code" och innehöll vissa regler som försvårar införandet av försvarsåtgärder som i regel används för att försvåra ett bud. Som exempel på sådana regler kan nämnas styrelseneutralitetsregeln som kräver att styrelsen i målbolaget måste ha stöd från aktieägarna för att få lov att införa försvarsåtgärder. Även den s.k. genombrottsregeln är ämnad att neutralisera försvarsåtgärder, bl. a. genom att neutralisera aktier med olika röstvärden så att varje aktie är värd en röst oavsett aktiens tidigare värde.

På grund av medlemstaters olika regleringar av företagsförvärv blev Direktivet som baserats på den anglosaxiska rätten kritiserat av både det Europeiska Parlamentet och medlemsstater med ett kontinentalt rättssystem, speciellt av Tyskland. Den tyska bolagsstrukturen skiljer sig nämligen från den engelska som är inriktat på aktieägarna eftersom Tyskland fokuserar på övriga intressenter i ett bolag samt på bolaget som sådant. Även författare har hävdat att Direktivet riskerar att skada företag i medlemsstater vars bolagsstruktur består av aktier med olika röstvärden. Kommissionen bemötte kritiken genom att modifiera Direktivet och göra genombrottsregeln och styrelseneutralitetsregeln frivilliga. Därav har implementeringen av Direktivet varierat mellan medlemsstaterna eftersom vissa stater inklusive Tyskland har valt att avstå från att implementera styrelseneutralitetsregeln. Vad beträffar implementering av genombrottsregeln så har inga stater (förutom de Baltiska staterna) till Kommissionens stora besvikelse antagit denna regel. Besvikelsen består i att genombrottsregeln med stor sannolikhet skulle ha bidragit till att uppnå syftet om ökad konkurrens på företagsmarknaden. Ett annat syfte med Direktivet är en gemensam reglering av upphandlingserbjudanden inom EU men med anledning av att stater har implementerat och tolkat Direktivet olika har inte heller detta syfte kunnat uppnås med hjälp av Direktivet.

Det är min målsättning att genom detta arbete belysa några av de syften som står bakom Direktivet och redogöra för varför de inte har varit möjliga att uppnå. Jag kommer dessutom att genom en jämförelse av implementeringen av Direktivet mellan Sverige, England och Tyskland undersöka hur införlivandet av Direktivet har påverkat medlemsstaternas nationella lagar. Slutligen, med anledning av medlemsstaters olika regleringar av bolagsstyrning, rättslig struktur samt marknadsekonomi ska jag förklara problemtiken med en gemensam reglering av uppköpserbjudanden inom EU. (Less)
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author
Hamnered, Malin LU
supervisor
organization
course
JURM02 20121
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
EU Law, Banking Law, Business Law
language
English
id
3052601
date added to LUP
2012-11-01 10:39:02
date last changed
2012-11-01 10:39:02
@misc{3052601,
  abstract     = {One of the main purposes in EU is increased competiveness on the European market and to achieve the goal; the European Commission made a proposal of a Directive on Takeover Bids which would facilitate the takeover activity in EU. Takeover activities essentially signify when a company purchases shares in another company which occasionally also leads to a takeover of the control of the target company. The proposed Directive was inspired by the UK regulation on Takeover Bids "the Takeover Code" and contained several rules that would obstruct the use of defensive measures applied in relation to impeding an offer. For example, the proposal of the Directive contained a board neutrality rule requiring that the board of the offeree company cannot take any defensive measure in order to frustrate a bid unless it is supported by the shareholders. In addition, the Directive contained a breakthrough rule aimed to neutralize pre-bid measures, e.g., striking out multiple voting rights by using the ’one share - one vote’ principle.

Owing to Member States’ different regulations on takeovers, the Directive based on Anglo-Saxon regulation, was strongly criticized by the European Parliament and several Continental Member States and especially by Germany. The corporate structure in Germany is, unlike the UK’s focus on shareholder value, instead focused on the company and its stakeholders. Several authors have also claimed that the Directive might damage companies in Member States using dual class share system (i.e., companies with shares carrying different amount of votes). 

As a reaction to the criticism, the Commission amended the Directive and made the breakthrough rule and the board neutrality rule voluntary. The implementation of the Directive thus varied among the Member States since some States including Germany chose to refrain from the adoption of the board neutrality rule. Moreover, none of the Member States (except for the Baltic States) implemented the breakthrough rule which was a disappointment for the Commission since the rule is significant for the achievement of increased competitive market. Another purpose with the Directive is a mutual regulation on takeover bids in EU but since the Member States have implemented and interpreted the Directive differently; neither is this purpose accomplished.

With this project I intend to illuminate some of the purposes behind the Takeover Directive and to clarify why they have not been able to be achieved. In addition, I will examine the implementation of the Directive by a comparison between Sweden, the UK and Germany and explore whether the implementation of the Directive has affected the Member States’ national law. Finally, owing to the Member States’ various regulations of corporate governance, legal structure and market economy; I will explain the problems with a mutual regulation on takeover bids in the EU.},
  author       = {Hamnered, Malin},
  keyword      = {EU Law,Banking Law,Business Law},
  language     = {eng},
  note         = {Student Paper},
  title        = {The Takeover Directive - and Its Implementation In Germany, UK and Sweden},
  year         = {2012},
}