EUROPEAN PARLIAMENT
1999
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2004
Committee on Economic and Monetary Affairs
PROVISIONAL
2002/240(COD)
28 March 2003
DRAFT OPINION
of the Committee on Economic and Monetary Affairs
for the Committee on Legal Affairs and the Internal Market
on the proposal for a directive of the European Parliament and of the Council
on take-over bids
(COM(2002) 534 – C5-0481/2002 – 2002/0240 (COD))
Draftsman: Christopher Huhne
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PROCEDURE
The Committee on Economic and Monetary Affairs appointed Christopher Huhne, draftsman
at its meeting of ....
It considered the draft opinion at its meeting(s) of ....
At the latter/last meeting it adopted the following conclusions by ... votes to ..., with ...
abstention(s)/unanimously.
The following were present for the vote: ..., chairman/acting chairman; ... (and ...), vicechairman/vice-chairmen/; ..., draftsman; ..., ... (for ...), ... (for ... , pursuant to Rule 153(2)), ...
and ....
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SHORT JUSTIFICATION
Background
The European Commission's first proposal on company law concerning take-over bids was
tabled as long ago as 1989. On 8 February 1996 the Commission presented another proposal
for a directive on take-over bids1, which the Commission amended in 1997. On 4 July 2001
the European Parliament rejected the Conciliation Committee text2 of this take-over bids
proposal, in a tied vote of 273 to 273. A Group of High-Level Company Law Experts was
subsequently set up under the Chairmanship of Professor Jaap Winter and it produced a
report3 in January 2002. The European Commission produced the current new proposal for a
directive on 2 October 2002, taking on board recommendations contained in the Winter
Report.
The importance of the proposal
This proposal is a key priority of the Financial Services Action Plan, as specified by the
Lisbon European Council. Without it, many of the potential gains of the Euro will not be
realised. It is an essential measure required in order to reach the objective of fully integrated
and efficient capital markets in the EU, which can raise returns to savers and provide cheaper
capital to investors. Cross-border company take-overs also allow economies of scale and
hence facilitate the restructuring and increases of productivity that can flow from the euro.
Objectives of the proposal
The proposal will create a legal framework and hence level playing field for corporate takeovers in Europe. By ensuring an adequate level of protection for shareholders (and in
particular minority shareholders), it will remove a source of investor concern and encourage
more cross-border ownership. The proposal will also provide for welcome and long-overdue
openness about key shareholdings and control of companies, which will contribute to the rebuilding of confidence in financial markets. The current proposal therefore forms part of a
package of EU policy measures currently under negotiation which will lead to increased
standards of integrity and efficiency in the EU's financial markets.
Economic consequences
At present the degree of integration of company ownership varies enormously from Member
State to Member State. Corporate ownership is not blind to nationality as it should be within
the EU, as is shown by the dramatic differences in foreign ownership revealed by the table
below. Moreover, the lowest levels of economic integration exist in some of the member
states that are theoretically most in favour of it. The first column of the table shows a broad
measure of foreign ownership of the economy, namely the stock of equity capital liabilities by
foreign direct investors as a percentage of GDP. Germany’s foreign ownership is just 12.1 per
cent of GDP, and France’s only 11.9 per cent. This is much lower than the figures for a
number of smaller member states such as 104.9 per cent in Ireland, 33.6 per cent in the
Netherlands, 28.3 per cent in Denmark and 24.7 per cent in Sweden. Even more strikingly, it
falls well short of the levels of foreign ownership found in two big member states: 21.3 per
cent in Spain and 24 per cent in the UK. (Figures for Italy are not available).
The apparent resistance to economic integration is particularly clear in more politically
sensitive sectors of the economy such as finance. For example, the share of the assets of credit
1
OJ C 162, 6.6.1996, p. 5
OJ C 065E, 14.3.2002, p. 57
3
http://europa.eu.int/comm/internal_market/en/company/company/news/hlg01-2002.pdf
2
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institutions (i.e. loans) that are in foreign-controlled financial institutions is just 4.74 per cent
in Germany compared with 51.18 per cent in the UK. It should be noted that these figures
apply purely to foreign ownership of companies in the country concerned, and are usually
paralleled by an equally pronounced ownership of overseas companies and securities. The
very wide differences in foreign ownership are principally a product of differing social and
political attitudes to foreign companies and to the differing legal and institutional
impediments to foreign purchase.
Some apologists have sought to explain the large difference between Germany and France on
one hand, and Britain, Scandinavia and the Netherlands on the other by arguing that the
position is not so different when debt is taken into account. Because of the greater reliance on
debt to finance investment in the German model, the argument is that cross-border equity
stakes understate the German openness to foreign ownership. However, the figures including
debt tell the same story as the equity figures. For example, Germany’s total stock of foreign
direct investment liabilities (equity and debt) amounted to 23.8 per cent of gdp in 2000
compared with 30 per cent in Britain, 34.4 per cent in Sweden, 39.8 per cent in Denmark and
63.7 per cent in the Netherlands. France was even more closed than Germany with FDI
liabilities of just 19.6 per cent, while Italy is extraordinarily low at 10.4 per cent of GDP
MEASURES OF ECONOMIC INTEGRATION
BE Belgium
DK Denmark
DE Federal Republic of
Germany
GR Greece
ES Spain
FR France
IE Ireland
IT Italy
LU Luxembourg
NL Netherlands
AT Austria
PT Portugal
FI Finland
SE Sweden
UK United Kingdom
n.a.= not available
______________
Stock of FDI equity
capital liabilities
(% of GDP)1
Foreign owner:
total world
Total stock of FDI
liabilities (% of
GDP)1
Foreign owner:
total world
Year 2000
Year 2000
Proportion of bank
assets which are
foreign controlled2
n.a.
28,3%
12,1%
n.a.
39,8
23,8
Year 2001
25,20%
n.a.
4,74%
n.a.
21,3%
11,9%
104,9%
n.a.
n.a.
33,6%
15,0%
22,8%
14,5%
24,7%
24,0%
n.a.
25,5
19,6
126,0
10,4
n.a.
63,7
15,8
26,3
19,9
34,4
30,0
n.a.
9,49%
n.a.
n.a.
n.a.
93,78%
11,31%
n.a.
n.a.
5,65%
n.a.
51,18%
1 Source:
Response to Written question E-3637/02 by Christopher Huhne to the Commission
ECB or authorities represented in the BSC, as published in the ECB "Structural analysis of the EU banking sector"
November 20
2 Source:
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The importance of FDI flows in spreading best practice, stimulating competition and
providing better-paid jobs than home employers is well documented. The trend increase in
FDI flows is also part of the phenomenon called globalisation. This is highlighted in the
Commission's recent Report published on 23 December 2002 'Economic Reform: report on
the functioning of community product and capital markets'1. It points out that foreign direct
investment is the main driver of integration in the EU but that "intra-EU FDI flows increased
by a factor of 15 between 1995 and 2000 and was seriously hit by events in 2001, falling
below 1999 levels".2 The rapid adoption of the take-over directive could help to alleviate this
cyclical downturn while reinforcing the trend towards specialisation and scale economies.
A major advantage of increased cross-border mergers is the potential for restructuring to take
advantage of the single market, which has now been created by the Euro. Unless businesses
can locate in the most advantageous position within the market, a major benefit of EMU will
not be realised. Many studies have shown how regions tend to be more specialised by type of
business in the US than in Europe.
A key problem with cross-border take-overs is the complexity of obstacles that management
can put in their way. This is a difficulty for a company that wishes to buy a significant part or
the whole of another company. But it also inhibits cross-border investment by pension funds
and insurance companies if they feel that they may be deprived of a full return on their
shareholding by an arbitrary set of defences against a bid (so-called "poison pills"). This
therefore reduces the rate of return for the savings of pensioners who rely on investments for
their retirement provision.
It is true that hostile bids are a very small proportion of the total merger activity. Moreover,
the economic evidence for some years has shown that there are relatively few if any gains
from hostile – i.e. contested – bids for the bidding company’s shareholders. But these points
do not take account of the important role of a potential hostile bid in encouraging
managements to negotiate. If hostile bids are made more difficult, the first casualty is likely to
be negotiated or agreed bids. An important incentive to talk and agree will have been
removed. A general reduction in pressure on management to perform efficiently – and the
merger process is one of the few checks and balances on managements - is likely to reduce the
return on capital and the efficiency of the economy.
It is vital that common ground be sought on the take-over proposal, in order for the directive
to quickly become part of the 'acquis communautaire'. Although there are a number of
remaining issues in the proposed directive, the issue of "multiple voting rights" (MVRs) is one
of significant importance to several Member States and negotiations on the directive will be
blocked unless the issue is tackled. In particular, Germany has already introduced national
legislation to abolish multiple voting rights, and many German MEPs and industrialists feel
that the continued existence of multiple voting rights in other member states would put
Germany at some disadvantage. (Your Draftsman does not believe this position to be correct:
Germany would benefit from more foreign investment, not be disadvantaged by it. Moreover,
as we have seen above, the Nordic countries with the most multiple voting rights are
substantially more open to foreign ownership than Germany. But the actual rights and wrongs
of this issue seem less important in the German debate than the perception). In order to
facilitate the agreement between the Committee on Legal Affairs and the Internal Market
1
2
COM 2002/743
See figures 13, 14, 15 in Annex I
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(JURI) and the Committee on Economic and Monetary Affairs (ECON) I have highlighted the
amendments taken on board in my draft opinion which take account of amendments in the
Lehne draft report and amendments tabled so far by ECON members.
Inclusion of MVRs in directive
In this context ECON should adopt the amendments of Klaus-Heiner Lehne, the draftsman of
JURI (which form part of the Council compromise) which bring MVRs within the scope of
Article 11, with the effect of neutralising them in a take-over situation.
An exception could be French-style shares with double votes, which do not hinder take-over
operations and which are awarded as a loyalty premium to any shareholders of more than two
years standing. Double votes are allocated purely on the basis of duration of holding and they
can promote the existence of a stable shareholder base. In France, there have been a number of
high profile hostile take-over bids (e.g. BNP for Paribas and SocGen) and in practice such
loyalty votes have not been an impediment. Once the bidder has a controlling stake or a
majority of the equity – even if not yet all the voting rights – there is a general realisation that
a change of control is only a matter of time, and this triggers negotiation. Double votes are
non-transferable and do not lead to an increase in the value of the security.
To give effect to this inclusion of MVRs in the directive, a package of amendments would
have to be introduced:
ECON Amendment 35 (Amendment 18 of the draft Lehne Report).
ECON Amendment 11 (Amendment 5 in the draft Lehne Report)
Amendment 14 of the draft Lehne report
Amendment 26 in the draft Lehne Report Amendments 28 of the draft Lehne Report
Amendment 29 of the draft Lehne Report ECON Amendment 35 (Amendment 18 of the draft
Lehne Report)
ECON Amendment 104 (Amendment 34 of the draft Lehne Report).
Amendment 30 of the draft Lehne Report.
The loss of MVRs should not be compensated for as proposed by Lehne's recital (that
Member States should be able to provide redeeming mechanisms such as a higher bid price
and commitment to subsequent acceptance of an offer of sale or compensation) as this is too
vague a provision and would not amount to adequate or appropriate compensation.
ECON should adopt one of the following two options in addition to the Lehne amendments on
MVRs listed above. The options are presented in order of radicalism, with the less radical
option presented first. Your Draftsman has a strong preference for the grandfathering option given the strength of feeling in the three Nordic Member States regarding MVRs, it is the
more sensitive option and does not intrude on private arrangements. The grandfathering
option would not, given the evidence presented above, damage the creation of a level playing
field, to which we all aspire.
1. Longer Transitional period for removal of MVRs
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The principal problem with the removal of multiple voting rights in the context of a takeover
(as proposed in option one) is the question of compensation to owners since this is a
retrospective application of company law. Owners of MVR shares clearly undergo a loss, and
in cases where there is actually a loss of control of the company this could be significant. Nor
is there any easy way to assess such compensation. One solution would be to lengthen the
transitional period for the application of the breakthrough clause to MVRs exclusively (while
not delaying other aspects of the directive). This has the economic effect of reducing the loss
that they suffer. A transitional period that captured most of the economic benefit of the
ownership rights – say twenty years - could be implemented in order to take account of the
potential loss suffered by the invalidation of MVTS and to reduce the loss suffered in "net
present value"1 terms.
This necessitates a change in Amendment 38 of the draft Lehne Report, which provides for
delayed implementation of Articles 9 and 11 until 1 January 2010 at the latest.
2. Grandfathering clause for MVRs
Some MEPs feel that any retrospective application of the law to existing MVRs is an
excessive infringement on private bargains freely entered into by willing sellers and willing
buyers under the law of the time. In order to avoid retrospective legislation, which is generally
in all the member states held to be unsound, a safer course of action might be to ‘grandfather’
(or continue to allow) existing MVRs. In this case, the directive should apply only to MVRs
which are accorded subsequent to the implementation date of the directive
This necessitates the creation of a new paragraph 5a in article 11.
Your Draftsman also proposes the following changes to the Commission's proposal:
Exemptions for certain special shares
If a general grandfathering of existing property rights is not acceptable, it may nevertheless be
sensible for the parliament to allow for the continuation of special shares designed to
guarantee some public interest of a non-economic kind (for example, a commitment to high
levels of medical research, or to the editorial independence of a news-gathering operation).
This necessitates a new paragraph 5b in article 11.
Company law
The directive does not aim to harmonise national company law and will therefore not affect
the rules of Member States on this aspect.
Amendment 1 of EMPL (Committee on Employment and Social Affairs) should therefore be
supported.
Employee rights
1
"net present value" (NPV) is the present value of expected future cash flows minus the cost. A given
amount of cash in ten years is worth less than a given amount of cash today, and the difference in value
is given by the interest that would be payable on today’s cash if held for ten years.
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The proposal introduces a new Article which stresses the importance of applying existing
policy measures concerning the protection of employees such as the European Works
Council1 Directive, the Directive on collective redundancies2 and the Directive on information
and consultation of employees3. With regard to protection of employees, it is essential that
companies continue to respect the company law in force in the country where they are based,
regardless of who controls the company. This will continue to be the case under the
Commission proposal - companies subject to a take-over will continue to be subject to the
labour law and company law of the company of their home Member State. Employees will
continue to be protected by national legislation in place to protect employees in the event of a
take-over and to safeguard their existing rights when businesses are transferred.
However, the proposal needs to be amended in order to strengthen its provisions on
information, consultation and co-determination. It is essential that employees be provided in a
timely manner with information concerning the terms of the bid, in order to ensure adequate
provision of information and to ensure that the consultation of employees is carried out with
the appropriate level of information, thereby ensuring an accurate response from employees.
It is also important that not only the employees (and their representatives) of the offeree
company, but also the employees and their representatives of the offeror company be offered
consultation and the opportunity to express their views. In addition, employees of both
companies should be able to express their views not only on employment aspects but on other
aspects which will affect their interests.
ECON amendment 14 (Amendment 6 of the draft Lehne Report) should be supported.
ECON 101 should be supported.
EMPL 14 should be supported.
ECON Amendment 30 should be supported.
Amendment 3 of the draft Lehne Report should be supported.
Amendment 23 of the draft Lehne Report should be supported.
Amendment 31 of the draft Lehne Report should be supported, and part of EMPL 18.
Shareholder to shareholder agreements
The Commission proposal currently includes agreements between shareholders in the list of
corporate defence mechanisms (such as limitations and restrictions) which are considered as
hindering bids and which are therefore banned. The Commission's aim according to the
explanatory memorandum4 is to prevent "management entrenchment". However, agreements
made between shareholders on a contractual basis are in fact often employed with the specific
aim of facilitating the making of an offer, and should therefore be permitted.
ECON Amendment 82 and ECON Amendment 90 should be supported.
International reciprocity
1
94/45/EC
98/59/EC
3
2002/14
4
Page 9
2
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The Commission's text does not deal with the need for reciprocal take-over legislation in third
countries. In principle, however, EU companies should be afforded the same advantages that
the directive will bestow on companies from third countries wishing to invest in Europe. This
issue is especially important with regard to investment from economies in a position to take
full advantage of the potentially liberalising effect of the take-over directive. The United
States, for example, has certain sectoral provisions relating to media and defence industries
that are an obstacle to any take-over by an EU-registered firm. However, the amount of takeover activity from EU bidders in the US shows that this is not a generalised problem, and any
countervailing measures should be both proportionate and compatible with our international
obligations.
Amendment 10 of the draft Lehne report provides for a recital specifying that Member States
may ban take-overs from third countries or make them subject to prior approval, for as long as
access to those third country markets is hindered. Due to potential complications with WTO
arrangements, it is not appropriate to place a provision on reciprocity in the articles of the
directive.
Shared jurisdiction
The Commission proposal provides in Article 4 for shared jurisdiction where the target
company is not listed in its country of origin. However, shared jurisdiction causes practical
complications and entails significant risk, in particular in relation to take-overs. A clear
provision is therefore necessary regarding applicable law.
In addition to the principle of shared jurisdiction being problematic, the Commission's text
causes implementation difficulties by employing the use of undefined terminology such as
"bid procedure" and "company law".
In order to bring clarity to the issue of jurisdiction, your Draftsman proposes that the
competent authority should be solely that of the Member State where the offeree company has
its registered office. This therefore necessitates support for Amendments 27 and 28 of ECON
(Amendment 15 of the draft Lehne Report)
Additionally, Member States should not be permitted to provide derogations to the general
principles to be respected by national implementing measures. Amendment 29 should
therefore be supported.
State-guaranteed monopolies
The aim of the directive is to create a level playing field between market operators. Since
state guaranteed monopolies still exist within the EU, the directive should be careful not to
perpetuate advantages enjoyed by wholly state-owned monopoly structures. Amendment 19
(Amendment 11 of the draft Lehne Report) should therefore be supported which provides that
where the offeror is a state owned company, the supervisory authority may subject the takeover to a discretionary approvals procedure.
Cash alternative
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Member States should oblige offerors to provide a cash offer, at least as an alternative.
ECON Amendments 40, 44, 43 and 45 should be supported.
Comitology
The take-over proposal is a major plank of the Financial Services Action Plan, and as such it
should be subject to the agreed provisions regarding implementing measures. There should be
a "sunset clause" which will lead to the expiry of the powers four years after entry into force
of the directive unless voted anew by the parliament, and recitals concerning the commitments
undertaken by the Commission and the Council in setting out implementing measures.
Clarifications to the text

Recital 16 should be amended as in Amendment 8 (Amendment 4 of the draft Lehne
Report) so that it reflects the obligation in Article 6, paragraph 3, point (h) that the board
of the offeree company is required to publish a document setting out its opinion on the bid,
including effects on employment.

Recital 2 and recital 10 should be amended (as proposed in ECON Amendment 2 and 4
and Amendments 1 and 2 of the draft Lehne Report) so that it is clear, as it is in Article 2,
paragraph 1, point (e), that the directive includes in its scope shares carrying voting rights.
Similarly, the adoption of part of Amendment 11 is also required to ensure this
(Amendment 5 in the draft Lehne Report).

A drafting amendment (ECON Amendment 90) is necessary to ensure that Article 11
applies only to securities as defined in Article 1, paragraph 2, point (e).
AMENDMENTS
The Committee on Economic and Monetary Affairs calls on the Committee on Legal Affairs
and the Internal Market, as the committee responsible, to incorporate the following
amendments in its report:
Text proposed by the Commission1
Amendments by Parliament
Amendment 111
Recital 2
(2) It is necessary to protect the interests of
holders of securities of companies
governed by the law of a Member State
when these companies are subject to a take1
(2) It is necessary to protect the interests of
holders of securities of companies
governed by the law of a Member State
when these companies are subject to a take-
Not yet published in OJ.
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over bid or to a change of control and at
least some of their securities are admitted
to trading on a regulated market.
over bid or to a change of control and at
least some of their securities carrying
voting rights are admitted to trading on a
regulated market.
Justification
This classification is required in order to be coherent with the definition of securities in
Article 2 (e).
Amendment 112
Recital 10
(10) The obligation to launch a bid should
not apply in the case of the acquisition of
securities which do not carry voting rights
at ordinary general meetings.
Member States should, however, be able to
provide that the obligation to make a bid to
all holders of securities relates not only to
securities carrying voting rights but also to
securities which carry voting rights only in
specific circumstances or which do not
carry voting rights.
(10) The obligation to launch a bid should
not apply in the case of the acquisition of
securities which do not carry voting rights
at ordinary general meetings and where the
relinquishment of voting rights is offset by
pecuniary advantages. Member States
should, however, be able to provide that
the obligation to make a bid to all holders
of securities relates not only to securities
carrying voting rights but also to securities
which carry voting rights only in specific
circumstances or which do not carry voting
rights.
Justification
It is necessary to clarify that the directive does not apply to securities carrying voting rights
which carry pecuniary advantages.Amendment 113
Recital 12
(12) The holders of securities should be
properly informed of the terms of the bid
by means of an offer document.
Appropriate information should also be
given to the representatives of the
company's employees or, failing that, to
the employees directly.
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(12) The holders of securities should be
properly informed of the terms of the bid
by means of an offer document.
Information about all details of the terms
of the bid should also be given to the
representatives of the company's
employees. Where there are no employee
representatives in the company, the
employees should be informed directly in
as detailed a manner as necessary.
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Justification
Employees, or their representatives should be provided with information on all of the terms of
the bid.
Amendment 114
Recital 16
The board of the offeree company should be
required to make public a document setting
out its opinion on the bid and the reasons on
which it is based, including its views on the
effects of implementation on all the interests
of the company and specifically on
employment.
The board of the offeree company is required
to make public a document setting out its
opinion on the bid and the reasons on which
it is based, including its views on the effects
of implementation on all the interests of the
company and specifically on employment.
Justification
The board has an absolute obligation to provide a public document, rather than merely an
optional duty.
Amendment 115
Recital 18
(18) Member States should take the
necessary measures to afford any offeror
the possibility of purchasing the securities
of the offeree company, by neutralising
provisions placing restrictions on the
transfer of securities and on voting rights,
and to render ineffective any restrictions on
the transfer of securities and on voting
rights which may prevent an offeror who
holds sufficient securities of the offeree
company from exercising the
corresponding voting rights in order to
amend the company’s articles of
association, by neutralising restrictions on
the voting rights and special appointment
rights held by shareholders at the first
general meeting following closure of the
bid.
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(18) Member States should afford any
offeror the possibility of purchasing
securities admitted to trading on a
regulated market and carrying voting
rights by neutralising provisions placing
restrictions on the transfer of such
securities and on the attached voting
rights, and to render ineffective any
restrictions on the transfer of securities and
on voting rights which may prevent an
offeror who holds sufficient securities of
the offeree company from exercising the
corresponding voting rights in order to
amend the company’s articles of
association, by neutralising restrictions on
the voting rights, multiple voting rights
and special appointment rights held by
shareholders at the first general meeting
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following closure of the bid.
Justification
See justification to amendment to Article 5.4.1 and Article 11.
Amendment 116
Recital 18a (new)
This Directive does not seek to override
rights or restrictions whose sole purpose
is to safeguard or uphold moral, ethical or
cultural qualities or standards of a noneconomic nature which are in the public
interest and compatible with the general
provisions and other principles of
Community law.
Justification
See justification to amendment to Article 11, paragraph 5b new.
Amendment 117
Recital 20
(20) The provision of information to and
consultation of representatives of the
employees of the offeror and the offeree
company must be governed by the relevant
national provisions, and in particular those
adopted pursuant to Council Directive
94/45/EC of 22 September 1994 on the
establishment of a European Works
Council or a procedure in
Community-scale undertakings and
Community-scale groups of undertakings
for the purposes of informing and
consulting employees, Council Directive
98/59/EC of 20 July 1998 on the
approximation of the laws of the
Member States relating to collective
redundancies1 and Directive 2002/14/EC of
the European Parliament and of the
1
2
OJ L 225, 12.8.1998, p. 16.
OJ L 225, 12.8.1998, p. 16.
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(20)The provision of information to and
consultation of representatives of the
employees of the offeror and the offeree
company must be detailed and be governed
by the relevant national provisions, and in
particular those adopted pursuant to
Council Directive 94/45/EC of
22 September 1994 on the establishment of
a European Works Council or a procedure
in Community-scale undertakings and
Community-scale groups of undertakings
for the purposes of informing and
consulting employees, Council Directive
98/59/EC of 20 July 1998 on the
approximation of the laws of the
Member States relating to collective
redundancies2 and Directive 2002/14/EC of
the European Parliament and of the
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Council of 11 March 2002 establishing a
general framework for informing and
consulting employees in the
European Community. The employees of
the offeree company, or their
representatives, should nevertheless be
afforded the opportunity of giving their
views on the foreseeable effects of the bid
on employment.
Council of 11 March 2002 establishing a
general framework for informing and
consulting employees in the
European Community. The employees of
the offeree company, or their
representatives, should nevertheless be
afforded the opportunity of giving their
views on the foreseeable effects of the bid
on employment. Where there are no
employee representatives, the employees
must be informed directly in as detailed a
manner as necessary and be given an
opportunity to express their opinion.
Justification
Employee representatives must be provided with detailed information. If there are no
representatives of employees, the employees themselves must be informed in a detailed
fashion and must be provided with the opportunity to express their opinion.
Amendment 118
Recital 25b (new)
The European Parliament should be given
a period of three months from the first
transmission of draft implementing
measures to allow it to examine them and
to give its opinion. However, in urgent and
duly justified cases, this period may be
shortened. If, within that period, a
resolution is passed by the European
Parliament, the Commission should
re-examine the draft measures.
Justification
It is necessary to take into account the agreement between the Commission and Parliament on
the implementation of financial services legislation.
Amendment 119
Recital 25c (new)
In exercising its implementing powers in
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accordance with this Directive, the
Commission should respect the following
principles:
–
the need to ensure confidence in
financial markets among investors by
promoting high standards of transparency
in financial markets;
–
the need to provide investors with a
wide range of competing investments and a
level of disclosure and protection tailored to
their circumstances;
–
the need to ensure that independent
regulatory authorities enforce the rules
consistently, especially as regards the fight
against economic crime;
–
the need for high levels of
transparency and consultation with all
market participants and with the European
Parliament and the Council;
–
the need to encourage innovation in
financial markets if they are to be dynamic
and efficient;
–
the need to ensure market integrity
by close and reactive monitoring of
financial innovation;
–
the importance of reducing the cost
of, and increasing access to, capital;
–
the balance of costs and benefits to
market participants on a long-term basis
(including small and medium-sized
businesses and small investors) in any
implementing measures;
–
the need to foster the international
competitiveness of EU financial markets
without prejudice to a much-needed
extension of international cooperation;
–
the need to achieve a level playing
field for all market participants by
establishing EU-wide regulations every
time it is appropriate;
–
the need to respect differences in
national markets where these do not
unduly impinge on the coherence of the
single market;
–
the need to ensure coherence with
other EU legislation in this area, as
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imbalances in information and a lack of
transparency may jeopardise the operation
of the markets and above all harm
consumers and small investors.
Justification
This sets out principles to guide the Commission when exercising its implementing powers
Amendment 120
Recital 25d (new)
The Resolution of the European
Parliament of 5 February 2002 on the
implementation of financial services
legislation also endorsed the Committee of
Wise Men's report, on the basis of the
solemn declaration made before
Parliament the same day by the
Commission and the letter of
2 October 2001 addressed by the Internal
Market Commissioner to the chairman of
Parliament's Committee on Economic and
Monetary Affairs with regard to the
safeguards for the European Parliament's
role in this process.
Justification
It is necessary to take into account the agreement between the Commission and Parliament on
the implementation of financial services legislation
Amendment 121
Recital 26 a (new)
(26a) The general conditions governing
corporate take-overs currently differ at
international level. Member States may
therefore take proportionate action to
prohibit take-overs originating in third
countries for as long as access for
offerors from the European Union to
such markets is hampered inappropriately
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on account of legal obstacles to takeovers.
Justification
It is essential to ensure that there is a level playing field between EU law and US law and that
EU operators are able to gain access to investment in US markets since the directive will
provide access to European markets for third countries.
Amendment 122
Recital 26 b (new)
(26b) Where the offeror is a company that
derives the bulk of its turnover from a
market with monopoly structures enjoying
state protection, the Member State in
which the offeree company is based may
impose restrictive conditions on, or
prohibit, the take-over.
Justification
Monopoly structures should not be permitted to enjoy advantages which are not permitted to
other market operators.
Amendment 123
Recital 26 d (new)
(26d) Where national provisions stipulate
special rights on the part of the State or
private individuals that are designed to
hinder the acquisition of the offeree
company such as golden shares,
restrictions on voting rights and multiple
voting rights, the Member States must
make appropriate notification to the
Commission.
Justification
The Commission rightly proposes – in keeping with the case law of the European Court – that
the problem of the golden share should be resolved by means of primary Community law. It
also appears to make sense to provide for an appropriate notification requirement
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particularly since golden shares are in some cases considered admissible by this case law
subject to stringent conditions.
Amendment 124
Article 2, paragraph 1, point (g) (new)
(g) ‘multiple voting shares’ means shares
included in a distinct and separate class
and carrying a vote of higher weight than
other shares.
Justification
In accordance with amendments to Article 11, a definition of "multiple voting rights" is
required within the directive for the sake of clarity.
Amendment 125
Article 4, paragraph 2
(a)
The authority competent for
supervising the bid shall be those of the
Member State in which the offeree company
has its registered office if the securities of
that company are admitted to trading on a
regulated market in that Member State.
The authority competent and the law
applicable for supervising the bid shall be
those of the Member State in which the
offeree company has its registered office.
(b)
If the securities of the offeree
company are not admitted to trading on a
regulated market in the Member State in
which the company has its registered office,
the authority competent for supervising the
bid shall be that of the Member State on
whose regulated market the securities of
the company are admitted to trading.
If the securities of the company are
admitted to trading on regulated markets in
more than one Member State, the authority
competent for supervising the bid shall be
that of the Member State on whose
regulated market the securities were first
admitted.
(c)
If the securities of the offeree
company are first admitted to trading on
regulated markets within more than one
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Member State simultaneously, the offeree
company shall determine which of the
supervisory authorities of those
Member States is the competent authority
for supervising the bid by notifying these
regulated markets and their supervisory
authorities on the first trading day.
(d)
Member States shall ensure that the
decisions referred to in point (c) are made
public.
(e)
In the cases referred to in points (b)
and (c), matters relating to the
consideration offered in the case of a bid,
in particular the price, and matters relating
to the bid procedure, in particular the
information on the offeror's decision to
make a bid, the contents of the offer
document and the disclosure of the bid,
shall be dealt with in accordance with the
rules of the Member State of the competent
authority. In matters relating to the
information to be provided to the employees
of the offeree company and in matters
relating to company law, in particular the
percentage of voting rights which confers
control and any derogation from the
obligation to launch a bid, as well as the
conditions under which the board of the
offeree company may undertake any action
which might result in the frustration of the
bid, the applicable rules and the competent
authority shall be those of the Member
State in which the offeree company has its
registered office.
Justification
The provisions on applicable law are overly complex. The supervisory authority of the
country where the offeree has its registered office should be the sole supervisory authority.
Amendment 126
Article 4, paragraph 5, subparagraph 2
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Provided that the general principles set out
in Article 3(1) are respected, Member States
may provide in their rules made or
introduced pursuant to this Directive that
their supervisory authorities may, in
certain types of cases determined at
national level and/or in other special cases,
grant derogations from these rules on the
basis of a reasoned decision.
deleted
Justification
In the interests of creating a level playing field within Europe, Member States should not be
permitted to allow derogations from the directive.
Amendment by Christa Randzio-Plath
Amendment 127
Article 5, paragraph 1
Where a natural or legal person who, as a
result of his own acquisition or the
acquisition by persons acting in concert with
him, holds securities of a company referred
to in Article 1(1) which, added to any
existing holdings and the holdings of
persons acting in concert with him, directly
or indirectly give him a specified percentage
of voting rights in that company, conferring
on him the control of that company, Member
States shall ensure that this person is
required to make a bid as a means of
protecting the minority shareholders of that
company. This bid shall be addressed at the
earliest opportunity to all holders of
securities for all their holdings at an
equitable price.
Where a natural or legal person who, as a
result of his own acquisition or the
acquisition by persons acting in concert with
him, holds securities of a company referred
to in Article 1(1) which, added to any
existing holdings and the holdings of
persons acting in concert with him, directly
or indirectly give him a specified percentage
of voting rights in that company, conferring
on him the control of that company, Member
States shall ensure that this person is
required to make a bid as a means of
protecting the minority shareholders of that
company and of creating transparency for
the offeree company, and in particular for
its employees. This bid shall be addressed at
the earliest opportunity to all holders of
securities for all their holdings at an
equitable price.
Or. de
Justification
The purpose of the take-overs directive must not be confined to investor protection but must
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also include protection of the interests of the offeree company's employees.
Amendment 128
Article 5, paragraph 1
1. Where a natural or legal person who, as
a result of his own acquisition or the
acquisition by persons acting in concert
with him, holds securities of a company
referred to in Article 1(1) which, added to
any existing holdings and the holdings of
persons acting in concert with him, directly
or indirectly give him a specified
percentage of voting rights in that
company, conferring on him the control
of that company, Member States shall
ensure that this person is required to make
a bid as a means of protecting the minority
shareholders of that company. This bid
shall be addressed at the earliest
opportunity to all holders of securities for
all their holdings at an equitable price.
1. Where a natural or legal person who, as
a result of his own acquisition or the
acquisition by persons acting in concert
with him, holds securities of a company
referred to in Article 1(1) which, added to
any existing holdings and the holdings of
persons acting in concert with him, directly
or indirectly give him 30% of the shares
carrying most voting rights pursuant to
Article (3) and (4), Member States shall
ensure that this person is required to make
a bid as a means of protecting the minority
shareholders of that company. This bid
shall be addressed at the earliest
opportunity to all holders of securities for
all their holdings at an equitable price.
Justification
A threshold for the triggering a bid should be incorporated into the directive, in order to
provide uniformity across the EU .
Amendment 129
Article 5(3)
3. The percentage of voting rights which
confers control for the purposes of
paragraph 1 and the method of its
calculation shall be determined by the
rules of the Member State in which the
company has its registered office.
deleted
Justification
Article 5(3) lapses as a result of the amendment to paragraph 1.
Amendment 130
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Article 5, paragraph 4, subparagraph 1
The highest price paid for the same
securities by the offeror, or by persons
acting in concert with him, over a period of
between six and twelve months prior to the
bid referred to in paragraph 1 shall be
regarded as an equitable price.
The highest price paid for the same
securities by the offeror, or by persons
acting in concert with him, over a period of
between six and twelve months prior to the
bid referred to in paragraph 1 shall be
regarded as an equitable price. Where in
the case of shares carrying multiple
voting rights the equitable price cannot be
determined in accordance with the
provisions of this paragraph because
these shares are not traded on any
market, the equitable price for securities
of this nature shall be calculated in
accordance with provisions adopted by the
Member States pursuant to the respective
ownership and constitutional
requirements.
Justification
The equitable price should be determined by Member States where it cannot be determined
by the first part of subparagraph 1.
Amendment 131
Article 5, paragraph 4, subparagraph 2 and 3
Member States may authorise their
supervisory authorities to adjust the price
referred to in the first subparagraph in
circumstances and according to criteria
that are clearly determined. To that end,
they shall draw up a list of circumstances
in which the highest price may be adjusted
either upwards or downwards, for example
where the highest price was set by
agreement between the purchaser and a
seller, where the market prices of the
securities in question have been
manipulated, where market prices in
general or certain market prices in
particular have been affected by
exceptional occurrences, or in order to
enable a firm in difficulty to be rescued.
They may also determine the criteria to be
applied in such cases, for example the
average market value over a particular
period, the break-up value of the company
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or other objective valuation criteria
generally used in financial analysis.
Any decision by a supervisory authority to
adjust the equitable price shall be
substantiated and made public.
Justification
The proposed derogation powers of the Commission with regard to the equitable price should
be deleted since they are vague and impractical. Derogation powers are already granted in
Article 4, paragraph 5.
Amendment 132
Article 5, paragraph 5, subparagraph 1
The consideration offered by the offeror
may consist exclusively of liquid securities.
The offeror may offer as consideration
securities or cash or a combination of
them, unless Member States stipulate that
the consideration has to include a cash
consideration at least as an alternative
Justification
Member States should be able to require that a cash offer is provided as an alternative to an
offer of only listed securities. This would provide for flexibility in the interests of minority
shareholders.
Amendment 133
Article 5, paragraph 5, subparagraph 2
Where the consideration offered by the
offeror does not consist of liquid securities
admitted to trading on a regulated market,
Member States may stipulate that such
consideration has to include a cash
consideration at least as an alternative.
However, Where the consideration offered
by the offeror does not consist of liquid
securities admitted to trading on a regulated
market, Member States shall stipulate that
such consideration has to include a cash
consideration.
Justification
See justification to amendments to Article 5, paragraph 5, subparagraph 1
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Amendment 134
Article 5, paragraph 5, subparagraph 3
In any event, the offeror shall offer a cash
consideration at least as an alternative
where, either individually or together with
persons acting in concert with him, over a
period beginning at least three months before
his bid is made pursuant to Article 6(1) and
ending before expiry of the period for
acceptance of the bid, he has purchased in
cash more than 5% of the securities or
voting rights of the offeree company.
In any event, the offeror shall offer a cash
consideration at least as an alternative
where, either individually or together with
persons acting in concert with him, over a
period beginning at least three months before
his bid is made public pursuant to Article
6(1) and ending on expiry of the period for
acceptance of the bid, he has purchased in
cash securities carrying more than 5% of the
voting rights of the offeree company.
Justification
"Public" should be inserted to be consistent with Article 6 (1). "Before" should be placed
before "on" to make the expiry date clear. The 5% test should be clarified so that the
obligation to offer a cash consideration is determined by the purchase of securities carrying
more than 5% of the voting rights of the offeree company. This is necessary to be consistent
with Article 5 (1) which relates only to the acquisition of "securities" as defined in Article 2
(1) e and not to voting rights 1
Amendment 135
Article 9, paragraph 3.
3.
As regards decisions taken before
the beginning of the period referred to in
the second subparagraph of paragraph 2
and not yet partly or fully implemented, the
general meeting of the shareholders shall
approve or confirm any decision which
does not form part of the normal course of
the company's business and whose
implementation may result in the
frustration of the bid.
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3.
Member States may provide that as
regards decisions taken before the
beginning of the period referred to in the
second subparagraph of paragraph 2 and
not yet partly or fully implemented, the
general meeting of the shareholders and
the supervisory board in those Member
States where that is determined by
national law shall approve or confirm any
decision which does not form part of the
normal course of the company's business
and whose implementation may result in
the frustration of the bid.
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Justification
The proposal needs to take account of the different systems of national law.
Amendment 136
Article 10, paragraph 3
3. Member States shall ensure that, in the
case of companies whose securities are
admitted to trading on a regulated market
in a Member State, the general meeting of
shareholders takes a decision at least every
two years on the structural aspects and
defensive mechanisms referred to in
paragraph 1. They shall require the board to
state the reasons for those structural aspects
and defensive mechanisms.
3. Member States shall ensure that, in the
case of companies whose securities are
admitted to trading on a regulated market
in a Member State, the general meeting of
shareholders takes a decision each year on
the structural aspects and defensive
mechanisms referred to in paragraph 1.
They shall require the board to state the
reasons for those structural aspects and
defensive mechanisms.
Justification
The decision should be taken every years, in order to ensure that it is up to date. A decision
every two years is not sufficient.
Amendment 137
Article 10, paragraph 3a (new)
4. Where the legislation of a Member
State grants special rights to, or imposes
restrictions on, that Member State or third
parties that are designed to obstruct the
acquisition of the offeree company by the
offeror, such Member States shall be
required to notify the matter to the
Commission. The Commission shall
examine the justification for these special
provisions on the basis of the Treaty.
Justification
The Commission should be supported so as not to settle the issue of golden shares in this
directive but to resolve it on the basis of primary Community law in accordance with the
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decisions of the European Court of Justice. However, Member States should at least be
required to notify the Commission of provisions..
Amendment 138
Article 11, Title
Unenforceability of restrictions on the
transfer of securities and voting rights
Breakthrough
Justification
The title should be amended in order to be more transparency and clear about the provision
of Article 11.
Amendment 139
Article 11, paragraph 2, subparagraph 2
Any restrictions on the transfer of securities
provided for in contractual agreements
between the offeree company and holders of
its securities or between holders of
securities of the offeree company shall be
unenforceable against the offeror during the
period for acceptance of the bid.
Any restrictions on the transfer of securities
provided for in contractual agreements
between the offeree company and holders of
its securities shall be unenforceable against
the offeror during the period for acceptance
of the bid
Justification
Shareholders should be able to enter freely into agreements between themselves, and the
prohibition on shareholder agreements should be deleted.
Amendment 140
Article 11, paragraph 3
Any restrictions on voting rights provided
for in the articles of association of the
offeree company shall cease to have effect
when the general meeting decides on any
defensive measures in accordance with
Article 9.
Any restrictions on voting rights of
securities provided for in the articles of
association of the offeree company shall
cease to have effect when the general
meeting decides on any defensive measures
in accordance with Article 9.
Any restrictions on voting rights provided
Any restrictions on voting rights of
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for in contractual agreements between the
offeree company and holders of its securities
or between holders of securities of the
offeree company shall cease to have effect
when the general meeting decides on any
defensive measures in accordance with
Article 9.
securities provided for in contractual
agreements between the offeree company
and holders of its securities shall cease to
have effect when the general meeting
decides on any defensive measures in
accordance with Article 9.
Justification
See justification to amendment to 11.2. The term "of securities" has been added in order to
clarify. .
Amendment 140
Article 11, paragraph 3a (new)
3a. Multiple voting shares shall not carry
a vote of a higher weight than other
shares at the general meeting which
decides on any defensive measures in
accordance with Article 9.
Justification
Multiple voting rights should be included in the breakthrough rule, in accordance with the
view of the High Level Group of Company Law Experts ("Winter Group").
Amendment 141
Article 11, paragraph 4
4. Where, following a bid, the offeror
holds a number of securities of the
offeree company which, under the
applicable national law, would enable
him to amend the company's articles of
association, any restrictions on the
transfer of securities and on voting rights
referred to in paragraphs 2 and 3 and any
special rights of shareholders concerning
the appointment or removal of board
members shall cease to have effect at the
first general meeting following closure of
the bid.
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4. Where, following a bid, the offeror holds
75% of the securities of the offeree company
which, under the applicable national law,
would enable him to amend the company's
articles of association, any restrictions on the
transfer of securities and on voting rights
referred to in paragraphs 2 and 3 and any
special rights of shareholders concerning the
appointment or removal of board members
shall not apply and multiple voting rights
shall carry one vote only at the first general
meeting following closure of the bid.
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Justification
Multiple voting rights should be included in the breakthrough rule, as well as a harmonised
threshold.
Amendment 142
Article 11, paragraph 5a (new)
(a) Paragraphs 2, 3 and 4 shall not
apply to:
(i) restrictions on the transfer of
securities;
(ii) restrictions on voting rights
(iii) special rights of shareholders
concerning the appointment or
removal of board members; and
(iv) multiple voting shares;
which were in existence and in the public
domain on 1 January 2003
(b)
Member States shall cause to be
maintained, in respect of companies
incorporated under the laws of that
Member State, a register of such rights
and restrictions which shall be available
for public inspection. Failure to register
such any such right or restriction in the
relevant register by 1 January 2010 shall
remove the protection afforded by this
paragraph.
Justification
The Directive should not interfere with private contractual rights and constitutional
mechanisms freely entered into, or accepted on investment, by shareholders in the past and
which were perfectly legal at the time. The principal purpose of the Directive is the provision
of safeguards for shareholders (Recital 1), to protect the interests of shareholders (Recital 2),
and to create “community-wide clarity and transparency in respect of legal issues to be
settled in the event of take-over bids and to prevent patterns of corporate
restructuring…………. from being distorted……….”. The purpose is not to eliminate existing
property rights, nor to eliminate other rights and structures the purpose of which is neither to
entrench management nor to protect economic rights or benefits. Article 11 [in its likely
amended form] will achieve both, giving rise to a need for a compensation mechanism which
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will be both complicated and, in some cases, arbitrary. In any event, certain rights may not be
capable of compensation by economic means. Assessing compensation in a take-over
situation may therefore be difficult or in some cases impossible, leading to market uncertainty
and prejudice to companies and their shareholders.
Amendment 143
Article 11, paragraph 5a (new)
6. The provisions of Article 11 shall not
apply to take-overs of offeree companies
admitted to the stock market less than 5
years ago.
Justification
Start-up companies and young companies should be provided with a derogation in order to
encourage their development.
Amendment 144
Article 11, paragraph 5b (new)
Paragraphs 2, 3 and 4 shall not apply to
rights and restrictions whose sole purpose
is to safeguard or uphold moral, ethical or
cultural qualities or standards of a noneconomic nature which are in the public
interest and compatible with the general
provisions and other principles of
Community law. The shareholder
exercising such special powers shall be
independent in terms of legal structure
and economic interests of the board of
directors and of other shareholders.
Justification
Amendment 145
Article 13
Information for and consultation of
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employees' representatives
employees' representatives
Without prejudice to the provisions of this
Directive, the provision of information to
and consultation of representatives of the
employees of the offeror and the offeree
company shall be governed by the relevant
national provisions, and in particular those
adopted pursuant to Directives 94/45/EC,
98/59/EC and 2002/14/EC.
The provisions of this Directive are
without prejudice to the rules relating to
the provision of information to and
consultation and codetermination of
representatives of the employees of the
offeror and the offeree company governed
by the relevant national provisions, and in
particular those adopted pursuant to
Directives 94/45/EC, 98/59/EC and
2002/14/EC.
Justification
Employees are involved not only via information and consultation but via codetermination.
The boards of the offeror and offeree company must consult the employees and their
representatives during the take-over process. See also justification to amendment to Article 9,
paragraph 5.
Amendment 146
Article 15a (new)
Article 15a
Sell-out right in the case of multiple
voting rights
1. Member States shall provide that
holders of shares carrying multiple voting
rights that have been set aside by a
decision of the general meeting of the
offeree company pursuant to Article 11(4)
may require the offeror to acquire such
securities at an equitable price. The
equitable price shall be determined in
accordance with the provisions of Article
5.
Justification
See justification to amendment to 11.3 a new
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Amendment 148
Article 17, paragraph 3a (new)
Without prejudice to the implementing
measures already adopted, on the expiry of
a four-year period following its entry into
force of this Directive, the application of its
provisions requiring the adoption of
technical rules and decisions in accordance
with paragraph 2 shall be suspended. On a
proposal from the Commission, the
European Parliament and the Council may
renew the provisions concerned in
accordance with the procedure laid down in
Article 251 of the EC Treaty and, to that
end, they shall review them prior to the
expiry of the period referred to above'
Or. de
Justification
In the absence of a permanent procedure for democratic oversight of Commission
implementing measures, including a legally binding call-back mechanism, the Parliament
must protect its prerogatives by setting a time limit on the powers accorded to the
Commission and the Securities Committee. This amendment will ensure that the Commission
takes due account of the Parliament's position on implementing measures, since it will know
that its powers to adopt new implementing measures will not be renewed by the Parliament
unless it does. Any potential for a legal vacuum is minimised, first because existing legislation
and implementing rules will not be repealed, and second because the amendment requires the
Council and Parliament to review the provisions on the basis of a Commission proposal prior
to the expiry of the 4 year period. This amendment is taken from conclusion 17 of the von
Wogau report on the implementation of financial services legislation (A5-0011/2002). It is
necessary to take into account the agreement between the Commission and Parliament on the
implementation of financial services legislation.
Amendment 149
Article 19
Transitional period
Transitional periods
Member States are authorised to postpone
application of Article 9 for a period of not
more than three years after the date laid
down in Article 20(1), provided that they
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Notwithstanding Article 20(12), member
states shall promulgate by no later than 1
January 2010 the necessary legal and
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inform the Commission thereof not later
than that date.
administrative provisions for
implementation of Articles 9 and 11.
Member States may, however, extend the
transitional period for the application of
Article 11 paragraphs 2,3 and 4 to multiple
voting rights, restrictions on voting rights,
restrictions on the transfer of securities and
special rights of shareholders concerning
the appointment or removal of board
members for a period not exceeding twenty
years from the entry into force of the
directive.
Justification
Member States must enact by 1 January 2010 Articles 9 and 11, and for paragraphs 2, 3, 4,
they may delay implementation until 20 years from the entry into force of the directive.
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