EU Takeover Directive – Success after 30 years of discussion?

The paper calls for an urgent adoption of an EU-wide regulation of company takeovers.

EU-wide regulation of company takeovers is urgently needed. The regulatory environment currently in place, in which the EU member states set, independently of one another, their own often very different rules for changes in corporate control, is fettering European companies’ restructuring and development and placing them at a disadvantage in international competition.

Pressure is building up to create a level playing field in the EU, given that meanwhile more than one in every three takeovers is of a cross-border nature. Harmonisation of takeover regulations will benefit the German economy in particular, since more than 70% of all takeovers there are conducted across borders.

After decades of debate and the spectacular failure of the first draft EU Takeover Directive, the EU Commission has put forward a second, revised version. Its renewed dismissal would deal the European economy a severe blow.

The new draft Directive marks an important step, but in many respects it does not do justice to the necessities of the EU internal market.

• Aiming only at a minimum level of harmonization means that in future, too, different regulations – not only on details – will be applied in the member states.
• The Commission has followed only in rudimentary form the proposal by a high level group of legal experts to declare inoperative multiple voting rights, restrictions on voting rights and restrictions on the transfer of securities in the event of a takeover dispute.
• The regulations on supervision and applicable law in respect of takeovers across borders are too complicated and inconsistent.
• Control thresholds and determination of the price for voluntary bids must be made more specific.

Circumventing the most controversial regulations by reducing the proposal to a “rump directive” is not an acceptable solution.

The Directive is no more than a first step towards the creation of EU-wide takeover legislation. Its harmonisation must be intensified in future and taken beyond European borders. EU company law as a whole will also have to be adapted to internal market requirements and brought further into line.

Read the

complete texton the Deutsche Bank Research website.