No C 298/56 Official Journal of the European Communities 27. 11. 89 
Opinion on the proposal for a thirteenth Council Directive on company law concerning 
takeover and other general bids(1) 
(89/C 298/15) 
On 9 March 1989 the Council decided to consult the Economic and Social Committee, 
under Article 54 of the Treaty establishing the European Economic Community, on the 
abovementioned proposal. 
The Section for Economic, Financial and Monetary Questions, which was responsible for 
preparing the Committee's work on the subject, adopted its Opinion on 12 September 1989. 
The rapporteur was Mr Drago. 
At its 269th plenary session (meeting of 27 September 1989) the Economic and Social 
Committee adopted the following Opinion by 102 votes to 11, with 20 abstentions. 
1. General comments 
1.1. The proposal for a thirteenth Council Directive 
on company, law, adopted under Article 54 (3) (g) of 
the Treaty, concerning takeover and other general bids 
for public companies limited by shares, reflects a genu­
ine need for market transparency, correct information, 
equivalent protection for companies, shareholders and 
other interested parties, and for equal treatment within 
the various categories mentioned. 
At present, in view of the economic and legal back­
ground in some Member States, there are de facto and 
legal obstacles to implementing the Directive. 
The Committee is nonetheless aware that the Com­
mission is examining these very real obstacles. 
1.2. With the impending completion of the Internal 
Market and integration of financial markets, public 
issues of securities will have to be governed by rules 
upholding the rights and interests of all parties if there 
is to be freedom and mobility in the takeover market—a 
vital ingredient for a healthy economy. 
1.3. Takeover bids could be a useful way of stimulat­
ing productivity, provided industrial policy does not 
treat the productive and financial aspects of the econ­
omy as separate entities. Rules on takeover bids should 
therefore be part of a legislative framework which can 
be adapted to new situations as and when necessary. 
1.4. The formation of groups within the Community 
which can meet the challenge of international compe­
tition will help boost the standing of the European 
financial market and the productive economy in gen­
eral. 
(') O] No C 64, 14. 3. 1988, p. 8. As things stand at present, it is easy for non-EC oper­
ators with high financial profits and a substantial debt 
capacity to take over strategically important Com­
munity companies. 
Morevoer, given the legal and economic background 
in some Member States, existing imbalances and the 
absence of comparable conditions could prove to be 
the main stumbling-blocks to effective implementation 
of the Directive. The Committee trusts that these de 
facto inequalities between the situation of the Member 
States as regards the takeovers Directive will be the 
subject of a thorough examination and, possibly, of 
corrective measures. 
Similarly, it is clearly unfair that non-EC companies 
should be able to take over Community firms without 
the reverse being possible. 
The Committee calls on the Commission to examine 
positive measures to compensate for the lack of a prin­
ciple of reciprocity (which would in fact be fully justi­
fied at the present time). 
It wonders particularly about the Exon-Florio amend­
ment to the Trade Act, which would justify the general 
implementation of similar measures in the Community 
in the event of widespread application. 
1.5. In view of recent stock market trends and the 
financial techniques used for mounting and fending off 
takeover bids, and looking at those countries which 
have introduced rules on takeovers, the Committee 
stresses the need for companies to operate within a 
clear and precise legal framework. 
Nevertheless in view of the manner in which tactics 
and techniques develop so rapidly in the field of take­
overs there is a need for national regulatory authorities 
to be provided with powers that allow some measure 
of flexibility, albeit within clearly defined parameters. 
27. 11. 89 Official Journal of the European Communities No C 298/57 
1.6. The Committee also regrets that, as the pro­
posed Directives on transfrontier mergers and a Euro­
pean company statute have not yet been adopted, there 
is no means of comparing the general approaches under­
lying rules on takeovers and mergers, apart from the 
financial techniques and legal transactions involved. 
1.7. Finally, the Committee feels it might have been 
useful to introduce a standard procedure for takeover 
bids aimed at boosting investment or acquiring a con­
trolling interest in a company, and a simplified pro­
cedure for bids intended to consolidate an existing 
holding, so as to reduce company obligations where 
possible. 
2. Examination of the Articles of the proposed Direc­
tive 
Article 2 
The Committee would ask the Commission to consider 
the position of securities without voting rights (savings 
shares, investment certificates, etc.). 
Article 4 
Given that the supervisory authorities may grant 
exemptions (paragraph 3), the Committee feels that the 
threshold of 33 1/3% (paragraph 1) is acceptable. 
However, it has reservations about the obligation to 
make a bid for all the securities of the offeree company. 
The last line of paragraph 1 should be amended to 
read: '... make a public bid to acquire at least 2/3 of 
that company's securities.' In the Committee's view, it 
is vital to apply the rule of proportional distribution 
on a pro rata basis. 
Reason: considerable resources would automatically be 
required by the party mounting the takeover bid, there­
by guaranteeing sufficient capital gains, preventing 
marked imbalances in the event of successful resistance 
and avoiding the risk of too many constraints being 
placed on takeovers and companies being withdrawn 
from stock exchange lists. Minority shareholders must 
be protected by the maintenance of the offeree com­
pany's stock exchange quotation after the completion 
of the takeover bid. 
It can however be argued that the obligation for bids 
to cover all securities of the company concerned would 
prevent purely speculative partial bids. The solution 
would be to distinguish between bids made with the consent of the board or management of the company 
concerned, from bids made without this consent, with 
the obligation for bids to cover all securities applying 
only to the latter. 
Add a point 2 (e): 'Holdings with possible immediate 
access to securities with voting rights.' 
Article 5 
The Committee endorses the principle of cumulative 
criteria and considers the limits on net turnover (ECU 
12 800 000), the balance sheet total (ECU 6 100 000) 
and the number of employees (250) laid down by the 
fourth Council Directive on annual accounts (Articles 
11 and 27) to be reasonable. 
The rules should be simplified as far as possible in the 
case of takeovers involving small firms which are not 
quoted on the stock exchange, as well as for the least 
important companies covered by the Directive. 
There is a need to avoid the situation, prevalent in the 
USA, where litigation has become part an parcel of 
virtually every contested takeover bid. This in itself 
can constitute a barrier to the proper exercising of 
shareholders' rights. It is suggested that this Article be 
expanded so as to limit the extent to which provisions 
of the Directive can be made the basis of litigation in 
national courts. 
Article 7 
The Committee feels that the date on which a takeover 
bid is launched should be clearly established as being 
the date on which the requests are officially submitted. 
It would be unacceptable to consider a bid as a formal 
offer simply on the basis of a declaration of intent, as 
this would paralyse the board of the offeree company. 
The supervisory authorities set up under Article 6 
should also verify dealings which may have been 
initiated by persons with access to restricted infor­
mation (draft Directive on insider trading). 
Article 8 
The Committee agrees that the powers of the board of 
the offeree company should be restricted as soon as the 
bid has been launched. Contrary to the Commission 
proposal, however, it feels that if a general meeting of 
No C 298/58 Official Journal of the European Communities 27. 11. 89 
shareholders has previously voted to increase the capital 
at the discretion of the board, it should be possible to 
do this during the course of a takeover bid even if the 
reasons have not been explicitly stated. 
The use of authorized capital is not an infringement of 
the rights of those to whom the bid is offered. 
The phrase 'or of a specific delegation' should therefore 
be added after 'shareholders' in the first paragraph. 
With respect to paragraph b), the Committee considers 
that, during a takeover bid, the offeree company should 
continue to be run by a board which can i) conclude 
transactions which were sufficiently advanced before 
the bid was launched, and ii) carry out any transactions 
of an urgent nature which add to, rather than detract 
from, the company's corporate property. 
Article 9 
Add a second sentence to read: 'The representative of 
the offeror is the guarantor of the offer.' 
Article 10 
The Committee considers that the supervisory auth­
orities provided for under Article 6 should be em­
powered to inquire into the financing conditions 
attached to the offeror's bid and, where the conditions 
are clearly unreasonable, oblige him to make this infor­
mation public. 
The phrase 'and the date and the price at which they 
were acquired' in Article 10 (f) is superfluous and 
should be deleted from the final text. 
With regard to paragraph 1 (1), it is vital that the 
offeror's intentions are clearly set out in the offer docu­
ment. 
Done at Brussels, 27 September 1989. Article 12 
The period for accepting the bid may not be less than 
four weeks or more than six weeks. 
Article 13 
Delete the word 'official' in paragraph 1 (c). 
Article 14 
Add at the end of paragraph 1 'of which they are 
aware'. 
Amend paragraph 3 to read: 'The reports shall be filed 
with the competent supervisory authority in good time 
before the expiry of the period for acceptance and, 
upon receiving the stamp of approval, shall be made 
public by the means provided for in Article 11 (1).' 
Article 19 
In the event of a takeover bid, all relevant information 
should be supplied to workers' representatives and all 
employees of the offeree company, alongside the infor­
mation given to shareholders. The boards of the com­
panies concerned should update information before 
final agreements are reached and, in the event of a 
hostile bid, information should be made available 
before the takeover bid is publicly announced. All 
aspects of takeovers should be discussed with workers' 
representatives. 
Article 21 
In the Committee's view, the Contact Committee 
should be covered by the rules laid down in the Directive 
on the admission of securities to official stock exchange 
listing. 
The Committee would also like the Contact Committee 
to provide adequate guarantees of vigilance. 
Article 22 
The fact that there is no fixed date for the implemen­
tation of this Directive should not stand in the way of 
its entry into force within the deadline for completion 
of the Internal Market. 
The Chairman 
of the Economic and Social Committee 
Alberto MASPRONE 
27. 11. 89 Official Journal of the European Communities No C 298/59 
APPENDIX 
to the Opinion of the Economic and Social Committee 
Article 19 
b) Delete the last sentence: 
'All aspects ... representatives.' 
Reasons 
The amendment is self-explanatory. 
Voting 
For: 47, against: 69, abstentions: 15. 
Opinion on the contribution of the cooperative sector to regional development 
(89/C 298/16) 
On 31 May 1988 the Economic and Social Committee, acting under the third paragraph of 
Article 20 of its Rules of Procedure, decided to draw up an Opinion on the contribution of 
the cooperative sector to regional development. 
The Section for Regional Development and Town and Country Planning, which was respon­
sible for preparing the Committee's work on the subject, adopted its Opinion on 29 June 
1989. The rapporteur was Mr Bento Goncalves. 
At its 269th plenary session (meeting of 28 September 1989), the Economic and Social 
Committee unanimously adopted the following Opinion. 
1. Introduction 
1.1. The White Paper presented at the 1985 Milan 
Summit sets out the objectives which will underpin the 
completion of the Internal Market. The new decision­
making procedures introduced by the Single European 
Act in 1987 should help to achieve these objectives. 
1.2. The principles of free movement of goods, 
people, services and capital are fundamental to an area 
without frontiers. They affect a large number of socio­
economic operators, including those in the cooperative 
movement. 
1.3. The very general terms of Article 100 of the 
Treaty of Rome also embrace the cooperative sector. 
The second paragraph of Article 58 specifically men­
tions cooperatives societies as having a direct impact 
in the establishment and functioning of the Common 
Market. 1.4. In this context, the Committee welcomes the 
fact that the Commission has accorded formal recog­
nition to the cooperative sector, in the wake of the 
European Conference on the cooperative, mutual and 
non-profit sector held on 20 and 21 November 1986 by 
the ESC and the European cooperatives' coordination 
Committee. The Committee also appreciates the Euro­
pean Parliament's work on this subject in the Mihr, 
Avgerinos and Trivelli reports. 
2. Regional development and the completion of the 
Internal Market 
2.1. To achieve the goals of a People's Europe and 
the Single European Act, the Community institutions 
must first create conditions in which the various econ­
omic and social operators can help achieve the goals