18. 4. 91 Official Journal of the European Communities No C 102/49 
Opinion on the amended proposal for a thirteenth council Directive on company law 
concerning takeover and other general bids 
(91/C 102/14) 
At the plenary session on 27 September 1989 the Economic and Social Committee adopted 
its Opinion on the abovementioned proposal. 
In view of the Commission's amended proposal on this subject, the Committee Bureau 
proposed on 30 January 1990 that, in accordance with Article 20(3) of the Rules of Procedure, 
an additional Opinion should be drawn up on the abovementioned amended 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 February 1991. 
The Rapporteur was Mr Tyrie. 
At its 284th plenary session (meeting of 28 February 1991) the Committee adopted the 
following Opinion by a large majority with 19 votes against and 4 abstentions. 
1. General comments 
1.1. As pointed out in the Committee's original 
Opinion (paragraph 1.5) in the field of takeovers there is 
a need for national regulatory authorities to be provided 
with powers that allow some measure of flexibility. 
Given the nature of takeovers, it is prudent that the 
supervisory authority be able to operate within an 
established framework of general principles which 
enable it to react quickly to changing situations and to 
adopt a flexible approach to the application of detailed 
rules. It is to be regretted that the amended draft has 
not taken this more into account. As it stands, the 
Directive does not grant the supervisory authority gen­
eral power to suspend or adapt rules. Nor does it 
subordinate the detailed rules of the Directive to a set 
of general principles. The approach is to set out detailed 
rules and provide for exemption from them on an 
Article by Article basis, either at the option of the 
Member States, or, at the discretion of the supervisory 
authority. There are now principles in the Directive, 
but they are there to guide the supervisory authority in 
the exercise of its functions, rather than setting the 
framework for all the rules, and applying to all the 
parties to a bid. 
A possible approach would be to limit the Directive to 
stating the general principles and to include the detailed 
rules by way of an appendix to serve as possible guide­
lines and suggestions to the Member States which could 
then develop their own detailed rules based on the 
general principles. 
Great care also needs to be taken to ensure that the 
Directive does not offer scope for tactical litigation 
during the course of an offer, either by the parties to a bid against the supervisory authority or between the 
parties to a bid. The risk is that the Directive would 
spawn large amounts of litigation during the course 
of a bid which has, for example, bedeviled American 
practice in this field, as pointed out in the Committee's 
original Opinion. 
To that end, the supervisory authority should be 
responsible for the determination of questions concern­
ing compliance by the parties to a bid with the obli­
gations arising from the Directive and to have flexibility 
within the framework of general principles. 
As the earlier Opinion of the Committee makes clear, 
the state of both takeover activities between Member 
States and its regulation, differs widely throughout the 
Community. Whatever the merits of reducing these 
differences it would seem prudent to take them into 
account by avoiding, where possible, a prescriptive 
approach. 
Further, it is not clear to what extent it would be 
possible for Member States' own authorities to add to 
the requirements of the Directive. The position should 
be dealt with expressly in the text of the Directive by 
way of a general provision; otherwise companies could 
point out that having complied with the Directive, they 
could not be made subject to additional obligations. 
Clarification is needed here. 
1.2. The principle of a takeover or other general bid 
for all the securities of the offeree company is justifiable 
on the ground that it prevents the acquisition of com­
panies for a price which does not reflect their true 
value; however, in the event of an agreement with the 
target company a partial takeover bid must still be 
possible so to avoid wasting energy and money in 
battles which harm the economy as a whole. 
No C 102/50 Official Journal of the European Communities 18. 4. 91 
Specifically, it is proposed that the takeover bid must 
be for 100% of the securities except where 
— there is a prior agreement with the target company, 
or 
— the agreement of the target company can be 
expected. 
In the latter case, the offer shall be for a percentage 
less than 100% subject to the favourable opinion of the 
board of the offeree company. If this is not obtained, 
the offer shall be for 100%, which means that from 
the outset the offeror must prove to the supervisory 
authority that it has the resources needed to finance an 
offer for all the securities. 
2. Examination of the amended Articles of the pro­
posed Directive 
2.1. Article 2 
In relation to the definition of 'bid', the reference to 
'part' in this definition is unclear in the light of the 
remainder of the Directive in two main respects. 
a) There is no specific exemption included in Article 4 
in relation to shares acquired pursuant to a partial 
bid which has been carried out in accordance with 
the Directive. The result of this is that if a partial 
bid is made for, say, 40% of the shares of an offeree, 
and is successful, the offeror would thereby incur 
an immediate obligation to make a second offer 
for all of the remaining shares under Article 4. 
Accordingly, it would seem that all partial offers 
which would result in the offeror coming to hold 
more than the percentage of shares established 
under Article 4 are thereby automatically turned 
into offers for all the shares in the company. The 
Committee questions whether this is sensible or 
what the Commission intended. The Committee 
considers that the position should be dealt with by 
way of a specific exemption under Article 4.2c. 
b) The Committee is of the opinion that, since the 
Directive is only concerned with takeovers, it should 
not relate to acquisitions of shares which do not 
result in 'control' of the offeree changing hands. 
Accordingly, the Directive should not apply to offers 
which do not result in the percentage shareholding 
established pursuant to Article 4 being exceeded. 
The Committee considers that it should be left to 
each Member State to establish its own rules for 
regulating acquisitions of shares which do not result 
in a change of 'control' of the offeree company and 
that such acquisitions should fall outside the scope 
of this Directive. In relation to the definition of 'securities', the Commit­
tee would suggest that the words 'or conferring entitle­
ment to obtain transferable securities carrying such 
rights' be deleted. The Directive (and particularly the 
requirements of Article 4) should only apply to acqui­
sitions of 'securities' which actually carry voting rights 
and not to instruments which 'confer an entitlement' 
to obtain such securities in the future. Convertibles and 
options should, therefore, be excluded until such time 
as they are converted or are exercised (as appropriate). 
The requirement to make a mandatory bid should only 
be triggered when voting rights above the threshold are 
actually acquired (whether by acquisition, conversion 
or exercise of options). 
In relation to the definition of 'persons acting in con­
cert', the Committee considers that the definition is too 
broad and should, more properly, be linked to the 
acquisition of securities in a company. Accordingly, the 
Committee would suggest that the words 'in connection 
with a bid' are deleted and replaced with the words 
'through the acquisition by any of them of shares in 
a company, to obtain or consolidate control of that 
company'. 
2.2. Article 4 
The Committee recognizes the arguments that lie 
behind the Commission's suggestions for the mandatory 
bid requirement. The Committee accordingly, supports 
the suggestions whilst recognizing that this may dis­
courage investment in companies where such invest­
ment would lead to a mandatory bid. 
However, the Committee would like to emphasize the 
importance which it attaches to the need for specific 
exemptions to the mandatory bid. 
However, it is unacceptable that the exemptions from 
the mandatory bid requirement are merely optional for 
the Member States. This runs counter to the Directive's 
objective of harmonizing national legislation. 
Article 4 (et seq.) should be re-numbered now that 
Article 3 has been deleted. 
2.3. Article 6 
Article 6.2a envisages pre-vetting of offer documents at 
the option of Member States. Pre-vetting, as opposed 
to informal prior consultations with the supervisory 
authority, is generally undesirable because it puts the 
onus on the supervisory authority to vouch for the 
correctness of an offer document, rather than on the 
18. 4. 91 Official Journal of the European Communities No C 102/51 
offeror and could lead, therefore, to a fall in the stan­
dard of preparation by an offeror. 
Article 6.3 appears to address the question of which 
supervisory authority shall have responsibility for over­
seeing a bid. Clearly this is important in the case of a 
cross border bid. It adopts a compromise between place 
of incorporation of the offeree, and place of trading of 
its shares. The Committee considers that incorporation 
should be the sole criterion, on the grounds that it is a 
more definite and permanent guide to the true base of 
a company and will avoid any possibility of conflicts 
of national laws. 
Further it should be clarified that each supervisory 
authority should regulate bids for companies in accord­
ance with the takeover rules of the jurisdiction of the 
supervisory authority in question (for example the 
French supervisory authority should regulate bids for 
companies in accordance with French takeover regu­
lations). 
The Article also makes mutual recognition of the offer 
document conditional on pre-vetting of it in the host 
Member State. Since the Committee does not support 
pre-vetting it does not thinks that mutual recognition 
should be dependent on it. If a German company was 
bidding for another German company which had some 
shareholders in France, the offerer, having compiled 
with the German regulatory requirements, should be 
able to post his offer document into France without 
having to fulfil any additional requirements imposed 
by the French supervisory authority regardless of 
whether the German supervisory authority required 
pre-vetting. 
2.4. Article 7 
It is probably not practicable, for reasons of confiden­
tiality to draw up an offer document 'immediately'. 
Minimum requirements should be laid down as to what 
should appear in the announcement. 
Article 7.3 should be clarified to make it clear that the 
offer document should only go to the board of the 
offeree company at the same time as it is made public 
in accordance with Article 11.1. 
Done at Brussels, 28 February 1991. 2.5. Article 8 
The Committee considers that Article 8 is very import­
ant in the context of reducing barriers to takeovers 
within Member States. All barriers to takeovers should 
be reduced, not only legal ones. 
The Committee questions whether the taking of a 
decision, rather than the taking of the action concerned, 
is the appropriate test for the exclusions from Article 8. 
It may be difficult to determine when a particular 
decision has been taken with certainty and there is a 
risk that decisions taken in principle but in very vague 
terms by a board could be implemented during the 
course of an offer in an attempt to frustrate an offer. 
The Committee would suggest that this is not the 
intention. 
However, the Committee is very concerned that Ar­
ticle 8 should not operate so as to paralyse the board 
of the offeree company during the course of a bid and 
so as to prevent that board from carrying on its normal 
business operations where such operations are not being 
carried out with the intention of frustrating a bid. 
Accordingly, the Committee would repeat its previously 
expressed opinion that, during a bid, the offeree com­
pany should continue to be run by a board which can 
conclude transactions which were sufficiently advanced 
before the bid was launched and the purpose of which 
is not to frustrate the bid. 
2.6. Article 15 
Paragraph 4 does not take account of the situation 
where offers for securities cannot be made available to 
shareholders in jurisdictions without compliance with 
unduly, onerous requirements, for example, in the 
United States. 
2.7. Article 22 
In view of the Commission's indication that it would 
expect at least six months discussion of the Directive 
in the working group of the Council, the Committee 
questions whether the dates set out in Article 22 are 
realistic. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN 
No C 102/52 Official Journal of the European Communities 18. 4. 91 
APPENDIX 
to the Opinion of the Economic and Social Committee 
The following amendments were rejected during the debate, but received at least 25% of the votes cast. 
Page 6, point 2.3 (Article 6) 
The final sentence ('In addition ... generally.') should be replaced by a new paragraph worded as follows: 
'The Committee objects to the wording of the rule laid down in Article 6a(c). This wrongly suggests that it 
is the duty of the board of the offeree company to act solely in the interests of shareholders. The Committee 
feels that the board should let itself be guided by the interests of the company and the business associated 
with it.' 
Voting 
For: 34, against: 37, abstentions: 7. 
Page 7, point 2.5 (Article 8) 
This point should be replaced by the following: 
'The Committee objects to Article 8 because it feels that the Article is based on the false assumption that 
once a bid is announced, the interests of the company are to be identified with the decisions of the individual 
shareholders whether or not to accept the bid.' 
Voting 
For: 31, against: 46, abstentions: 8. 
Page 8, at the end 
The following text should be added to point 2.7: 
'The proposed Directive should include a new provision, concerning the regulation of compulsory buy-outs. 
Such arrangements already exist in certain EEC countries, such as France and the United Kingdom. 
Because of the close links between takeover bids and compulsory buy-outs, the two techniques should be 
governed by a single set of rules, as in French law.' 
Voting 
For: 33, against: 37, abstentions: 21.