Common Position (EC) No 1/2001

adopted by the Council on 19 June 2000

with a view to adopting a Directive 2000/.../EC of the European Parliament and of the Council of ... on company law concerning takeover bids

(2001/C 23/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 44 thereof,

Having regard to the proposal from the Commission(1),

Having regard to the opinion of the Economic and Social Committee(2),

Acting in accordance with the procedure referred to in Article 251 of the Treaty(3),

Whereas:

(1) It is necessary to coordinate certain safeguards which Member States require of companies and firms within the meaning of the second paragraph of Article 48 of the Treaty for the protection of members and others, in order to make such safeguards equivalent throughout the Community.

(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 takeover bid or to a change of control and their securities are admitted to trading on a regulated market within the scope of this Directive.

(3) Only action at Community level can ensure an adequate level of protection for holders of securities throughout the Community and provide for minimum guidelines for the conduct of takeover bids. Member States acting independently are not able to establish the same level of protection especially in the case of cross-border takeovers or acquisitions of control.

(4) The adoption of a directive is the appropriate procedure for laying down a framework consisting of certain common principles and a limited number of general requirements which Member States will be required to implement through more detailed rules according to their national systems and their cultural contexts.

(5) Member States should take the necessary steps in order to protect holders of securities having minority holdings after the acquisition of control of their company. Such protection should be ensured by obliging the person who acquired control of a company to make a bid to all holders of securities for all of their holdings. It should be allowed, during a transitional period, to ensure this protection through other appropriate and at-least-equivalent means on condition that these means are specific to the transfer of control and include specific financial compensation for the minority shareholders. Member States may, in addition to the protection provided for by a mandatory bid or other equivalent means, provide for further instruments aimed at the protection of the interests of holders of securities.

(6) The obligation to make a bid to all holders of securities should not apply to those controlling holdings already in existence at the date when the legislation implementing this Directive enters into force.

(7) Member States may establish further instruments for the protection of the interests of holders of securities, such as the obligation to make a partial bid where the offeror does not acquire control of the company, or the obligation to make a bid simultaneously with the acquisition of control of the company.

(8) The obligation to launch a bid does not apply in the case of the acquisition of securities which do not carry voting rights in ordinary general meetings. Member States may however extend this obligation to the acquisition of securities which only carry voting rights in specific circumstances or which do not carry voting rights.

(9) Each Member State should designate an authority or authorities to supervise the aspects of the bid governed by this Directive and to ensure that parties to takeover bids comply with the rules made pursuant to this Directive. The different authorities should cooperate with one another.

(10) In order to be effective, takeover regulation should be flexible and capable of dealing with new circumstances as they arise, and should accordingly provide for the possibility of exceptions and derogations. However, in applying any rules or exceptions laid down or in granting any derogations, supervisory authorities should respect certain general principles.

(11) Supervision may be exercised by self-regulatory bodies.

(12) In accordance with general principles of Community law, and in particular the right to a fair hearing, decisions of a supervisory authority will in appropriate circumstances be susceptible to review by an independent court or tribunal. However, this Directive leaves it to Member States to determine whether rights are to be made available which may be asserted in administrative or judicial proceedings, whether in proceedings against a supervisory authority or proceedings between parties to a bid.

(13) It is necessary to create Community-wide clarity and transparency in respect of legal issues to be settled in the event of takeover bids and to prevent patterns of corporate restructuring within the Community from being distorted by arbitrary differences in governance and management cultures.

(14) To reduce the scope for insider dealing offerors should be required to announce their decision to launch a bid as soon as possible and to inform the supervisory authority of the bid.

(15) 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.

(16) It is necessary to regulate the period for the acceptance of the bid.

(17) To be able to perform their functions satisfactorily, supervisory authorities should at all times be able to require the parties to the bid to provide information on it and should cooperate and supply information in an efficient and effective manner without delay to other authorities supervising capital markets.

(18) To avoid operations which frustrate the bid, it is necessary to limit the powers of the board of the offeree company to engage in operations of an exceptional nature without unduly hindering the offeree company from carrying out its normal business activities.

(19) 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.

(20) It is necessary that Member States provide rules to cover the cases where the bid lapses, the right of the offeror to revise his bid, the possibility of competing bids for the securities of a company, the disclosure of the result of the bid and the irrevocability of the bid and the conditions permitted.

(21) It is important to entrust the Contact Committee set up by Article 20 of Council Directive 79/279/EEC of 5 March 1979 coordinating the conditions for the admission of securities to official stock exchange listing(4) with the task of assisting Member States and the supervisory authorities in the implementation of this Directive, particularly in areas such as cross-border takeover bids and the mutual recognition of offer documents, and to advise the Commission, if necessary, on additions or amendments to this Directive,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Scope

1. The coordination measures prescribed by this Directive shall apply to the laws, regulations, administrative provisions, codes of practice or other arrangements of the Member States, including arrangements established by organisations officially authorised to regulate the markets (hereinafter "rules"), relating to takeover bids for the securities of a company governed by the law of a Member State, where such securities are admitted to trading on a regulated market within the meaning of Article 1(13) of Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field(5) in one or more Member States (hereinafter "regulated market").

2. The measures prescribed by this Directive shall not apply to takeover bids for securities issued by companies the object of which is the collective investment of capital provided by the public, and which operate on the principle of risk spreading, and the units of which are, at the holders' request, repurchased or redeemed, directly or indirectly, out of the assets of those companies. Action taken by such companies to ensure that the stock exchange value of their units does not significantly vary from their net asset value shall be regarded as equivalent to such repurchase or redemption.

Article 2

Definitions

For the purposes of this Directive:

(a) "takeover bid" and "bid" mean a public offer (other than by the offeree company itself) made to the holders of the securities of a company to acquire all or part of such securities. A bid may be either mandatory or voluntary, and must follow or have as its objective the acquisition of control;

(b) "offeree company" means a company whose securities are the subject of a bid;

(c) "offeror" means any natural person or legal entity in public or private law making a bid;

(d) "persons acting in concert" means natural persons or legal entities who cooperate with the offeror or the offeree company on the basis of an agreement, either express or tacit, either oral or written, and aimed respectively at obtaining control of the offeree company or frustrating the successful outcome of a bid.

Persons controlled by another person within the meaning of Article 8 of Directive 88/627/EEC of 12 December 1988 on the information to be published when a major holding in a listed company is acquired or disposed of(6) shall be deemed to be persons acting in concert with such persons and with each other;

(e) "securities" means transferable securities carrying voting rights in a company;

(f) "parties to the bid" means the offeror, the members of the offeror's board, if the offeror is a company, the offeree company, holders of securities of the offeree company and the members of the board of the offeree company, or persons acting in concert with such parties.

Article 3

General principles

1. For the purposes of the implementation of this Directive, Member States shall ensure that the rules or other arrangements made or introduced pursuant to this Directive respect the following principles:

(a) all holders of securities of an offeree company of the same class are to be given equivalent treatment; in particular, if a person acquires control of a company, the other holders of securities are to be protected;

(b) holders of securities of an offeree company are to have sufficient time and information to enable them to reach a properly informed decision on the bid;

(c) the board of an offeree company is to act in the interests of the company as a whole, and must not deny the holders of securities the opportunity to decide on the merits of the bid;

(d) false markets must not be created in the securities of the offeree company, of the offeror company, or of any other company concerned by the bid in such a way that the rise or fall in the prices of the securities becomes artificial and the normal functioning of the markets is distorted;

(e) an offeror shall announce a bid only after ensuring that it can fulfil in full any cash consideration, if so offered, and after having taken all reasonable measures to secure the implementation of any other type of consideration;

(f) an offeree company must not be hindered in the conduct of its affairs for longer than is reasonable by a bid for its securities.

2. In order to attain the objectives set out in paragraph 1, Member States:

(a) shall ensure that rules are in force which satisfy the minimum requirements set out in this Directive;

(b) may have additional conditions and more stringent provisions than those required by this Directive to regulate bids.

Article 4

Supervisory authority

1. Member States shall designate the authority or authorities, competent for supervising a bid for the purposes of the rules made or introduced pursuant to this Directive. The authorities thus designated shall be either public authorities or associations or private bodies recognised by national law or by public authorities expressly empowered for that purpose by national law. Member States shall ensure that these authorities exercise their functions impartially and independently of all parties to the bid. Member States shall inform the Commission of these designations and shall specify all divisions of functions that may be made.

2. (a) The authority competent for supervising the bid shall be that 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. When this is not the case subparagraph (b) or (c) shall apply.

(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 Member State simultaneously, the offeree company has to determine the competent authority for supervising the bid by notifying these regulated markets and their supervisory authorities on the first trading day.

If the securities of the offeree company are already admitted to trading on regulated markets in more than one Member State at the date referred to in Article 15(1) and were admitted simultaneously, the supervisory authorities of these Member States shall agree on who is to be the competent authority for supervising the bid within four weeks after the date mentioned in Article 15(1). Otherwise the competent authority shall be determined by the offeree company on the first trading day following the expiry of the period of time mentioned in the first sentence.

(d) Member States shall ensure that rules are in force requiring the decisions referred to in subparagraph (c) to be made public.

(e) In the cases referred to in subparagraphs (b) and (c), matters relating to the consideration offered in the case of a bid, particularly the price, and matters relating to the procedure of the bid, 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.

3. Member States shall ensure that all persons employed or formerly employed by the supervisory authorities shall be bound by professional secrecy. Information covered by professional secrecy may not be divulged to any person or authority except by virtue of provisions laid down by law.

4. The supervisory authorities of the Member States under this Directive and other authorities supervising capital markets, in particular in accordance with Directive 88/627/EEC, Directive 89/592/EEC of 13 November 1989 coordinating regulations on insider dealing(7) and Directive 93/22/EEC, shall cooperate and supply each other with information, wherever necessary for the application of the rules drawn up in accordance with this Directive and in particular in cases covered by Article 4(2)(b), (c) and (e). Information thus exchanged shall be covered by the obligation of professional secrecy to which the persons employed or formerly employed by the supervisory authorities receiving the information are subject. Cooperation should include the ability to serve the legal documents necessary to enforce measures taken by the competent authorities in connection with bids, as well as such other assistance as may reasonably be requested by the supervisory authorities concerned for the purposes of investigating any actual or alleged breaches of the rules made or introduced to implement this Directive.

5. The supervisory authorities shall have all the powers necessary for the exercise of their functions which shall include the duty to ensure that the parties to a bid comply with the rules made pursuant to this Directive.

Provided that the general principles referred to 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 particular types of cases and, on the basis of a reasoned decision, in specific appropriate cases grant derogation from these rules.

6. This Directive does not affect the powers of the Member States to designate judicial or other authorities responsible for dealing with disputes and for deciding on irregularities committed in the bid procedure nor does it affect the power of Member States to regulate whether and under which circumstances parties to a bid are entitled to bring administrative or judicial proceedings. In particular this Directive does not affect the power which courts may have in a Member State to decline to hear legal proceedings and to decide whether or not such proceedings affect the outcome of a bid. This Directive shall not affect the powers of the Member States to determine the legal position concerning the liability of supervisory authorities or concerning litigation between the parties to a bid.

Article 5

Protection of minority shareholders; mandatory bid

1. Where a natural person or legal entity 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 rules are in force which oblige this person to make a bid as a means to protect the minority shareholders of that company. This bid shall be addressed to all holders of securities for all their holdings at an equitable price. When the consideration offered by the offeror does not consist of liquid securities admitted to trading on a regulated market, such consideration has to include a cash consideration at least as an alternative.

2. Where a voluntary bid has been made in accordance with this Directive to all holders of securities for all their holdings and control has been obtained, the obligation to launch a bid no longer applies.

3. By way of derogation from paragraph 1, Member States, which provide at the time of adoption of this Directive for other appropriate and at-least-equivalent means in order to protect the minority shareholders of the company, may continue to apply such means for one year following the date mentioned in Article 15(1), on the condition that these means:

(a) are specific to the transfer of control, and

(b) include specific financial compensation for the minority shareholders.

4. In addition to the protection provided under paragraphs 1 and 3, Member States may provide for further instruments aiming at the protection of the interests of holders of securities in so far as these instruments do not hinder the normal course of the bid referred to in paragraph 1.

5. The percentage of voting rights which confers control for the purposes of paragraphs 1 and 3 and the method of its calculation shall be determined by the rules of the Member State in which the company has its registered office.

Article 6

Information

1. Member States shall ensure that rules are in force requiring that the decision to make a bid is made public without delay and that the supervisory authority is informed of the bid. Member States may require that the supervisory authority is informed before this decision is made public. As soon as the bid has been made public, the board of the offeree company shall inform the representatives of its employees or, where there are no such representatives, the employees themselves.

2. Member States shall ensure that rules are in force requiring the offeror to draw up and make public in good time an offer document containing the information necessary to enable the holders of securities of the offeree company to reach a properly informed decision on the bid. Before the offer document is made public, the offeror shall communicate it to the supervisory authority. When it is made public, the board of the offeree company shall communicate it to the representatives of its employees or, where there are no such representatives, to the employees themselves.

Where the offer document is subject to the prior approval of the supervisory authority and once it has been approved, it shall be recognised, subject to any translation, in the other Member State or Member States on whose markets the securities of the offeree company are admitted to trading, without its being necessary to obtain the approval of the supervisory authorities of that or those Member States and without their being able to require additional information to be included in the offer document. The supervisory authorities may, however, require that the offer document include information specific to the market of the Member State or Member States on whose markets the securities of the offeree company are admitted to trading concerning the formalities to be complied with for accepting the bid and for receiving the consideration due at the close of the bid as well as the tax arrangements to which the consideration offered to the holders of securities will be subject.

3. Those rules shall require that the offer document state at least:

(a) the terms of the bid;

(b) the identity of the offeror and, where the offeror is a company, the type, name and registered office of that company;

(c) the securities or class, or classes of securities for which the bid is made;

(d) the consideration offered for each security or class of securities and, in the case of mandatory bids, the basis of the valuation used in determining it, with particulars of the way in which that consideration is to be given;

(e) the maximum and minimum percentages or quantities of securities which the offeror undertakes to acquire;

(f) details of any existing holdings of the offeror, and of persons acting in concert with him, in the offeree company;

(g) all the conditions to which the bid is subject;

(h) the offeror's intentions with regard to the future business of the offeree company, its employees and its management, including any material change in the conditions of employment;

(i) the period for acceptance of the bid;

(j) where the consideration offered by the offeror includes securities of any kind, information about those securities;

(k) information on the financing for the bid;

(l) the identity of persons acting in concert with the offeror or with the offeree company, in the case of companies together with their type, name and registered office, and their relationship with the offeror and where possible with the offeree company.

4. Member States shall ensure that rules are in force requiring the parties to a bid to provide the supervisory authorities of their Member State at any time on request with all information in their possession concerning the bid which is necessary for the supervisory authority to discharge its functions.

Article 7

Period for acceptance

1. Member States shall provide that the period for acceptance of the bid to be specified by the offeror in the offer document in accordance with Article 6(3)(i) may not be less than two weeks or more than 10 weeks from the date of publication of the offer document. Member States may provide that the period of 10 weeks may be prolonged on the condition that the offeror gives at least two weeks' prior notice of its intention to close the bid.

2. Member States may provide for rules modifying the period mentioned in paragraph 1 in specific appropriate cases. Member States may authorise the supervisory authority to grant a derogation from the period mentioned in paragraph 1 in order to allow the offeree company to organise a general meeting to consider the bid.

Article 8

Disclosure

1. Member States shall ensure that rules are in force which require a bid to be made public in such a way as to ensure market transparency and integrity for the securities of the offeree company, of the offeror or of any other company affected by the bid, and which particularly avoid the publication or dissemination of false or misleading information.

2. Member States shall ensure that rules are in force which provide for the disclosure of all information or documents required in such a manner as to ensure that they are both readily and promptly available to the holders of securities at least in those Member States where the securities of the offeree company are admitted to trading on a regulated market and to the representatives of the employees of the offeree company or, where there are no such representatives, to the employees themselves.

Article 9

Obligations of the board of the offeree company

1. Member States shall ensure that rules are in force requiring that:

(a) at the latest after receiving the information referred to in Article 6(1), first sentence, concerning the bid and until the result of the bid is made public or the bid lapses, the board of the offeree company shall abstain from completing any action other than seeking alternative bids which may result in the frustration of the bid, and notably from the issuing of shares which may result in a lasting impediment to the offeror obtaining control over the offeree company, unless it has the prior authorisation of the general meeting of the shareholders given for this purpose, during the period of acceptance of the bid;

(b) the board of the offeree company shall draw up and make public a document setting out its opinion on the bid, together with the reasons on which it is based, including its views on the effects of implementation on all the interests of the company, including employment.

2. Member States may allow the board of the offeree company to increase the share capital during the period for acceptance of the bid on the condition that prior authorisation has been received from the general meeting of shareholders not earlier than 18 months before the beginning of the period of acceptance of the bid, with full recognition of the right of pre-emption of all shareholders as provided for in Article 29(1) of second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent(8).

Article 10

Rules applicable to the conduct of bids

In addition Member States shall ensure that rules are in force which govern the conduct of bids for at least the following matters:

(a) lapse of the bid;

(b) revision of bids;

(c) competing bids;

(d) disclosure of the result of bids;

(e) irrevocability of the bid and conditions permitted.

Article 11

Contact Committee

1. The Contact Committee set up by Article 20 of Directive 79/279/EEC shall also have as its functions:

(a) to facilitate, without prejudice to the provisions of Articles 226 and 227 of the Treaty, the harmonised application of this Directive through regular meetings dealing in particular with practical problems arising in connection with its application;

(b) to advise the Commission, if necessary, on additions or amendments to this Directive.

2. It shall not be the function of the Contact Committee to appraise the merits of decisions taken by the supervisory authorities in individual cases.

Article 12

Sanctions

Each Member State shall determine the sanctions to be applied for infringement of the measures taken pursuant to this Directive. The sanctions shall be sufficient to promote compliance with those measures.

Article 13

Revision of Article 4(2)

Three years after the date referred to in Article 15(1), the European Parliament and the Council,acting on a proposal from the Commission, shall examine and if necessary revise Article 4(2) in the light of the experience acquired in applying Article 4(2).

Article 14

Amendment of Article 1(1) of Directive 88/627/EEC

Article 1(1) of Directive 88/627/EEC shall be replaced by the following:

"1. Member States shall make subject to this Directive natural persons and legal entities in public or private law who acquire or dispose of, directly or through intermediaries, holdings meeting the criteria laid down in Article 4(1) which involve changes in the holdings of voting rights in companies incorporated under their law the shares of which are admitted to trading on one or several regulated markets within the meaning of Article 1(13) of Directive 93/22/EEC."

Article 15

Transposition of the Directive

1. Member States shall ensure that the laws, regulations, administrative provisions or other arrangements necessary for them to comply with this Directive are in force before ...(9). They shall forthwith inform the Commission thereof.

When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by the Member States.

2. Member States shall communicate to the Commission the provisions or other arrangements referred to in paragraph 1.

Article 16

Entry into force of the Directive

This Directive shall enter into force on the day of its publication in the Official Journal of the European Communities.

Article 17

Addressees of the Directive

This Directive is addressed to the Member States.

Done at ...

For the European Parliament

The President

For the Council

The President

(1) OJ C 162, 6.6.1996, p. 5 and OJ C 378, 13.12.1997, p. 10.

(2) OJ C 295, 7.10.1996, p. 1.

(3) Opinion of the European Parliament of 26 June 1997 (OJ C 222, 21.7.1997, p. 20), Council Common Position of 19 June 2000 and decision of the European Parliament of ... (not yet published in the Official Journal).

(4) OJ L 66, 16.3.1979, p. 21. Directive as last amended by Directive 88/627/EEC (OJ L 348, 17.12.1988, p. 62).

(5) OJ L 141, 11.6.1993, p. 27. Directive as amended by Directive 95/26/EC (OJ L 168, 18.7.1995, p. 7).

(6) OJ L 348, 17.12.1988, p. 62.

(7) OJ L 334, 18.11.1989, p. 30.

(8) OJ L 26, 30.1.1977, p. 1. Directive as last amended by the 1994 Act of Accession.

(9) Four years after the entry into force of this Directive.

STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 8 February 1996 the Commission forwarded to the Council a proposal for a thirteenth Directive of the European Parliament and of the Council on company law, concerning takeover bids, based on Article 44 of the EC Treaty.

The Economic and Social Committee and the European Parliament delivered their opinions on 11 July 1996 and 26 June 1997 respectively.

Following the European Parliament's opinion, the Commission submitted an amended proposal on 14 November 1997.

2. On 19 June 2000, the Council adopted its Common Position pursuant to Article 251 of the Treaty.

II. OBJECTIVE

The purpose of the proposal is 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 takeover bid and their securities are admitted to trading on a regulated market.

III. ANALYSIS OF THE COMMON POSITION

The Council has taken on board Amendments 1, 2, 4, 14, 15, 16, 17, 19 and 20.

Amendments 8, 10, 11 and 18 have been incorporated in substance.

Amendments 5, 6, 7, 9, 12, 13, 21, 22 and 23 have not been incorporated in the Common Position. It should be noted that Amendments 12, 13, 21 and 23 had not been taken on board in the Commission amended proposal.

Recitals

Amendments 1 and 2 have been incorporated in recitals 9 and 15, respectively.

Most recitals follow the Commission's proposal, with slight drafting changes. Some new recitals have been inserted, in particular:

- recital 6 has been added in order to make it clear that the obligation to launch a bid does not apply to those controlling holdings already in existence at the date when the legislation implementing this Directive enters into force,

- recital 7 accompanies Article 5(4),

- recital 8 makes it possible for Member States to extend the obligation to launch a bid to the acquisition of securities other than those defined in Article 2(e),

- recital 10 accompanies Article 4(5),

- recital 12 accompanies Article 4(6),

- recital 13 states the main goals of the Directive,

- recital 21 accompanies new Article 11.

Article 1 - Scope of the Directive

Article 1(1) of the Common Position takes over, almost verbatim, Amendment 4 of the European Parliament. The "concept of regulated market" has been clarified through a reference to Directive 93/22/EEC at the end of the paragraph.

Article 1(2) has been added in order to exclude from the scope of the Directive the securities issued by companies the object of which is the collective investment of capital provided by the public (UCITS). The reason for this exclusion is that UCITS shareholders already enjoy specific protection. Article 3(a) of Directive 89/298/EEC states that UCITS operate on the principle of risk spreading and their units are repurchased or redeemed at the holder's request. Article 3(a) of Directive 89/298/EEC has served as drafting basis for this paragraph.

Article 2 - Definitions

- Definition of "takeover bid" - point (a)

The Common Position has added at the end of this definition the requirement that takeover bids should have as their objective the acquisition of control. The Council agreed that the Directive should not cover bids that neither aim at control nor are an obligation resulting from obtaining control. Amendments 6 and 7 have therefore not been taken on board.

- Definition of "offeror" - point (c)

The Common Position does not include the reference to Article 4(2) proposed in Amendment 5, as Article 4(2) has been modified to a certain extent (see comments on new Article 4(2)).

- Definition of "persons acting in concert" - point (d)

The Common Position includes this new definition for the sake of legal certainty.

- Definition of "parties to the bid" - point (f)

The words "addressees of the bid" has been replaced with the more precise "holders of securities of the offeree company". The persons acting in concert with any party to the bid have been included in the definition of "parties to the bid".

Article 3 - General principles

For reasons of consistency, Article 3 has changed places with Article 5. Indeed, it seems that the "General principles" of a directive should appear just after the scope (Article 1) and the definitions (Article 2).

In Article 3(1) (a), a second sentence has been added in order to stress the importance of the protection of minority shareholders.

In Article 3(1)(c), a new sentence has been added in order to stress that the holders of securities of the offeree company must have the opportunity to decide on the merits of the offer.

The contents of Amendment 11 ("including safeguarding jobs") have now been included in Article 9(1)(b): for the sake of transparency, the board of the offeree company must give its opinion on the possible effects that the takeover bid may have on employment.

In Article 3(1)(d), the Council has accepted the language contained in the Commission's amended proposal.

Article 3(1)(e) has been added to the Common Position in order to prevent tactical bids that could harm the interests of shareholders: an offeror shall announce a bid only if he can afford the shares he wants to bid for.

Amendments 12 and 13 were not accepted in the Commission's amended proposal and have not been included in the Common Position either.

In Article 3(2), a point (b) has been added in order to clarify the framework nature of the Directive. Accordingly, the Directive establishes minimum requirements and Member States are free to impose more stringent provisions.

Article 4 - Supervisory authority

The drafting of Article 4 has been modified to some extent. However, the Common Position follows the main criterion endorsed by Parliament and Commission: the competent authorities to supervise a bid and the law applicable are the ones of the Member State where the offeree is listed. More in detail, the changes introduced in Article 4 are the following:

Article 4(1)

First sentence: some aspects of the bid do not fall within the competences of the supervisory authority (for instance, competition aspects). For this reason, the Council has decided to amend the words "the entire course of the bid" suggested in Amendment 8 and taken on board in the amended proposal, in order to cover only the aspects of the bid governed by this Directive.

Second sentence: for reasons of legal certainty, it was felt in the Council that private supervisory authorities should be recognised by national law or by public authorities.

Third sentence: this provision on the independence and impartiality of supervisory authorities has been included in order to limit the cases of conflicts of interests.

Article 4(2)

In Article 4(2), points (a) to (d), the Council has, like the Commission and Parliament, chosen the criterion of the Member State of listing for the determination of the law applicable and the competent authority to supervise a bid(1).

The first sentence of point (e) gives examples of matters, in particular the price, which shall be dealt with in accordance with the rules of the Member State of the competent authority, i.e. the rules of the Member State where the offeree is listed. An additional criterion has been added in Article 4(2)e), last sentence: in matters relating to the information for employees of the offeree company and in matters relating to company law, the applicable law and the competent authorities are the ones of the Member State of the registered office of the offeree company.

Article 4(3) and (4)

These two paragraphs develop the provisions on professional secrecy and cooperation contained in Article 4(3) of the amended proposal.

Article 4(5)

A second paragraph has been added along the lines of the Commission's original proposal in order to allow supervisory authorities to grant derogations for types of cases and for specific cases. The granting of derogations seems to be a common practice in most Member States.

Article 4(6)

The Council has followed the principles contained in the amended proposal and Amendment 10, although the drafting of the Article has been modified to some extent. The new wording in Article 4(6) makes it clear that the Directive does not create inter partes rights. Member States will have discretion as to how disputes are handled (i.e. before courts or by any administrative appeals procedure) and as to whether legal proceedings can affect the outcome of a bid. In accordance with the framework nature of this Directive, the possibility of compensation has been left at the discretion of individual Member States.

Article 5 - Protection of minority shareholders; mandatory bid

Former Article 10 of the amended proposal has been deleted and its main contents, the mandatory bid, have been included in Article 5.

The Directive no longer regulates partial bids (which were the subject matter of Amendment 22). In accordance with the framework nature of the Directive, the question of partial bids has been left to Member States (see recital 7 and Article 5(4)).

Article 5(1) establishes the obligation of launching a bid, addressed to all shareholders for all their holdings at an equitable price, when control is acquired in a company. For an increased protection of minority shareholders, a last sentence has been added imposing an alternative cash consideration when the consideration offered by the offeror does not consist of liquid securities admitted to trading within the Community.

Article 5(2) has been added in order to avoid the obligation to launch a bid when control has already been obtained through a voluntary bid launched to all holders of securities for all their holdings. It is understood that, in this case, minority shareholders have already been sufficiently protected.

The "equivalent means" included in Article 3(1) of the amended proposal are now in Article 5(3). The novelty is that these means are now limited both in time and in nature: they may continue to apply only for one year after the end of the implementation deadline and they must be specific to the transfer of control and include specific financial compensations for the minority shareholders. This limitation of the "equivalent means" serves the purpose of the introduction of the mandatory bid in all Member States.

Article 5(4) finally leaves it up to Member States to provide for other instruments for the protection of shareholders in addition to the mandatory bid and the equivalent means.

Former Article 3(2), first sentence, of the amended proposal (based on Amendment 7) has not been taken on board. According to current Article 4(2)(e), second sentence, and Article 5(5), the percentage of voting rights conferring control of a company will be determined by the law of the registered office of the offeree.

Article 6 - Information

- Articles 6(1) and 6(2), first subparagraph, incorporate Amendments 14 and 15, respectively.

- Article 6(2), second subparagraph (new) provides for the mutual recognition of the offer document in the other Member States on whose markets the offeree company is listed, provided that the offer document is subject to prior approval by the supervisory authority and has already been approved in one Member State. Supervisory authorities, however, may require some additional information specific to the market of the Member States where the offeree is listed.

- Article 6(3)(h) incorporates the first part of Amendment 16. However, a reference to "any envisaged dismissals" has not been considered necessary in a framework Directive like the one proposed.

- Article 6(4) incorporates the principle in Amendment 18.

Article 7 (new) - Period for acceptance

Article 7(1) incorporates Amendment 17. Along the lines of Article 4(5), Article 7(2) allows derogations to the standard period for acceptance under certain conditions.

Article 8 - Disclosure

The drafting of Article 8(1) has been adapted to the Commission's amended proposal.

Article 8(2) incorporates Amendment 19.

Article 9 - Obligations of the board of the offeree company

Article 9(1)(a) incorporates Amendment 20. As a novelty, the action of seeking alternative bids ("white knights") is authorised under the Directive.

The principle in Amendment 11 has been incorporated to Article 9(1)(b). On the other hand, the Common Position does not take on board Amendment 21, which had not been included in the Commission's amended proposal either.

Article 9(2) has been added in order to authorise, under certain restrictive conditions, one specific defensive measure: the increase of the share capital.

Article 10 - Rules applicable to the conduct of bids

Article 10 follows the Commission's amended proposal. A point (e) has been added: Member States will also have to ensure that rules are in force on the irrevocability of the bid.

Article 11 (new) - Contact Committee

The Contact Committee set up by Directive 79/279/EEC has also been entrusted with the monitoring of the Directive and with advising the Commission on changes to the Directive.

Article 12 (new) - Sanctions

Member States are to determine sanctions against infringements of the measures taken pursuant to the Directive.

Article 13 (new)

This provision contains a revision clause for Article 4(2).

Article 14 (new) - Amendment of Article 1(1) of Directive 88/627/EEC

In order to provide for an identical scope for both the Takeover Bids Directive and Directive 88/627/EEC ("Transparency Directive"), this Article states that the rules of the Transparency Directive will apply not only to changes in the holdings of voting rights in companies the shares of which are listed on an official market, but also to those listed on a regulated market within the meaning of Article 1(13) of Directive 93/22/EEC ("Investment Services Directive").

Article 15

A four-year implementation period has been chosen in the Common Position, so as to give Member States time enough to create legislation on a very traditional field, i.e. company law.

IV. CONCLUSION

The Council considers that the Common Position, which incorporates 13 of the 22 amendments of the European Parliament, fully complies with the objectives of the Commission proposal. The changes introduced aim primarily at increasing the protection of minority shareholders, at reinforcing legal certainty, at introducing certain flexibility in the application of the Directive and at ensuring consistency within Community legislation concerning the financial sector.

(1) Points (a) and (b) of Article 4(2) of the Common Position are taken over from the first two sentences of Article 4(2) of the Commission's amended proposal.

Point (c) provides for a solution for the - exceptional - case of a company that has first been admitted to trading on regulated markets within more than one Member States simultaneously. For reasons of transparency, the decisions adopted by the competent authorities in this case have to be made public (point (d)).