14. 10. 91 Official Journal of the European Communities No C 269/21 
R&D Programme and thus permit the agreement with 
Turkey beyond 1991. 
Done at Brussels, 3 July 1991. 
1. Introduction 
This proposal is closely linked with another current 
proposal relating to the Fifth Directive, on which the 
Committee has also prepared an Opinion (2), and to the 
amended proposal for a Thirteenth Directive which is 
currently before the Council of Ministers, and on which 
the Committee has already adopted an Opinion (3). All 
of these measures relate to takeover activity, but the 
proposed alterations to the Second and Fifth Directives 
will also have application in other circumstances, like 
the directives themselves. 
The alteration to the Second Directive deals with the 
acquisition by a company of its own shares, and is 
relatively straightforward. It is described in paragraphs 
14 and 15 of the Commission's explanatory memor­
andum. In essence, the proposal would extend to the 
(J) OJ No C 8, 12. 1. 1991, p. 5. 
(2) Opinion adopted on 3 July 1991. 
(3) OJ No C 102, 18. 4. 1991, p. 49. 3.2. The Committee requests the Commission to 
send to the ESC the summary report on implementation 
and the results of the research programme. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN 
subsidiaries of a company the rules which prevent a 
company from acquiring and holding more than 10% 
of its own shares, and would disenfranchise any shares a 
subsidiary might hold, like shares held by the company 
itself. 
2. General remarks 
2.1. The Committee agrees with the broad thrust of 
the Commission's intention to reduce existing barriers 
to takeovers in order to create a 'level playing field' 
for takeover activity across the Member States of the 
Community. 
2.2. The Committee agrees that companies should 
not be able to acquire their own shares in order to be 
able to make use of the votes attaching to the shares, 
whether in the circumstances of a proposed takeover, 
or in other circumstances. The Committee recognizes 
that the existing wording of the Second Directive 
intended to prevent this practice leaves a loophole by 
which companies can make use of their subsidiaries to 
circumvent this intention, and the Committee therefore Opinion on the proposal for a Council Directive amending Directive 77/91/EEC on the 
formation of public limited liability companies and the maintenance and alteration of their 
capital (!) 
(91/C 269/06) 
On 13 February 1991 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 Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the subject, adopted its Opinion on 5 June 1991 in the light of the 
Report by Mr Bell. 
At its 288th plenary session (meeting of 3 July 1991) the Economic and Social Committee 
adopted the following Opinion unanimously. 
No C 269/22 Official Journal of the European Communities 14. 10. 91 
agrees with the Commission's proposal to include sub­
sidiaries within the rules applying to companies them­
selves. 
2.3. While the Committee agrees with the extension 
of the rules governing purchase of own shares to sub­
sidiaries, it is possible that the interests of minority 
shareholders in subsidiaries could be adversely affected 
by application of rules, for instance where a partly-
owned subsidiary already holds shares in the company 
that controls it, the enforced cancellation of shares 
according to Article 21 of the Directive would penalize 
minority shareholders. The Committee asks the Com­
mission to consider whether it is desirable to include 
any safeguards in this respect, for instance by way of a 
transitional period for applicable of the rules in respect 
of existing holdings, allowing for orderly disposal of 
offending share stakes. 
2.4. The Committee notes that Article 8(c) of the 
proposed amended Thirteenth Directive imposes a pro­
hibition on the acquisition by a company of its own 
shares during the period of a takeover bid, other than 
with the explicit consent of a general meeting, and that 
the effect of the proposed amendment to the second 
directive will be to incorporate the subsidiaries of a 
company within this prohibition. 
2.5. The Committee notes that the proposed changes 
will still permit a company or its subsidiaries in certain 
circumstances to acquire up to 10% of the company's 
shares without prior authorization of the shareholders, 
other than during the period of a takeover bid, subject 
to various limitations. The Committee agrees that there 
are circumstances in which this freedom is justifiable 
Done at Brussels, 3 July 1991. and necessary, although the Second Directive merely 
lays down minimum provisions, and it is open to mem-
be countries to impose more restrictive national laws. 
2.6. The Committee recognizes that the present pro­
posals have been brought forward by the Commission 
to address particular concerns felt as regards barriers 
to takeover activity in the Community, but hopes that 
the Commission and the Council will also continue to 
make progress towards the completion of a unified 
structure of Community law for public companies and 
groups of companies. 
2.7. The Committee notes that in some Member 
States shares in a company may be acquired and held 
by funds or trusts for the benefit of past or present 
employees, for instance common investment funds and 
employee stock ownership trusts ('Esops'). Such blocks 
of shares would appear to fall outside the rules govern­
ing self-acquisition of shares, and it can happen that 
the managers or trustees of such funds are chosen from 
among the senior managers of a company. In the USA, 
managers have sometimes taken advantage of employee 
funds to acquire and vote their companies' shares in a 
takeover. While this practice does not a present seem 
to be prevalent in any Member State, the Committee 
suggests that a careful watch should be kept and asks 
the Commission to examine the need for suitable legis­
lation. 
3. Commentary on the Articles 
Subject to the above general remarks, the Committee 
agrees with the Commission's proposal, and has no 
comments on the wording of the new Article 24bis. 
The Chairman 
of the Economic and Social Committee 
Francois STAEDELIN