Keywords

Summary



Keywords

Community law – Principles – Protection of minority shareholders

(European Parliament and Council Directive 2004/25, recital 8, and Art. 3(1)(a); Council Directives 77/91, Arts 20 and 42, and 79/279, Annex; Commission Recommendation 77/534, Annex)

Summary

Community law does not include any general principle of law under which minority shareholders are protected by an obligation on the dominant shareholder, when acquiring or exercising control of a company, to offer to buy their shares on the same conditions as those agreed when a shareholding conferring or strengthening the control of the dominant shareholder was acquired.

The mere fact that secondary Community legislation lays down certain provisions relating to the protection of minority shareholders is not sufficient in itself to establish the existence of a general principle of Community law, in particular if the scope of those provisions is limited to rights which are well defined and certain. In order to establish whether such a principle exists it is necessary to ascertain whether such provisions give any conclusive indications of its existence, for those provisions have indicative value only if they are drafted so as to have binding effect.

First, Articles 20 and 42 of Directive 77/91 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, and point 2(a) of Schedule C in the Annex to Directive 79/279 coordinating the conditions for the admission of securities to official stock exchange listing apply to well-defined situations clearly different from that of a dominant shareholder having acquired a shareholding conferring or strengthening control in a company in particular circumstances and which are essentially limited to regulating very specific company-law situations by imposing on companies certain obligations for the protection of all shareholders. Those provisions do not therefore possess the general comprehensive character which is naturally inherent in general principles of law.

Second, as regards General principle 3 and Supplementary principle 17 of the Code of Conduct annexed to Recommendation 77/534 and Directive 2004/25 on takeover bids, neither that code nor the directive expressly mentions the existence of a general principle of Community law relating to the protection of minority shareholders. As far as concerns the Code of Conduct, first, the principles of good conduct that it recommends have, as sources of law, the same value as those already applying to the markets, which is irreconcilable with the premiss that General principle 3 and Supplementary principle 17 of that code are underpinned by a general principle of Community law. Second, none of those provisions of the Code of Conduct sets out the obligation of equal treatment of shareholders in absolute and binding terms. As to Directive 2004/25, Articles 1, 5(1), 15 and 16 apply to specific situations so that no general principle with a specific content can be inferred from them. Those provisions do not possess the general comprehensive character naturally inherent in general principles of law. Furthermore, although recital 8 in the preamble to that directive alludes to general principles of Community law, that recital refers only to procedural safeguards and does not involve any principle of equal treatment of shareholders. Similarly, it cannot be inferred from the use of the term ‘general principles’ in Article 3 of that directive that the Community legislature thereby intends the principles mentioned in that article to be treated in the same way as general principles of Community law. As is clear from the words ‘for the purposes of implementing this Directive’, they are only guiding principles for the implementation of that directive by the Member States.

Moreover, seeking to impose on the dominant shareholder an obligation to contract with all minority shareholders on the same conditions as those agreed when a shareholding conferring or strengthening control was acquired and entailing a corresponding right of all shareholders to sell their shares to the dominant shareholder, cannot be understood as a specific expression, in company law, of the general principle of equal treatment. That principle cannot in itself either give rise to a particular obligation on the part of the dominant shareholder in favour of the other shareholders or determine the specific situation to which such an obligation relates. It cannot determine the choice between various conceivable means of protection for minority shareholders, such as those recommended by the Code of Conduct annexed to Recommendation 77/534 and that recommendation. Such treatment presupposes legislative choices, based on a weighing of the interests at issue and the fixing in advance of precise and detailed rules and cannot be inferred from the general principle of equal treatment. The general principles of Community law have constitutional status while equal treatment is characterised by a degree of detail requiring legislation to be drafted and enacted at Community level by a measure of secondary Community law. Therefore, that equal treatment cannot be regarded as an independent general principle of Community law.

(see paras 34, 42-45, 50-51, 55, 57, 61-64, operative part)