Common Position (EC) No 1/2001 of 19 June 2000 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting a Directive of the European Parliament and of the Council on company law concerning takeover bids
Date: 2000-06-19
Institutions: Council of the European Union
Subjects: EU Member State, application of EU law, company law, protection of shareholders, share, takeover bid

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(Information)

COUNCIL

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 Com-
munity, 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

(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).

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
to ensure
be allowed, during a transitional period,
this protection through other appropriate and at-least-
equivalent means on condition that these means are

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specific to the transfer of control and include specific
financial compensation for the minority shareholders.
in addition to the protection
Member States may,
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.

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.

(6)

The obligation to make a bid to all holders of securities
should not apply to those controlling holdings already
legislation
in existence
implementing this Directive enters into force.

the date when the

at

(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)

(9)

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.

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.

(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,

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.

it

(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
the
views on the effects of
interests of the company and specifically on employ-
ment.

implementation on all

(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 indepen-
dent court or tribunal. However, this Directive leaves it
to Member States to determine whether rights are to be

(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.

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(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 list-
ing (1) 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 (2) 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;

‘offeree company’ means a company whose securities are
the subject of a bid;

‘offeror’ means any natural person or legal entity in public
or private law making a bid;

‘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 (3)
shall be deemed to be persons acting in concert with such
persons and with each other;

‘securities’ means transferable securities carrying voting
rights in a company;

‘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.

(b)

(c)

(d)

(e)

(f)

Article 3

General principles

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

(a)

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

treatment;

(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;

(1) 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).

(2) OJ L 141, 11.6.1993, p. 27. Directive as amended by Directive

95/26/EC (OJ L 168, 18.7.1995, p. 7).

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

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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;

(b)

(c)

(d)

(e)

(f)

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;

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;

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

In order to attain the objectives set out in paragraph 1,

2.
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 auth-
orities, 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
these
authorities exercise their functions impartially and indepen-
dently of all parties to the bid. Member States shall inform the
Commission of these designations and shall specify all div-
isions of functions that may be made.

law. Member States shall ensure that

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.

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 regis-
tered 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 subpara-
graph (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 com-
pany and in matters relating to company law, in
particular the percentage of voting rights which
confers control and any derogation from the obli-
gation 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.

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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 pro-
fessional secrecy may not be divulged to any person or
authority except by virtue of provisions laid down by law.

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.

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, Direc-
tive 89/592/EEC of 13 November 1989 coordinating regu-
lations on insider dealing (1) 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),
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
the purposes of
supervisory authorities concerned for
investigating any actual or alleged breaches of the rules made
or introduced to implement this Directive.

(c) and (e).

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.

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.

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.

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
in specific appropriate cases grant
of a reasoned decision,
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 administrat-
ive 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

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

By way of derogation from paragraph 1, Member States,
3.
which provide at the time of adoption of this Directive for
other appropriate and at-least-equivalent means in order to
protect
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:

the minority shareholders of

(a)

are specific to the transfer of control, and

(b)

include specific financial compensation for the minority
shareholders.

In addition to the protection provided under paragraphs
4.
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.

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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
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.

is made public,

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 infor-
mation 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.

Those rules shall require that the offer document state at

3.
least:

(a)

the terms of the bid;

(d)

(e)

(f)

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;

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

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 manage-
ment, 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 accept-
ance 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.

(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;

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.

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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 publi-
cation 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

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
the second
States of companies within the meaning of
paragraph of Article 58 of the Treaty,
in respect of the
formation of public limited liability companies and the main-
tenance and alteration of their capital, with a view to making
such safeguards equivalent (1).

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;

Obligations of the board of the offeree company

(d) disclosure of the result of bids;

(e)

irrevocability of the bid and conditions permitted.

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.

Article 11

Contact Committee

The Contact Committee set up by Article 20 of Directive

1.
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.

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

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

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

Act of Accession.

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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 com-
pliance 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 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 ... (*).
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 para-
graph 1.

Article 16

Entry into force of the Directive

Article 14

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

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 intermediari-
es, 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 17

Addressees of the Directive

This Directive is addressed to the Member States.

Done at ...

For the European Parliament

For the Council

The President

The President

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

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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),

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— 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’.

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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.

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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)).

(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)).

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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.

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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.