proposal for a Directive of the European Parliament and of the Council on takeover bids
Date: 2002-10-02
Institutions: European Commission
Subjects: access to information, administrative transparency, approximation of laws, company law, protection of shareholders, takeover bid

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II

(Preparatory Acts)

COMMISSION

Proposal for a Directive of the European Parliament and of the Council on takeover bids

(2003/C 45 E/01)

COM(2002) 534 final — 2002/0240(COD)

(Submitted by the Commission on 2 October 2002)

EXPLANATORY MEMORANDUM

1. General considerations

In its 1985 White Paper on completing the internal market, the Commission announced its intention to
propose a directive on the approximation of Member States'
legislation governing takeover bids. On
19 January 1989 it presented to the Council an initial proposal for a Thirteenth Directive on company
law concerning takeover and other general bids (1). On 10 September 1990 it adopted an amended
proposal (2)
the Economic and Social Committee (3) and the
European Parliament (4).

took account of

the opinions of

that

This was an ambitious text aimed at achieving detailed harmonisation in the field of takeover bids at a
time when economic circumstances were propitious. However, as the economic situation changed, the
proposal encountered strong opposition from certain Member States. Consequently, the Commission
indicated in its declaration on subsidiarity to the European Council at
in
December 1992 and confirmed to the Essen European Council in December 1994 that it was planning
to revise its proposal on the basis of consultations with the Member States as of June 1993.

the Edinburgh Summit

On 8 February 1996 the Commission presented to the Council and to the European Parliament a new
proposal for a Thirteenth Directive on company law concerning takeover bids (5). The proposal contained
a ‘framework’ directive drawn up in the light of consultations with the Member States and setting out
general principles but not attempting detailed harmonisation. At the end of 1997 the Commission adopted
an amended proposal that took account of the opinions of the Economic and Social Committee and the
European Parliament.

On 19 June 2000 the Council unanimously adopted its common position (6). In December 2000 the
European Parliament proposed on second reading a number of amendments (7) that were not such as to
meet with the Council's approval. The ensuing conciliation procedure ended with an agreement within the
Conciliation Committee on 6 June 2001.

On 4 July 2001 there was a division in the European Parliament, with the compromise text being rejected
(273 votes for and 273 votes against). The European Parliament's decision was motivated by three main
political considerations: (1) rejection of the principle whereby, in order to take defensive measures in the
face of a bid, the board of the offeree company must first obtain the approval of shareholders once the bid
has been made, and this until such time as a level playing field is created for European companies facing a
takeover bid; (2) regret that the protection which the directive would afford employees of companies
involved in a takeover bid was insufficient; (3) the failure of the proposal to achieve a level playing field
with the United States.

(1) OJ C 64, 14.3.1989, p. 8; for the explanatory memorandum, see Bull. EC Supplement 3/89.
(2) OJ C 240, 26.9.1990, p. 7; for the explanatory memorandum, see COM(90) 416 final.
(3) OJ C 298, 27.11.1989, p. 56.
(4) OJ C 38, 19.2.1990, p. 41.
(5) OJ C 162, 6.6.1996, p. 5; for the explanatory memorandum, see COM(95) 655 final.
(6) OJ C 23, 24.1.2001, p. 1.
(7) OJ C 232, 17.8.2001, p. 168.

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However, the Lisbon European Council placed this directive, which forms part of the Financial Services
Action Plan (1), among the priorities as regards the integration of European financial markets by 2005.
This view is shared by UNICE, which has repeatedly stressed the need for a common framework for
cross-border takeover bids. The European Parliament itself recognised that a directive would be useful and
important in this field. Under the circumstances, the Commission considers it essential to provide a
European framework for cross-border takeover bids as part of the Financial Services Action Plan.

Such transactions can contribute to the development and reorganisation of European firms, a key
condition for withstanding international competition and developing a single capital market. That said,
they are still subject to very divergent national rules and give rise to numerous problems when they
involve two or more Member States, e.g. the law applicable and the competent authorities. These uncer-
tainties are neither acceptable nor even desirable within the European Union.

The Commission has, therefore, decided to present a new proposal for a directive that meets the concerns
of the European Parliament without compromising the basic principles approved unanimously in the
Council's common position of 19 June 2000. With this in mind,
it set up a Group of High-Level
Company Law Experts under the chairmanship of Professor Jaap Winter with the task of presenting
suggestions for resolving the matters raised by the European Parliament. In preparing its proposal, the
Commission has taken broad account of the recommendations made by the Group in its report on issues
related to takeover bids, which was published in January 2002 (2).

The new proposal pursues the same objectives as its predecessor: alongside the general objectives of
integrating European markets in line with the Financial Services Action Plan and undertaking harmon-
isation conducive to corporate restructuring, it sets out to strengthen the legal certainty of cross-border
takeover bids in the interests of all concerned and to ensure protection for minority shareholders in the
course of such transactions. It establishes a framework for action by Member States by laying down certain
principles and a limited number of general requirements while allowing Member States to adopt the
detailed implementing rules in accordance with their national practices, provided that the differences
are not such as to jeopardise implementation of the directive at Community level.

The new proposal also has the same scope and lays down the same basic principles as its predecessor.
However, it has been supplemented in such a way as to incorporate the amendments adopted by the
European Parliament to the previous proposal. The proposal here follows the recommendations set out for
the Commission in the Winter Report as regards a common definition of ‘equitable price’ (Article 5) and
the introduction of a squeeze-out right (Article 14) and a sell-out right (Article 15) following a takeover
bid.

In line with the recommendations of the Winter Report, the new proposal retains the principle (in Article
9) that it is for shareholders to decide on defensive measures once a bid has been made public and
proposes greater transparency of the defensive structures and mechanisms in the companies affected by the
proposal (Article 10). These structural aspects and defensive mechanisms will be published in a detailed
and thorough manner. The proposal adds to these recommendations an obligation to put the measures
concerned to a vote at the general meeting every two years, together with the reasons for such measures.

The proposal does not take up all the recommendations of the Winter Report as regards neutralisation of
defensive measures following a successful takeover bid (break-through right). This is because the recom-
mendations met with opposition from virtually all Member States and interested parties, notably because of
the legal problems to which they may give rise (application threshold, concept of risk-bearing capital,
compensation for rights forgone, etc.). Moreover, a large majority of those questioned were opposed to the
inclusion in the proposal of measures that would have had far-reaching implications for company law.

(1) COM(1999) 232, 11.5.1999.
(2) Report by the Group of High-Level Company Law Experts, European Commission, Brussels, 10 January 2002.

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Nevertheless, following the logic of the Winter Report, the proposal stipulates that restrictions on transfers
of securities (e.g. the imposition of a ceiling on shareholdings or restrictions on the transferability of
shares) and restrictions on voting rights (e.g. restrictions on the exercise of voting rights and deferral of
voting rights) are rendered unenforceable against the offeror or cease to have effect once a bid has been
made public (Article 11). Following a successful bid, the offeror should also have the right to call a general
meeting at short notice with a view to amending the articles of association and replacing the members of
the board, provided that the company law rules in force are met, without any restrictions on the transfer
of securities or the exercise of voting rights being imposed on the offeror.

The Commission takes the view that this proposal represents a consistent approach that is the most
realistic as things stand. Combination of the greater transparency required by Article 10 with the unen-
forceability of measures that could result in management entrenchment, stipulated in Article 11, should
enable significant progress to be made towards the more level playing field called for by the European
Parliament, without undermining the competitive position of European businesses vis-à-vis
their
counterparts in non-member countries, and in particular the United States. This is a first step; the
revision provided for by Article 18 will afford an opportunity for examining whether other initiatives
should be taken in order to level the playing field further.

the Court recalls, generally,

The Commission wishes, before concluding this general introduction, to refer to the recent judgments of
the Court of Justice concerning infringements of the fundamental principle of the free movement of capital
provided for in Article 56 of the EC Treaty (judgments of 4 June 2002 in Cases C-367/98 Commission v
Portugal, C-483/99 Commission v France and C-503/99 Commission v Belgium). Although these judgments
concern only rules adopted by Member States,
that any restriction on
investment or on the exercise of control in European companies is in breach of the principle of the
free movement of capital: ‘the free movement of capital, as a fundamental principle of the Treaty, may be
restricted only by national rules which are justified by reasons referred to in Article 58 of the Treaty or by
overriding requirements of the general interest and which are applicable to all persons and undertakings
pursuing an activity in the territory of the host Member State. Furthermore, in order to be so justified, the
national legislation must be suitable for securing the objective which it pursues and must not go beyond
what is necessary in order to attain it, so as to accord with the principle of proportionality’. The present
proposal is in no way intended to depart from this approach. Article 11 is concerned specifically with
private-law restrictions on the transfer of securities and the exercise of voting rights and renders them
unenforceable or ineffective in the event of a takeover bid. This precision is useful in the light of the
resolution adopted by the European Parliament on 5 April 2001 concerning the updating of certain legal
aspects relating to intra-Community investments.

Lastly, the proposal also incorporates provisions on committee procedure (Article 17) to replace the
contact committee arrangements.

2. Commentary on the articles

Article 1 — Scope

As in the previous proposal, the Directive applies to companies governed by the law of a Member State all
or some of whose securities are admitted to trading on one or more stock exchanges in the European
Union. The words ‘all or some of’ are the only innovation compared with the previous text and indicate
clearly that the Directive applies also in cases where only a proportion of the offeree company's securities
conferring voting rights is listed.

Since the Directive lays down minimum requirements, Member States are free to apply its provisions to
companies whose securities are not listed on a stock exchange.

Article 2 — Definitions

This Article defines in the same way as in the previous text the most important terms used in the
Directive. No change has been made.

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It should be stressed that the provisions of the Directive apply to both mandatory and voluntary bids. A
bid may be mandatory where it is required by Member States as a means of protecting minority share-
holders in the event of a change of control. A bid may be voluntary when it is launched by a person with
there being no obligation on him to do so, in order to acquire control of a company.

It is also worth pointing out which types of securities are covered by the Directive. It applies only to
transferable securities carrying voting rights in a company. However, since the Directive lays down
minimum requirements, Member States are free to apply its provisions to other types of securities.

Article 3 — General principles

As in the previous proposal, this Article contains a series of general principles which must be respected by
the national rules transposing the Directive.

Article 4 — Supervisory authority and applicable law

As in the previous proposal, Member States are required to designate a supervisory authority or authorities
to supervise all aspects of the bid and to ensure compliance by all the parties to the bid with the rules
made pursuant to the Directive.

Determining which supervisory authority is competent and which law is applicable is a simple matter
where the offeree company's securities are traded on a regulated market in the Member State in which it
has its registered office: they are those of that Member State. The situation is somewhat more complex
where the offeree company's securities are traded on a regulated market in one or more other Member
States. The Directive draws a distinction according to whether the issues raised relate to the bid itself or to
the operation of the company: in the latter case, the competent authority and the applicable law remain
those of the Member State in which the company has its registered office whereas, in the former case, the
competent authority and the applicable law are those of the Member State in which the company's
securities are traded or the Member State in which they were first admitted to trading.

In order to ensure that the Directive is applied flexibly but that such flexibility does not go so far as to
undermine its general principles, Member States may grant their supervisory authorities powers to waive
certain national rules adopted pursuant
in doing so, the supervisory
authority should always comply with the general principles laid down in the Directive. Such flexibility
may be necessary in order to enable the supervisory authority to cope with the great variety of circum-
stances which can arise in fast-moving financial markets.

to the Directive. Nevertheless,

It is desirable to avoid systematic litigation during takeover bids. Member States are therefore free to decide
to what extent and in what conditions judicial action may be brought, without prejudice to the right of an
injured party to have recourse to the courts in order at least to claim compensation in case of damage.

As in the previous proposal, paragraph 2 of this Article is the subject of a revision clause (Article 18).

Article 5 — Protection of minority shareholders; mandatory bid; equitable price

As in the previous proposal, the aim of this Article is to ensure that, every time a person or entity acquires
control of a listed company as a result of an acquisition, minority shareholders are protected. To that end,
the Directive requires that national rules afford proper safeguards to minority shareholders by obliging that
person or entity to address a bid to all holders of securities, for all their holdings, at an equitable price.

As in the previous proposal, and unlike earlier texts, the Directive itself does not attempt to specify the
percentage of voting rights above which control can be deemed to have been acquired or the method of
calculating such a percentage. It was decided that these matters were to be determined by the Member
State where the supervisory authority is located.

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Nevertheless, unlike the previous proposal, Article 5(4) defines the price to be paid in the case of a
mandatory bid. To ensure that the minority shareholders obtain the best price in all cases and to
afford the offeror the greatest possible legal certainty, the highest price paid for the same securities by
the offeror, or by persons acting in concert with him, over a period of between six and twelve months
prior to the bid is regarded as an equitable price. Nevertheless, in the current economic and financial
climate this principle needs to be applied with some flexibility; Member States may therefore authorise
their supervisory authorities to adjust that price in circumstances and according to criteria that are clearly
determined, by means of a reasoned decision that is made public.

It is desirable to introduce the committee procedure (Article 17) to spell out these circumstances and
criteria.

Article 6 — Information on the bid

As in the previous proposal, national rules must ensure that the addressees of a bid have sufficient
information about the terms of the bid.

Moreover, as soon as the offeror decides to make the bid he must announce his intention to the
supervisory authority and to the board of the offeree company. The offeror must also be required to
prepare and make public in good time an offer document containing all the necessary information to
enable the addressees of the bid to reach a properly informed decision. All parties to the bid should also be
required to provide the supervisory authority, at its request, with all the information it deems necessary in
order to discharge its duties.

is desirable to introduce the committee procedure (Article 17)

It
necessary, the list of information required in paragraph 3.

for amending, should this prove

Article 7 — Period for acceptance

As in the previous proposal, the period for acceptance may not normally be less than two weeks or more
than ten weeks in order that the conduct of the companies' affairs is not unduly hindered.

Article 8 — Disclosure

Member States must ensure that information capable of having an influence on the market in the securities
concerned is made public in such a way as to reduce the risks of the creation of false markets and insider
trading.

As in the previous proposal, and unlike earlier texts, the Directive does not enumerate the different forms
of disclosure but leaves the Member States substantial discretion to decide on the matter, provided that all
the necessary information is both clear and promptly available to the addressees of the bid.

Article 9 — Obligations of the board of the offeree company

As in the previous proposal, this Article requires Member States to ensure that the board of the offeree
company refrains from taking any defensive measures that may result in the frustration of the bid unless it
has the prior authorisation of the general meeting of shareholders for the purpose. Where control of the
offeree company is at stake, it is important to ensure that its fate is decided by its shareholders. The
authorisation of the general meeting must therefore be given explicitly with a view to responding to a
specific bid.

The Directive does not define the measures which can frustrate a bid. In general, such measures may be all
operations which are not carried out in the normal course of the company's business or not in conformity
with normal market practices.

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The board of the offeree company must also be required by national rules to give its opinion on the bid,
together with the reasons on which it is based, in a report setting out the arguments for and against
acceptance of the offer. The offeree company's employees should be associated with the opinion and
should be able, if they disagree, to communicate their own opinion at the same time. These opinions are
addressed to the shareholders, who have the responsibility to decide on the bid.

Member States are allowed a transitional period for the application of this provision.

Article 10 — Information on companies referred to in Article 1(1)

This new Article meets the need for transparency, something which is extremely important in the case of
companies that may be the target of a takeover bid. It lists the particulars that companies covered by the
Directive should publish at least in their annual report, with special reference to the structures and
measures that could hinder the acquisition and exercise of control over the company by an offeror.
The information should, where appropriate, be updated during the year. This Article should be seen in
close connection with other Community rules on transparency (Council and Parliament Directive
2001/34/EC of 28 May 2001 on the admission of securities to official stock exchange listing and on
information to be published on those securities (1) and draft proposal for a directive on transparency
obligations for issuers and holders of securities admitted to trading on a regulated market). The
Commission has repeatedly stressed the need for transparent information on listed companies. Recent
events, such as the Enron affair, have served to confirm this need.

It is also proposed that all the shareholders should take a decision every two years on the structural
measures and defensive mechanisms and that the board should state the reasons for them.

This Article should be re-examined, with a view to possible revision, five years after the deadline for
implementing the Directive. It should be possible at that point to ascertain the extent to which market
forces have, thanks to the transparency introduced by this Article, levelled the playing field for takeover
bids.

Article 11 — Unenforceability of restrictions on the transfer of securities and voting rights

This new Article reflects the need to level the playing field in takeover bids in the European Union by
banning certain legal restrictions that can be regarded as hindering bids. It therefore proposes that:

— any restrictions on the right of ownership which may prevent the offeror from acquiring securities of
the offeree company, such as limitations on ownership or a right for the company or other holders of
securities to veto any transfer of securities, should be rendered unenforceable against the offeror;

— any restrictions on voting rights which prevent holders of the offeree company's securities from
exercising their rights when the general meeting decides on defensive measures after a bid has been
announced, such as limits on voting rights, deadlines for exercising voting rights or agreements
between holders of securities, should be rendered ineffective. In accordance with the principle laid
down in Article 9, holders of securities should be able to make a completely free and properly
informed decision on the bid;

— any restrictions on the transfer of securities and on voting rights, as well as any special rights of
shareholders concerning the appointment or removal of board members, which may prevent an offeror
who holds sufficient securities of the offeree company from exercising the corresponding voting rights
in order to amend the company's articles of association should be lifted at the first general meeting
following closure of the bid.
‘Sufficient securities’ means a particular percentage which is normally
required under the relevant national law for taking such decisions.

(1) OJ L 184, 6.7.2001, p. 1.

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It should be noted that securities without voting rights are not regarded as restrictions in so far as they
carry a preferential entitlement to a share in the profits or liquidation surplus.

These provisions are aimed at measures that could result in management entrenchment; they do not
concern securities carrying double or multiple voting rights.
It can be argued that securities with
multiple voting rights form part of a system for financing companies and that there is no proof that
their existence renders takeover bids impossible. The same applies to securities with double voting rights,
which may make for a stable shareholder base. Moreover, the suppression of such rights, especially if no
compensation were provided, would in some legal systems give rise to questions of a constitutional nature
that could jeopardise or at least delay for a long time the adoption of the Directive. Nevertheless, if it were
to prove at some later stage that such securities are used mainly as defensive mechanisms against takeover
bids, the revision clause written into Article 18 would enable the Commission to re-examine the issue.

Article 12 — Other rules applicable to the conduct of bids

As in the previous proposal (former Article 10) and in line with the principle of subsidiarity, this Article
lists a number of matters which national rules must cover, without going into any detail. This approach
leaves the content of such rules to the discretion of the Member States, which must nevertheless ensure
that the rules they adopt pursuant to this Article do not undermine the general principles of the Directive.

Article 13 — Information for and consultation of representatives of employees

This new Article responds to concerns voiced by certain Members of the European Parliament regarding
protection of the employees of companies involved in a takeover bid (both the offeror and the offeree
company).

It confirms that the close and effective involvement of the companies' employees, via their representatives,
is an important factor not only for the success of the operation but also for proper consideration of the
different interests that may be affected by the takeover. It stresses that, in addition to the national rules
which may be applicable, certain provisions of Community law may be relevant in this context.

Such information and consultation is in addition to the specific procedure to be followed in the event of a
takeover bid as provided for in Articles 6(3)(h) and 9(5).

Article 14 — Squeeze-out right

This new Article responds directly to an amendment made by the European Parliament to the previous
proposal.
introduces a common squeeze-out procedure enabling a shareholder holding a given
percentage of securities of a company to require the remaining minority shareholders to sell him their
securities at a fair price.

It

The Directive nevertheless limits this right to cases where the percentage of securities was acquired
following a takeover bid.

Article 15 — Sell-out right

This new Article constitutes the quid pro quo, for the benefit of the minority shareholders, of the right
created by Article 14 for the benefit of the majority shareholder. It provides that, under similar conditions
and again following a takeover bid, a minority shareholder can require the majority shareholder to buy his
securities from him.

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Article 16 — Sanctions

It is important that Member States should provide for adequate sanctions in the event of infringement of
the measures taken pursuant to the Directive.

Article 17 — Committee procedure

The previous proposal (former Article 11) set up a Contact Committee for monitoring application of the
Directive. That provision can now be replaced by a provision on committee procedure.

Article 18 — Revision

As in the previous proposal, a procedure is established for re-examining and if necessary revising some of
the Directive's provisions. Any such revision would be aimed at achieving a more level playing field in
takeover bids (Articles 4(2), 10 and 11).

Article 19 — Transitional period

It is nevertheless useful for Member States to be able to give their companies time to adjust to the new
rules by allowing a transitional period of not more than three years for complying with Article 9.

Article 20 — Transposition

It is important that the national measures implementing the Directive should be in force at the end of the
Financial Services Action Plan, to which it should make a key contribution.

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

some of their securities are admitted to trading on a
regulated market.

Having regard to the Treaty establishing the European
Community, and in particular Article 44(1) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the Economic and Social
Committee,

Acting in accordance with the procedure referred to in Article
251 of the Treaty (1),

Whereas:

(1) In accordance with Article 44(2)(g) of the Treaty,

it is
necessary to coordinate certain safeguards which, for the
protection of
the interests of members and others,
Member States require of companies governed by the
law of a Member State and whose
are
admitted to trading on a regulated market in a Member
State, with a view to making such safeguards equivalent
throughout the Community.

securities

(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
least
takeover bid or to a change of control and at

(3) 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.

(4) Each Member State should designate an authority or auth-
orities 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.
should cooperate with one
The different authorities
another.

(5) 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 possi-
bility of exceptions and derogations. However, in applying
any rules or exceptions laid down or in granting any
derogations,
respect
supervisory
certain general principles.

authorities

should

(1) Opinion of
. . ., Council Common
Position of
. . .,
decision of the European Parliament of . . . and decision of the
Council of . . .

the European Parliament of
. . ., decision of

the European Parliament of

(6) Supervision should be able to be exercised by self-regu-

latory bodies.

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

should be left

the

control of

acquisition of

after
Such protection should be

(8) Member States should take the necessary steps to protect
holders of securities, and in particular those with minority
holdings,
their
company.
ensured by
obliging the person who has acquired control of a
company to make a bid to all holders of securities for
all of their holdings at an equitable price according to a
common definition. Member States should be free to
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 announce a
bid at
the company is
acquired.

the same time as control of

(9) 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 national legislation trans-
posing this Directive enters into force.

(10) The obligation to launch a bid should not apply in the
case of the acquisition of securities which do not carry
voting rights at ordinary general meetings. Member States
should, however, be able to provide that the obligation to
make a bid to all holders of securities relates not only to
securities carrying voting rights but also to securities
which carry voting rights only in specific circumstances
or which do not carry voting rights.

(11) 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.

(13) It is necessary to regulate the period for the acceptance of

the bid.

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

(15) In order to avoid operations which could frustrate the bid,
it is necessary to limit the powers of the board of the
offeree company to engage in operations of an excep-
tional nature without unduly hindering the offeree
company from carrying out its normal business activities.

(16) 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.

(17) In order to reinforce the effectiveness of

the existing
provisions regarding freedom to deal in the securities of
companies covered by this Directive and freedom to
exercise voting rights,
it is essential that the defensive
such
structures
companies be transparent and that they be regularly put
to a vote at the general meeting.

and mechanisms

envisaged

by

the offeree

(18) Member States should take the necessary measures to
the possibility of purchasing the
afford any offeror
company, by neutralising
securities of
provisions placing restrictions on the transfer of securities
and on voting rights, and to render
ineffective any
restrictions on the transfer of securities and on voting
rights which may prevent an offeror who holds sufficient
the offeree company from exercising the
securities of
to amend the
corresponding voting rights
in order
company's
neutralising
by
restrictions on the voting rights and special appointment
rights held by shareholders at the first general meeting
following closure of the bid.

association,

articles

of

(12) 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
failing
that, to the employees directly.

the company's employees or,

(19) Member States need to 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, the
irrevocability of the bid and the conditions permitted.

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(20) The provision of

of

groups

information to and consultation of
representatives of the employees of the offeror and the
offeree company must be governed by the relevant
national provisions, and in particular
those adopted
pursuant to Council Directive 94/45/EC of 22 September
1994 on the establishment of a European Works Council
or a procedure in Community-scale undertakings and
Community-scale
the
informing and consulting employees (1),
purposes of
Council Directive 98/59/EC of 20 July 1998 on the
the Member States
approximation of
and Directive
relating
2002/14/EC of
the
Council of 11 March 2002 establishing a general
framework for informing and consulting employees in
the European Community (3). The employees of
the
offeree company, or their representatives, should never-
theless be afforded the opportunity of giving their views
on the foreseeable effects of the bid on employment.

the European Parliament and of

laws of
redundancies (2)

the
to collective

undertakings

for

(21) Member States should take the necessary measures to
enable a shareholder who has acquired a high level of
control of a company following a takeover bid to
require the remaining minority shareholders to sell him
shareholder has
their
acquired a high level of control of a company following
a takeover bid,
the remaining minority shareholders
should be able to require him to buy their securities.

securities. Likewise, where

a

throughout

the Community)

(22) Since the objectives of the action envisaged (establishing
minimum guidelines for the conduct of takeover bids and
ensuring an adequate level of protection for holders of
securities
be
sufficiently achieved by the Member States (need for trans-
parency and legal certainty in the case of cross-border
takeovers or acquisitions of control) and can therefore
be better achieved at Community level, the Community
can take action in accordance with the principle of subsi-
diarity enshrined in Article 5 of the Treaty. In line with
the subsidiarity principle as set out in that Article, this
Directive does not go beyond what is necessary to achieve
those objectives.

cannot

(24) Member States should, however, establish sanctions for
any infringement of the national measures transposing
this Directive.

(25) The necessary measures must be taken for the implemen-
tation of
this Directive in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down
the procedures for the exercise of implementing powers
conferred on the Commission (4).

(26) The Commission should be able to re-examine and if
necessary revise the provisions requiring greater trans-
parency and ensuring effective operation of general
meetings in the context of a takeover bid.

(27) Member States should be allowed to postpone for a
specified period application of the provisions relating to
the obligations of the board of the offeree company,

HAVE ADOPTED THIS DIRECTIVE:

Article 1

Scope

of

arrangements

the Member

This Directive lays down measures coordinating the laws,
1.
regulations, administrative provisions, codes of practice or
other
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 all or some of
those securities are
admitted to trading on a regulated market within the
meaning of Council Directive 93/22/EEC (5) in one or more
Member States (hereinafter ‘regulated market’).

States,

(23) The adoption of a directive is the appropriate procedure
laying down a framework consisting of certain
for
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.

This Directive shall not apply to takeover bids for
2.
securities issued by companies the object of which is the
collective investment of capital provided by the public, 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 vary significantly from
their net asset value shall be regarded as equivalent to such
repurchase or redemption.

(1) OJ L 254, 30.9.1994, p. 64. Directive as amended by Directive

97/74/EC (OJ L 10, 16.1.1998, p. 22).

(2) OJ L 225, 12.8.1998, p. 16.
(3) OJ L 80, 23.3.2002, p. 29.

(4) OJ L 184, 17.7.1999, p. 23.
(5) OJ L 41, 11.6.1993, p. 27. Directive as last amended by Directive
2000/64/EC of the European Parliament and of the Council (OJ L
290, 17.11.2000, p. 27).

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Article 2

Definitions

1.

For the purposes of this Directive:

(a) ‘takeover bid’ or ‘bid’ means a public offer (other than by
the offeree company itself) made to the holders of the
securities of a company to acquire all or some of the
said securities, whether mandatory or voluntary, which
follows or has as its objective the acquisition of control
of the offeree company in accordance with national law;

(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; where it advises the
holders of securities, the board of the offeree company is to
give its views on the effects of implementation of the bid
on employment,
employment and the
locations of the company's places of business;

conditions of

(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;

(b) ‘offeree company’ means a company whose securities are

the subject of a bid;

(c) ‘offeror’ means any natural or legal person governed by

public or private law making a 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;

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

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

(e) ‘securities’ means transferable securities carrying voting

rights in a company;

(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.

(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,
and persons acting in concert with such parties.

2.
For the purposes of paragraph 1(d), persons controlled by
another person within the meaning of Article 87 of Directive
2001/34/EC of the European Parliament and of the Council (1)
shall be deemed to be persons acting in concert with that other
person and with each other

2. With a view to ensuring compliance with the principles
set out in paragraph 1, Member States:

(a) shall see to it that the minimum requirements set out in

this Directive are observed;

(b) may lay down additional conditions and more stringent
provisions than those required by this Directive for regu-
lating bids.

Article 3

General principles

1.
For the purpose of implementing this Directive, Member
States shall ensure that the following principles are complied
with:

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

(1) OJ L 184, 6.7.2001, p. 1.

Article 4

Supervisory authority and applicable law

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, associations
or private bodies recognised by national law or by public auth-
orities expressly empowered for that purpose by national law.
inform the Commission of these desig-
Member States shall
nations, specifying all divisions of
functions that may be
made. They shall ensure that these authorities exercise their
functions impartially and independently of all parties to the
bid.

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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.

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.

(b) If the securities of the offeree company are not admitted
to trading on a regulated market in the Member State in
the
which 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.

registered office,

company has

its

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 shall
determine which of the supervisory authorities of those
Member States is the competent authority for super-
vising the bid by notifying these regulated markets and
their supervisory authorities on the first trading day.

the securities of

If
the offeree company are already
admitted to trading on regulated markets in more than
one Member State at the date referred to in Article 20(1)
and were admitted simultaneously, the supervisory auth-
orities of these Member States shall agree on which one
of them is to be the competent authority for supervising
the bid within four weeks of the date mentioned in
the offeree company shall
Article 20(1). Otherwise,
determine which of
to be the
is
competent authority on the first trading day following
the expiry of the period of time mentioned in the first
sentence.

these authorities

(d) Member States shall ensure that the decisions referred to

in point (c) are made public.

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

in particular

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

in

particular

The supervisory authorities of the Member States under
4.
this Directive and other authorities supervising capital markets,
in
Council Directive
accordance with
89/592/EEC (1), Council Directive 93/22/EEC and Directive
2001/34/EC of the European Parliament and of the Council,
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 points (b), (c) and (e) of paragraph 2. Information
covered by the obligation of
thus
professional
secrecy to which the persons employed or
formerly employed by the supervisory authorities receiving
the information are subject. Cooperation shall
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
purpose of investigating any actual or alleged breaches of the
rules made or introduced pursuant to this Directive.

exchanged shall be

5.
The supervisory authorities shall be vested with all the
powers necessary for carrying out their duties, including that of
ensuring that the parties to the bid comply with the rules
established pursuant to this Directive.

Provided that the general principles set out 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 certain types of cases determined at
national level and/or in other special cases, grant derogations
from these rules on the basis of a reasoned decision.

This Directive shall not affect the power of the Member
6.
States to designate judicial or other authorities responsible for
dealing with disputes and for deciding on irregularities
committed during the bid procedure or
the power of
Member States to regulate whether and under which circum-
stances parties to a bid are entitled to bring administrative or
judicial proceedings. In particular, this Directive shall 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 power of the Member States to determine the
legal position concerning the liability of supervisory authorities
or concerning litigation between the parties to a bid.

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

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Article 5

Member States may stipulate that such consideration has to
include a cash consideration at least as an alternative.

Protection of minority shareholders; mandatory bid;
equitable price

1. Where a natural or legal person 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 this person is required to make a bid as a
means of protecting the minority shareholders of
that
company. This bid shall be addressed at the earliest oppor-
tunity to all holders of securities for all their holdings at an
equitable price.

In any event, the offeror shall offer a cash consideration at least
as an alternative where, either individually or together with
persons acting in concert with him, over a period beginning
at least three months before his bid is made pursuant to Article
6(1) and ending before expiry of the period for acceptance of
the
the bid, he has purchased in cash more than 5 % of
securities or voting rights of the offeree company.

The Commission shall adopt,
6.
procedure referred to in Article 17(2),
application of paragraphs 4 and 5 of this Article.

in accordance with the
the
the rules for

2. Where control has been obtained following a voluntary
bid made in accordance with this Directive to all holders of
securities for all their holdings, the obligation to launch a bid
laid down in paragraph 1 shall no longer apply.

In addition to the protection provided under paragraph 1,
7.
Member States may provide for further instruments aimed at
protecting the interests of holders of securities in so far as
these instruments do not hinder the normal course of the bid.

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

4.
The highest price paid for the same securities by the
offeror, or by persons acting in concert with him, over a
period of between six and twelve months prior to the bid
referred to in paragraph 1 shall be regarded as an equitable
price.

Member States may authorise their supervisory authorities to
adjust the price referred to in the first subparagraph in circum-
stances and according to criteria that are clearly determined. To
that end, they shall draw up a list of circumstances in which
adjusted either upwards or
the highest price may be
downwards, for example where the highest price was set by
agreement between the purchaser and a seller, where the
in question have been
market prices of
securities
in general or certain
manipulated, where market prices
market prices in particular have been affected by exceptional
occurrences, or in order to enable a firm in difficulty to be
rescued. They may also determine the criteria to be applied in
for example the average market value over a
such cases,
the company or
the break-up value of
particular period,
other objective valuation criteria generally used in financial
analysis.

the

Any decision by a supervisory authority to adjust the equitable
price shall be substantiated and made public.

The consideration offered by the offeror may consist

5.
exclusively of liquid securities.

Where the consideration offered by the offeror does not consist
of liquid securities admitted to trading on a regulated market,

Article 6

Information on the bid

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

company and of

the offeror

shall

2. Member States shall ensure that the offeror is required 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 boards of the offeree company and
of the offeror shall communicate it respectively to the represen-
tatives of
their employees or, where there are no such
representatives, to the employees themselves.

Where the offer document referred to in the first subparagraph
is subject to the prior approval of the supervisory authority
and has been approved, it shall be recognised, subject to any
translation, in any other Member State on whose market the
securities of
the offeree company are admitted to trading,
without it being necessary to obtain the approval of the super-
visory authorities of that Member State. The latter may require
additional information to be included in the offer document
only if such information is specific to the market of
the
Member State or Member States where the securities of the
offeree company are admitted to trading and relates to 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 to the tax arrangements to which the consideration offered
to the holders of securities will be subject.

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The offer document referred to in paragraph 2 shall state

3.
at least:

(a)

the terms of the bid;

5. Member States shall ensure that the parties to a bid are
required 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 super-
visory authority to discharge its functions.

(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, where appropriate, the class or classes of
securities for which the bid is made;

(d)

the consideration offered for each security or class of
securities and,
the
method employed in determining it, with particulars of
the way in which that consideration is to be paid;

in the case of mandatory bids,

(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 and, in so far as it is affected by
the bid, the offeror company and with regard to safe-
guarding the jobs of their employees and management,
including any material change in the conditions of
employment. This
the
offeror's strategic plans for the two companies and the
likely repercussions on employment and the locations of
the companies' places of business;

concern in particular

shall

(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
in the case of
or with the offeree company and,
companies,
and
relationship with the offeror and, where possible, with
the offeree company;

registered office

type, name,

their

Article 7

Period for acceptance

that

1. Member States
the period for
shall provide
acceptance of the bid may not be less than two weeks or
more than ten weeks from the date of publication of the
offer document. Provided that the general principle laid down
in Article 3(1)(f) is respected, Member States may provide that
the period of ten weeks may be prolonged on the condition
that the offeror gives at least two weeks' notice of its intention
to close the bid.

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

Article 8

Disclosure

1. Member States shall ensure that a bid must be made
public in such a way as to ensure market transparency and
the
integrity for the securities of
the offeree company, of
offeror or of any other company affected by the bid,
in
particular in order to prevent the publication or dissemination
of false or misleading information.

2. Member States shall provide for the disclosure of all
information or documents required by Article 6 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
paragraphs 2 to 5 below are complied with.

rules laid down in

(m) indication of the national law which will govern contracts
concluded between the offeror and holders of securities of
the offeree company as a result of
the bid and the
competent courts.

4.
The Commission shall adopt,
procedure referred to in Article 17(2),
application of paragraph 3 of this Article.

in accordance with the
the
the rules for

2.
During the period referred to in the second subparagraph,
the board of the offeree company must obtain the prior auth-
orisation of the general meeting of shareholders given for this
purpose before taking any action other than seeking alternative
bids which may result in the frustration of the bid and in
particular before issuing any shares which may result in a
lasting impediment to the offeror in obtaining control over
the offeree company.

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Such authorisation shall be mandatory at least from the time
the board of the offeree company receives the information
concerning the bid referred to in the first sentence of Article
6(1) and until the result of the bid is made public or the bid
lapses. Member States may stipulate that such authorisation is
to be obtained at an earlier stage, for example from the time
when the board of the offeree company becomes aware that
the bid is imminent.

3.
As regards decisions taken before the beginning of the
period referred to in the second subparagraph of paragraph 2
and not yet partly or fully implemented, the general meeting of
the shareholders shall approve or confirm any decision which
does not form part of the normal course of the company's
business and whose implementation may result in the frus-
tration of the bid.

the holders of

For the purpose of obtaining the prior authorisation or
4.
confirmation of
referred to in
paragraphs 2 and 3, Member States may adopt rules allowing
a general meeting to be called at short notice, provided that the
meeting does not take place within two weeks of notification
being given.

securities

the interests of

The board of the offeree company shall draw up and
5.
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 on all
the company,
including employment, and on the offeror's strategic plans
for the offeree company and their likely effects on employment
and the locations of the company's places of business as set out
in the offer document in accordance with Article 6(3)(h). The
the same time
board of
its
communicate
employees or, where there are no such representatives, the
employees
the offeree
company receives in good time a separate opinion from the
representatives of its employees on the effects of the bid on
employment, that opinion shall be appended to the document.

the offeree company shall at

that opinion to the

themselves. Where

representatives of

the board of

Article 10

Information on companies referred to in Article 1(1)

1. Member States shall ensure that companies referred to in
Article 1(1) publish detailed information on the following:

(a)

the structure of their capital, including securities which are
not admitted to trading on a regulated market in a Member
State, where appropriate with an indication of the different
classes of shares and, for each class of shares, the rights and
obligations attaching to it and the percentage of total share
capital that it represents;

(b) any restrictions on the transfer of securities, such as limi-
tations on the holding of securities or the need to obtain
the approval of the company or other holders of securities,
without prejudice to Article 46 of Directive 2001/34/EC;

(c) significant direct and indirect

(including
shareholdings
indirect
through pyramid structures and
cross-shareholdings) within the meaning of Article 85 of
Directive 2001/34/EC;

shareholdings

(d) the holders of any securities with special control rights and

a description of these rights;

(e)

the system of control of any employee share scheme where
the control
rights are not exercised directly by the
employees;

(f) any restrictions on voting rights, such as limitations of the
right to vote for holders of a given percentage or number
of votes, deadlines for exercising the right to vote or sepa-
ration of the right to vote from the holding of a security;

(g) agreements between shareholders which may result

in
restrictions on the transfer of securities and/or voting
rights within the meaning of Article 87(1)(c) of Directive
2001/34/EC;

(h) the rules governing the appointment and replacement of
the articles of

board members and the amendment of
association;

(i)

the powers of board members, and in particular the power
to issue or buy back shares;

(j)

significant agreements to which the company is a party and
which take effect, alter or terminate upon a change of
control of the company and the effects thereof;

(k) any agreements between the company and its board
members or employees providing for compensation if
they are made redundant without valid reason following
a takeover bid.

company's

The information referred to in paragraph 1 shall be
2.
published in the
report within the
meaning of Article 46 of Council Directive 78/660/EEC (1)
and Article 36 of Council Directive 83/349/EEC (2) and,
where appropriate, updated during the year in accordance
with the transparency requirements applicable to companies
whose securities are admitted to trading on a regulated market.

annual

3. Member States shall ensure that, in the case of companies
whose securities are admitted to trading on a regulated market
in a Member State, the general meeting of shareholders takes a
decision at least every two years on the structural aspects and
defensive mechanisms referred to in paragraph 1. They shall
require the board to state the reasons for those structural
aspects and defensive mechanisms.

(1) OJ L 222, 14.8.1978, p. 11.
(2) OJ L 193, 18.7.1983, p. 1.

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Article 11

(c) competing bids;

Unenforceability of

restrictions on the

transfer of

securities and voting rights

(d) disclosure of the results of bids;

to the obligations

1. Without prejudice
imposed by
Community law on companies whose securities are admitted
to trading on a regulated market in a Member State, Member
States shall ensure that the safeguards referred to in paragraphs
2, 3 and 4 are afforded when a bid has been made public.

2.
Any restrictions on the transfer of securities provided for
in the articles of association of the offeree company shall be
the offeror during the period for
unenforceable against
acceptance of the bid.

Any restrictions on the transfer of securities provided for in
contractual agreements between the offeree company and
holders of its securities or between holders of securities of
the offeree company shall be unenforceable against
the
offeror during the period for acceptance of the bid.

3.
Any restrictions on voting rights provided for in the
articles of association of the offeree company shall cease to
have
effect when the general meeting decides on any
defensive measures in accordance with Article 9.

Any restrictions on voting rights provided for in contractual
agreements between the offeree company and holders of its
securities or between holders of securities of
the offeree
company shall cease to have effect when the general meeting
decides on any defensive measures in accordance with Article 9.

4. Where, following a bid, the offeror holds a number of
securities of the offeree company which, under the applicable
national
law, would enable him to amend the company's
articles of association, any restrictions on the transfer of
securities and on voting rights referred to in paragraphs 2
and 3 and any special rights of shareholders concerning the
appointment or removal of board members shall cease to have
effect at the first general meeting following closure of the bid.

To that end, the offeror shall have the right to convene a
general meeting at short notice, provided that the meeting
does not take place within two weeks of notification.

Paragraphs 2 and 3 shall not apply to securities without

5.
voting rights which carry specific pecuniary advantages.

Article 12

Other rules applicable to the conduct of bids

Member States shall also lay down rules which govern the
conduct of bids at least as regards the following:

(a)

lapse of the bid;

(b) revision of bids;

(e)

irrevocability of the bid and conditions permitted.

Article 13

Information for and consultation of employees' represen-
tatives

Without prejudice to the provisions of
the
provision of information to and consultation of representatives
of the employees of the offeror and the offeree company shall
be governed by the relevant national provisions, and in
particular
to Directives 94/45/EC,
98/59/EC and 2002/14/EC.

those adopted pursuant

this Directive,

Article 14

Squeeze-out right

1. Member States shall ensure that, following a bid made to
all the holders of securities of the offeree company for all their
securities, an offeror is able to require the holders of
the
remaining securities to sell him those securities at a fair price
in either of the following cases:

(a) where he holds securities representing not less than 90 %

of the capital of the offeree company, or

(b) where he has acquired,

through acceptance of the bid,
securities representing not less than 90 % of the capital
concerned by the bid.

In the case referred to in point (a) above, Member States may
set a higher threshold that may not, however, be more than
95 % of the company's capital.

2. Member States shall ensure that rules are in force making
it possible to calculate when the threshold is reached.

Where the offeree company has issued more than one class of
shares, the rule laid down in paragraph 1 shall apply separately
within each class.

3. Member States shall ensure that a fair price is guaranteed.
That price shall take the same form as the consideration offered
in the bid.

Following a voluntary bid, the price shall be presumed to be
fair where it corresponds to the consideration offered in the
bid and the offeror has acquired, through acceptance of the
bid, securities representing not less than 90 % of the capital
concerned by the bid.

Following a mandatory bid, the consideration offered in the bid
shall be presumed to be fair.

25.2.2003

EN

Official Journal of the European Union

C 45 E/17

In both the cases referred to in points (a) and (b) of
4.
paragraph 1,
the fair price presumption shall apply only
where the squeeze-out right is exercised within a period of
three months after the end of the period for acceptance of
the bid. In all other cases, the price shall be determined by
an independent expert.

Article 15

Sell-out right

1. Member States shall ensure that, following a bid made to
all the holders of securities of the offeree company for all their
securities, a minority holder of securities is able to require the
offeror holding not less than 90 % of the capital of the offeree
company to buy his securities from him at a fair price. They
may set a higher threshold, but this may not be more than
95 % of the company's capital.

However, the sell-out right may not be exercised where the
specified threshold has been reached only for a short period.

2. Where the offeree company has issued more than one
class of shares, the rule laid down in paragraph 1 shall apply
separately within each class.

The price shall be determined in accordance with the

3.
provisions of Article 14(3) and (4).

Article 16

Sanctions

Member States shall determine the sanctions to be applied for
infringement of the national measures adopted pursuant to this
Directive and shall take all the necessary steps to ensure that
they are put into effect. The sanctions thus provided for shall
be effective, proportionate and dissuasive. Member States shall
notify these measures to the Commission not later than the
date laid down in Article 20(1) and any subsequent change
thereto at the earliest opportunity.

Article 17

Committee procedure

The Commission shall be assisted by the European
1.
Securities Committee established by Commission Decision
2001/528/EC (1).

2. Where reference is made to this paragraph, the regulatory
procedure laid down in Article 5 of Decision 1999/468/EC
shall apply, having due regard to Articles 7(3) and 8 thereof.

The period referred to in Article 5(6) of Decision

3.
1999/468/EC shall be three months.

Article 18

Revision

the
Five years after the date laid down in Article 20(1),
Commission shall examine Articles 4(2), 10 and 11 and,
if
necessary, propose that they be revised in the light of the
experience acquired in applying them.

Article 19

Transitional period

Member States are authorised to postpone application of
Article 9 for a period of not more than three years after the
date laid down in Article 20(1), provided that they inform the
Commission thereof not later than that date.

Article 20

Transposition

1. Member States shall bring into force the laws, regulations
and administrative provisions necessary to comply with this
Directive not later than 1 January 2005. They shall forthwith
inform the Commission thereof.

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

2. Member States shall communicate to the Commission the
texts of the main provisions of national law that they adopt in
the fields governed by this Directive.

Article 21

Entry into force

This Directive shall enter into force on the 20th day following
its publication in the Official Journal of the European Communities.

Article 22

Addressees

This Directive is addressed to the Member States.

(1) OJ L 191, 13.7.2001, p. 45.