Opinion of the European Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council on takeover bids" (COM(2002) 534 final — 2002/0240 (COD))
Date: 2003-05-14
Institutions: European Economic and Social Committee
Subjects: company law, takeover bid

3.9.2003

EN

Official Journal of the European Union

C 208/55

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council on takeover bids’

(COM(2002) 534 final — 2002/0240 (COD))

(2003/C 208/15)

On 5 November 2002 the Council decided to consult the European Economic and Social Committee on
the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was
responsible for preparing the Committee’s work on the subject, adopted its opinion on 29 April 2003.
The rapporteur was Mr Cassidy.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 101 votes to 8, with 17 abstentions.

1.

Introduction

1.1.
The EESC welcomes the latest Commission proposal
as a further step towards the creation of a Single Market. The
European Parliament and the Council are urged to proceed as
quickly as possible to approve the latest Commission proposal.

1.2.
The EESC believes that the ultimate aim must be the
elimination of all obstacles to cross-border takeovers in the
EU, equality of treatment of stakeholders and the phasing out
of all defence mechanisms.

1.3.
The Commission has under Article 18 five years after
the implementation of the directive to propose revisions in the
light of experience which the EESC hopes will enable some of
the shortcomings in the present draft to be corrected.

1.4.
The EESC hopes that Article 4 will achieve its objective
of avoiding systematic litigation during takeover bids and that
Member States shall ensure the transparency of the competent
authorities’ decision making, but fears that the rules introduced
in Article 4 to determine the supervisory authorities and
applicable laws for takeover bids may introduce unnecessary
complexity and uncertainty and therefore proposes their
simplification.

requires

1.6.
The EESC particularly welcomes a new Article 13
concerning timely and comprehensive information and consul-
tation of employees’ representatives and stresses that good
management practice
the
employees of both offeror and offeree companies. It believes
that employees or their representatives should be informed no
later than the supervisory authorities, shareholders, the media
and other stakeholders in order to ensure a level playing field
between them, so as to make it possible for the boards of the
offeror and the offeree companies to consider the views of
their employees.

cooperation of

the

Article 13 is important to assist in overcoming the
1.7.
concerns previously expressed regarding protection for
employees. Helpful references to information to be passed to
employees representatives are included in Article 6 para-
graphs 1 and 2 and the EESC welcomes that the text reflects in
a more expansive way the importance of information and
consultation of employees.

1.8.
The EESC asks the European Parliament and the
Council to establish a qualified majority threshold range for
amending a company’s Articles of Association in Article 11.4
of the directive.

1.9.
The EESC has not proposed any amendments to
Articles 14 and 15 as we believe that these two articles have
been re-drafted by Council Working Parties.

1.5.
To ensure a more level playing field, the EESC asks the
European Parliament and the Council to set a relatively narrow
range of percentage voting rights as the control threshold
triggering a mandatory takeover bid.

1.10.
In connection with the ‘level playing field’ with non
member countries, the EESC notes that there is no reference to
this in the latest draft directive but stresses the importance of
a level playing field within the EU.

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EN

Official Journal of the European Union

3.9.2003

1.11.
to the amendments presented below:

The EESC approves the Commission text subject only

2.5. Article 9

2. Specific comments

2.1. Article 4.2(a)

2.5.1. A r t i c l e 9 . 3

Add a final sentence: ‘A share-repurchasing pro-
2.5.1.1.
gramme that started before the bid was made forms part of
the normal course of the company’s business’.

2.5.2. A r t i c l e 9 . 4

2.1.1.
to trading on a regulated market in that Member State’.

Delete ‘if the securities of that company are admitted

2.5.2.1.
from two weeks to three weeks.

Change the notice period for a general meeting

2.2. Article 5.3

2.5.3. A r t i c l e 9 . 5

The article should be rewritten as follows:

2.2.1.
‘The
percentage of voting rights which triggers off the obligation to
for the purposes of
make a bid under confers control
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. This percentage shall not be
set lower than 30 % nor higher than 40 % of the company’s
voting rights.’

2.5.3.1.
The board of the offeree company shall, before
making public its opinion on the bid, consult with the
employees to be able to include their views in the document.
The sentence in Article 9.5 starting with ‘The board of the
offeree company shall at the same time ...’ therefore ought to
be replaced as follows:
‘Before finalising the document the
board of the offeree company informs and consults in a
detailed and comprehensive way with the worker representa-
tives or, failing that, with the workers themselves.’

2.3. Article 5.5

2.6. Article 10.1, 10.2 and 10.3

Rewrite second paragraph as follows:

‘Where the
2.3.1.
consideration offered by the offeror does not consist of liquid
securities admitted to trading on a regulated market, Member
States should may stipulate that such consideration has to
include a cash consideration at least as an alternative.’

2.4. Articles 5(6) and 6(4)

2.6.1. R e m a r k s t o 1 0 . 1 a n d 1 0 . 2

2.6.1.1.
This article entitled Information on companies
referred to in Article 1(1) is important and perfectly in keeping
with the Commission’s general approach in favour of financial
transparency and transparency in company law (1). As a
preliminary remark, the EESC wishes to draw the attention of
the Commission to the necessity of coordinating its different
initiatives in this field.

2.4.1.
These articles refer to comitology. This seems incom-
patible with the directive, which lays down minimum require-
if
ments that Member States must ensure are observed,
necessary by laying down additional and more stringent
provisions (Article 3(2)).

2.6.1.2.
The proposed wording is such that it places the
same importance on information that the company must
communicate on an ongoing or regular basis, and information
that it must communicate when a bid is made, which is not
relevant.

2.4.2.
The provisions related to the determination of the
price and the conditions of the offer are essential rules which
have to be governed by the directive itself.

2.4.3.
deleted.

The EESC calls for Article 5(6) and Article 6(4) to be

(1) See the Report on issues related to takeover bids (10.1.2002,
p. 25) and the Report on a Modern Regulatory Framework for
Company Law in Europe (4.11.2002, p. 45 and 95), both drawn
up by the High Level Group of Company Law Experts, and the
Proposal for a Directive on the prospectus to be published when
securities are offered to the public or admitted to trading
(COM(2001) 280 final).

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Official Journal of the European Union

C 208/57

2.6.1.3.
Some of this information is only useful or relevant
in the context of a bid, for instance ‘significant agreements to
which the company is a party and which take effect, alter or
terminate upon a change of control of the company’ (j). These
agreements are often confidential business information and
providing such information as part of the ongoing information
requirement could have a detrimental effect on the company.

2.6.2.7.
Furthermore, a number of points mentioned in
paragraph 1 are the responsibility not of the general meeting
of shareholders but of other bodies of the company, and it is
not the role of a directive on takeover bids to modify company
law. This is the main criticism levelled by experts from almost
all the Member States at the Group of High-Level Company
Law Experts’ report on this issue.

2.6.1.4. Moreover, point g) refers to agreements between
shareholders. It is obvious that a company is only able to
provide information on such agreements if it is aware of them.

2.6.2.8.
Approval by the general meeting is irrelevant. A
report presented by the board every two years should be
sufficient.

2.6.1.5.
The wording of point k) is unclear. Apparently it
refers to what are commonly called ‘golden parachutes’ and
not to collective agreements. If that is the case, it would be
better to specify that the employees concerned are ‘senior
managers’.

2.6.2.9.
Reword paragraph 10.3 as follow: ‘The boards of
companies whose securities are admitted to trading on a
regulated market in a Member State, must present a descriptive
report to the general meeting of shareholders at least every
two years on the points referred to in paragraph 1’.

2.6.2.

P r o p o s e d a m e n d m e n t s t o 1 0 . 1 , 1 0 . 2
a n d 1 0 . 3

2.7. Article 11

2.6.2.1.
informed of those agreements’ at the end of point (g).

Add to 10.1 (g) the phrase: ‘when the company is

2.6.2.2.
beginning of points 10.1 (j) and (k).

Add the phrase:

‘when a bid is made’ to the

2.6.2.3.
management’ in this paragraph.

In point 10.1 (k) replace ‘employees’ with ‘senior

2.6.2.4.
Reword the beginning of paragraph 10.2 as fol-
‘The information referred to in paragraph 1, with the
lows:
exception of that mentioned in points (j) and (k) ...’ (the rest
remains unchanged).

2.7.1. R e m a r k s

t o A r t i c l e

1 1 . 1 , 1 1 . 2 a n d

1 1 . 3

2.7.1.1.
This article on contractual agreements is particu-
larly problematic as it stipulates that any restrictions on the
transfer of securities or voting rights provided for in contrac-
tual agreements between the offeree company and holders of
its securities or between holders of securities of the offeree
company will be unenforceable against the offeror during the
period for acceptance of the bid or cease to have effect when
the general meeting decides on any defensive measures.
Such agreements, however, are covered by contract law and
company law.

2.7.1.2.
Finally, it is hard to understand how agreements
between shareholders to which neither the company nor the
management is a party could pose a problem for a directive
on takeover bids.

2.6.2.5.
The wording of paragraph 10.3 is ambiguous,
contradicts the description found in Article 11 and is incom-
patible with company law in some Member States.

2.7.2.

P r o p o s e d a m e n d m e n t s t o A r t i c l e 1 1

2.7.2.1.
second paragraph of point 3.

Delete the second paragraph of point 2 and the

2.6.2.6.
It implies that all the points mentioned in para-
graph 1 are either ‘structural aspects’ — a term whose scope
is, moreover, too wide to be attributed with such important
effects — or defensive mechanisms, which is not the case.

In Art. 11.4, second paragraph, change the period
2.7.2.2.
of notice for convening a general meeting from two weeks to
three weeks.

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Official Journal of the European Union

3.9.2003

2.8. Article 13

To be able to present a well-founded bid as well as
2.8.1.
an opinion on a bid it is necessary for the boards of both the
offeror and the offeree companies to consult with their
employees. Such consultations are necessary not only before
the initial proposals are presented but also during the whole
process of a takeover. We, therefore, propose the following
changed text for Article 13 instead of the text proposed by the
Commission, which in fact only introduces already existing
rules: ‘The board of the offeror and the offeree have to inform
and consult worker representatives, or failing that employees

directly, at all stages of
comprehensive manner.’

the takeover in a detailed and

2.9. Article 17

Replace with the following:

2.9.1.
‘A contact committee
shall be appointed which has as its functions: (a) to facilitate
the harmonised application of this directive through regular
meetings dealing with practical problems arising in connection
with its application; (b) to advise the Commission, if necessary,
on modifications to this directive.’

Brussels, 14 May 2003.

The President

of the European Economic and Social Committee

Roger BRIESCH

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Decision
on guidelines for the Employment Policies of the Member States’

(COM(2003) 176 final — 2003/0068 (CNS))

(2003/C 208/16)

On 22 April 2003, the Council decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The European Economic and Social Committee decided to appoint Mr Christóforos Koryfidis as
rapporteur-general for its opinion.

At its 399th plenary session on 14 and 15 May 2003 (meeting of 14 May), the European Economic and
Social Committee adopted the following opinion by 87 votes to 4 with 23 abstentions.

1.

Introduction

1.3. Meanwhile, the EESC has also drafted an opinion on
the related broad economic policy guidelines for 2003.

1.1.
On 8 April 2003, the European Commission approved
its proposals for the broad economic policy guidelines and its
employment policy guidelines and recommendations simul-
taneously for the first time.

This EESC opinion follows on from its opinion on the
1.2.
European Employment Strategy (EES), which was adopted by
the plenary assembly in March (1).

2. The Commission proposal

( 1) OJ C 133, 6.6.2003.

2.1.
In the Explanatory Memorandum to its proposal, the
Commission specifies the reasons that led to a fundamental
reassessment of the guidelines, defines the new framework for
their development and sets out the priorities.