CELEX: 51988PC0823
Language: en
Date: 1989-02-16
Title: PROPOSAL FOR A THIRTEENTH COUNCIL DIRECTIVE ON COMPANY LAW CONCERNING TAKEOVER AND OTHER GENERAL BIDS

No C 64/8                              Official Journal of the European Communities                                14. 3. 89
                                                               II
                                                       (Preparatory Acts)
                                                  COMMISSION
               Proposal for a Thirteenth Council Directive on Company Law concerning takeover and other
                                                          general bids
                                                COM(88) 823 final - SYN 186
                                      (Submitted by the Commission on 19 January 1989)
                                                         (89/C 64/07)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                           documents within the Community; whereas the different
                                                                   authorities must cooperate with one another and their
                                                                   present or former officers and servants should be bound
Having regard to the Treaty establishing the European
                                                                   to preserve confidentiality;
Economic Community, and in particular Article 54
thereof,
                                                                   Whereas to reduce the scope for insider dealing offerers
                                                                   should be required to announce their intention of
Having regard to the proposal from the Commission,                 launching a bid as soon as possible and to inform the
                                                                   supervisory authority and the offeree company's board
In cooperation with the European Parliament,                       of the precise terms of the bid before they are made
                                                                   public;
Having regard to the opinion of the Economic and                   Whereas to avoid operations which frustrate the bid it is
Social Committee,                                                  necessary to limit the powers of the board of directors of
                                                                   the offeree company to engage in operations of an
Whereas it is necessary to coordinate certain safeguards           exceptional nature;
which Member States require of companies and firms
within the meaning of the second paragraph of Article 58           Whereas to help ensure compliance with the obligations
of the Treaty for the protection of members and others,            resulting from the Directive it should be compulsory for
in order to make such safeguards equivalent throughout             offerers to be represented by a person or credit
the Community;                                                     institution licensed to deal on the financial markets;
Whereas it is necessary to protect the interests of the            Whereas the addressees of a takeover or other general
shareholders of public companies limited by shares when            bid should be properly informed of the terms of the bid
these are the subject of a takeover or other general bid;          by means of an offer document and, where the
                                                                   consideration offered includes securities, should be
                                                                   provided with certain additional information about the
Whereas shareholders who are in the same position                  company issuing those securities;
should be treated equally;
                                                                   Whereas the offerer should be required to bring the offer
Whereas this equality of treatment requires that the obli-         document to the attention of all addressees of the bid
gation to make a bid is imposed on persons wishing to              and where the offer document contains insufficient
attain a certain level of participation in a company and in        information to clarify the real intentions of the offerer,
order to ensure the protection of minority shareholders            the supervisory authority should be able either to forbid
and to avoid purely speculative partial bids, it is                the publication of the offer document or to make the
necessary to require that these persons make a bid for all         offerer publish a revised document;
the shares of that company;
                                                                   Whereas it is necessary to set a time limit for takeover
Whereas each Member State should designate a super-                bids;
visory authority or authorities to ensure that parties to a
takeover or other general bid fulfil their obligations; and        Whereas, in the interests of the offeree company and the
whereas it is necessary to determine which authority has           addressees of the bid, it should be provided that once an
territorial jurisdiction in the case of cross-frontier bids        offer document has been made public the bid may not be
and to provide for the mutual recognition of offer                 withdrawn except in certain specified circumstances;
 ---pagebreak---  14. 3. 89                             Official Journal of the European Communities                              No C 64/9
Whereas the board of the offeree company should be               HAS ADOPTED THIS DIRECTIVE:
required to report in writing to its shareholders its view
of the bid, and whereas where the consideration offered                                    Article 1
in the bid includes serurities for which at the time the bid
is made no official stock exchange listing has been                                         Scope
applied for it should also be required to obtain and make
available to all addressees of the bid an additional report      The coordination measures prescribed by this Directive
by an independent expert;                                        shall apply to the laws, regulations and administrative
                                                                 provisions of the Member States relating to takeover and
                                                                 other general bids addressed, on the same terms, to all
Whereas offerers are entitled to revise their bids;              holders of the securities, or the securities of a particular
whereas limits should be placed on that right in order to        class or classes, of any of the following types of
maintain an orderly market in the shares and it should be        company:
ensured that the addressees of the bid are informed in
time; whereas it is necessary that the offerer draw up           — in Germany:
and make public a fresh document setting out the
                                                                     die Aktiengesellschaft, die Kommanditgesellschaft auf
amendments to the original bid and whereas addressees
                                                                     Aktien,
who have already accepted the bid should be entitled to
accept the revised bid;                                          — in Belgium:
                                                                     la societe anonyme / de naamloze vennootschap, la
Whereas in order to ensure equal treatment of                        societe en commandite par actions / de comraan-
addressees of the bid, any acquisition by the offerer, or            ditaire vennootschap op aandelen,
by certain persons associated with him, of shares which
are the subject of the bid at a higher price than that laid      — in Denmark:
down in the offer document or one of its revisions, must             aktieselskaber, kommanditaktieselskaber,
itself be considered as a revision;
                                                                 — in Spain:
Whereas to be able to perform their functions satisfac-              la sociedad anonima, la sociedad en comandita por
torily, supervisory authorities need to be able to find out          acciones,
at any time how many acceptances have been received to
date and whereas, from the time the intention to make a          — in France:
bid is announced by the offerer, any dealing in the
                                                                     la societe anonyme, la societe en commandite par
securities concerned must be made public by any person
                                                                     actions,
already having a significant shareholding;
                                                                 — in Greece:
Whereas the result of the bid must be made public and                T] avcbvuuri Exaipeia, n ETep6ppu$uT| Kaxd U£TOX&S
notified to the supervisory authority;                               exaipeia,
                                                                 — in Ireland:
Whereas taking into account the social policy of the
                                                                     the public company, limited by shares,
Community, it is necessary that representatives of the
employees of the offeree company be informed with                — in Italy:
regard to the bid and that they should receive all the
documents concerning that bid;                                       la societa per azioni, la societa in accomandita per
                                                                     azioni,
Whereas competing bids for the securities of a company           — in Luxembourg:
are necessarily to the advantage of its shareholders;
                                                                     la societe anonyme, la societe en commandite par
whereas all such bids should be subject to the same rules
                                                                     actions,
as the original bid and the original offerer should be
entitled to withdraw his bid in such a case;                     — in the Netherlands:
                                                                     de naamloze vennootschap,
Whereas this Directive does not until subsequent coordi-
nation affect the capacity of Member States to forbid a          — in Portugal:
takeover or other general bid where the offerer is either
                                                                     sociedade anonima, sociedade em comandita por
a national or a company from a third country, in
                                                                     accoes,
particular where Community nationals and companies do
not benefit from reciprocal treatment as regards the
                                                                 — in the United Kingdom:
acquisition of shares by means of such a bid in a
company governed by the law of that third country,                   the public company, limited by shares.
 ---pagebreak--- No C 64/10                            Official Journal of the European Communities                               14. 3. 89
                           Article 2                                 undertakings within the meaning of Article 1 of
                                                                     Council Direcitve 83/349/EEC (');
                         Definitions
                                                                (c) voting rights held by persons acting in concert with
1.    For the purposes of this Directive, 'offeree                  the offerer;
company' shall mean a company whose securities are the
subject of a takeover or other general bid (hereinafter         (d) where appropriate, voting rights held by directors of
referred to as 'a bid').                                             the offerer company.
                                                                3.    The supervisory authority may grant exemptions to
2.    For the purposes of this Directive, 'offerer' shall
                                                                the rule laid down in paragraph 1, giving reasons for its
mean any person or company including, where appro-
                                                                decision and adopting all measures necessary to ensure
priate, the directors of the offeree company, who
                                                                equal treatment of all shareholders.
launches a bid in accordance with the obligation set out
in Article 4 or on a voluntary basis.
                                                                                         Article 5
3.    For the purposes of this Directive, 'securities' shall
                                                                Exemptions on the basis of size of the offeree company
mean securities carrying voting rights in a company or
which can be converted into securities carrying such
rights.                                                         Article 4 shall not apply:
                                                                (a) where the securities of the offeree company have not
4.    For the purposes of this Directive, 'parties to the
                                                                    been admitted to official stock exchange listing or
bid' shall mean the offerer, the representative of the
                                                                    have not been the subject of a request for such
offerer within the meaning of Article 9, the directors of
                                                                     admission at the moment when the bid is announced
the offerer, if the latter is a company, the addressees of
                                                                    in accordance with Article 7, and
the bid and the directors of the offeree company.
                                                                (b) where the offeree company, or, where appropriate,
5.    For the purposes of this Directive, 'persons acting           the group of undertakings within the meaning of
in concert' shall mean persons who, pursuant to an                  Article 1 of Directive 83/349/EEC to which the
agreement, cooperate with one another with the aim of               company belongs, do not exceed, at the
acquiring the securities of a company.                              balance-sheet date, the amounts of two of the three
                                                                    criteria laid down in Article 27 of Council Directive
                                                                    78/660/EEC (2).
                           Article 3
                      Equal treatment                                                    Article 6
                                                                                   Supervisory authority
Shareholders who are in the same position shall be
treated equally.
                                                                 1.    Member States shall designate the authority or
                                                                authorities which must discharge the functions specified
                           Article 4                            in this Directive. The authorities thus designated may
                                                                delegate all or part of their powers to other authorities
                 Obligation to make a bid                       or to associations or private bodies. Member States shall
                                                                inform the Commission of these designations and of any
                                                                delegation of powers and shall specify all divisions of
1.    Any person aiming to acquire a number or                  functions that may be made.
percentage of securities, which, added to any existing
holdings, gives him a percentage of the voting rights in a
company which may not be fixed at more than 33 lh %,            2.    The authorities and, where appropriate, the associ-
shall be obliged to make a bid to acquire all the securities    ations or private bodies referred to in paragraph 1 must
of that company.                                                have all the necessary powers to ensure that this
                                                                Directive is put into effect and, in any case, either the
                                                                power to forbid the publication of an offer document
2.    To calculate the threshold referred to in paragraph       which is incomplete by reference to the requirements of
1, the following must be added to the voting rights held        this Directive or the power to oblige the offerer to
by the offerer:                                                 correct an inadequate offer document and to make it
                                                                public by the means set out in Article 11 (1).
(a) voting rights held by persons acting in their own
     name but on behalf of the offerer;
(b) where appropriate, voting rights held by companies          (') OJ No L 193, 18. 7. 1983, p. 1.
     belonging with the offerer to the same group of            (2) OJ No L 222, 14. 8. 1978, p. 11.
 ---pagebreak---  14. 3. 89                           Official Journal of the European Communities                            No C 64/11
3.    The authority competent for supervising the                                         Article 9
drawing-up and publication of the offer document shall
be that of the Member State in which the offeree                               Representative of the offerer
company has its registered office. Where the bid is made
in several Member States simultaneously, the offer             The offerer shall be represented either by a qualified
document as prepared under the supervision of the              person authorized to deal on the Community financial
national authority responsible shall be accepted in the        markets or by a credit institution authorized within the
other Member States, without their supervisory auth-           Community.
orities having the right to require the inclusion of any
additional particulars in the document.
                                                                                         Article 10
4.    After an offer document has been made public in
accordance with Article 11 (1), the competent authorities                             Offer document
of the Member States shall give each other any
cooperation required for the performance of their duties
and for this purpose shall supply each other with any           1.   The offerer shall draw up an offer document in
information that may be necessary.                             respect of the bid stating at least:
5.    All present or former officers or servants of super-     (a) the type, name and registered office of the offeree
visory authorities shall be bound by the rules of                   company;
professional secrecy. Information that has come to their
knowledge in the course of performing their professional       (b) the name and address of the offerer or, where the
duties shall not be disclosed to any person or body not             offerer is a company, the type, name and registered
legally entitled to receive it.                                     office of that company;
6.    This Directive shall not affect the legislation of
                                                               (c) the name and address or, where appropriate, name
Member States concerning the liability of competent
                                                                    and registered office of the representative of the
authorities.
                                                                    offerer referred to in Article 9,
                          Article 7
                                                               (d) the securities or class or classes of securities for
  Procedure prior to publication of the offer document             which the bid is made;
1.    As soon as it decides to make a bid, the offerer         (e) the securities, or the securities of the relevant class
shall make public its intention of doing so by one of the           or classes, already held by:
means provided for in Article 11 (1). It shall inform the
competent supervisory authority accordingly.                        (aa) the offerer,
                                                                    (bb) other persons for the account of the offerer,
2.    The offerer shall then immediately draw up an
                                                                    (cc) companies belonging with the offerer to the
offer document in accordance with Article 10 and make
                                                                          same group of undertakings within the
it public in accordance with Article 11 (1).
                                                                          meaning of Article 1 of Directive 83/349/EEC,
3.    Before the offer document is made public, the                 (dd) persons acting in concert with the offerer,
offerer shall communicate it to the competent super-
                                                                    (ee) where the offerer is a company, its directors,
visory authority and to the board of the offeree
                                                                          and the voting rights attached to those
company.
                                                                          securities and the date and the price at which
                                                                          they were acquired;
                          Article 8
                                                               (f) where the offerer is a company, the securities, or the
Restriction of the powers of the board of the offeree
                                                                    securities of a particular class or classes, of the
                          company
                                                                    offerer held by the offeree company, and the voting
After receiving the information referred to in Article             rights attached to them and the date and the price at
7(1) and until the expiry of the period for accepting the          which they were acquired;
bid, the board of the offeree company shall not, without
the authorization of the general meeting of shareholders,      (g) the consideration offered for each security and the
decide:                                                            basis of the valuation used in determining it and, in
                                                                   the case of a cash consideration, the guarantees
(a) to issue securities carrying voting rights or which            provided by the offerer regarding payment of that
     may be converted into such securities;                         consideration, and, where appropriate, a statement
(b) to engage in transactions which do not have the                concerning any future indebtedness of the offeree
     character of current operations concluded under                company to finance the bid;
     normal conditions unless the competent supervisory
     authority has authorized them, giving its reasons for     (h) where the consideration comprises securities, the
     such authorization.                                            date from which those securities will entitle their
 ---pagebreak--- No C 64/12                               Official Journal of the European Communities                                   14. 3. 89
     holders to a share in the profits and any special                                       Article 11
     conditions affecting that entitlement;
                                                                                 Publication of the offer document
(i)   any condition authorized by the competent super-              1.    The offer document and, where appropriate, the
     visory authority which the offerer places on the bid;          documents required by Article 10 (3) or (4) shall be
                                                                    either:
(j)  the latest date on which the bid may be accepted;              (a) published in full in one or more national or mass-
                                                                        circulation newspapers and in the national gazette
                                                                        designated under Article 3 (4) of Council Directive
(k) the steps to be taken by the addressees of the bid in               68/151/EEC O , or
     order to signify their acceptance and to receive the
     consideration for the securities which they transfer           (b) made available to the addressees of the bid at
     to the offerer;                                                    addresses announced in notices in the newspapers
                                                                        and the gazette referred to at (a) or by equivalent
                                                                        means approved by the competent supervisory
(1)  the intentions of the offerer,      explicitly expressed,          authority, or
     regarding the continuation of       the business of the
      offeree company, including the     use of its assets, the     (c) where all the securities comprised in the bid are
     composition of its board and its    employees;                     registered, circulated to all addressees of the bid.
                                                                    2.    The offer document and, where appropriate, the
(m) any special advantages which the offerer intends to             documents referred to in Article 10 (3) and (4) shall also
      grant to the directors of the offeree company;                be filed with the competent supervisory authority.
(n) all agreements concerning the exercise of the voting                                     Article 12
      rights attached to the securities of the offeree
      company.                                                                         Period for acceptance
                                                                    1.    The period for accepting the bid indicated in the
2.     In addition, the offer document shall identify:              offer document in accordance with Article 10 (1) (j) may
                                                                    not be less than four weeks or more than ten weeks from
                                                                    the date of publication of the document in accordance
(a) any person for whose account the offerer is acting;            with Article 11 (1).
                                                                    2.    The period may not be modified without the auth-
(b) any companies belonging with the offerer to the                 orization of the supervisory authority, giving its reasons,
     same group of undertakings within the meaning of               without prejudice to Article 20.
     Article 1 of Directive 83/349/EEC;
                                                                                             Article 13
(c) any person acting in concert with the offerer.
                                                                                         Withdrawal of bids
                                                                    1.    Once a bid has been made public by the means
3.     Where the consideration offered includes newly-
                                                                    provided for in Article 11 (1), it may be withdrawn only
issued securities for which at the time of the bid an
                                                                    in the following circumstances:
official stock exchange listing has been applied for, the
offer document shall be accompanied by the listing
                                                                    (a) where there are competing bids and the offerer
particulars      required       by      Council      Directive          decides to withdraw his bid in accordance with
80/390/EEC (').                                                         Article 20 (4);
                                                                    (b) in a bid in which new securities are          offered in
4.     Where the consideration offered includes securities              exchange for the securities bid for,          where the
for which at the time of the bid no official stock                       approval of the general meeting of          the offerer
exchange listing has been applied for, the offer document                company is not obtained for the issue       of the new
shall contain all the facts necessary to enable the                      securities;
addressees of the bid to form an informed judgment as
to the assets and liabilities, financial position, record and       (c) in a bid in which securities are offered in exchange
prospects of the issuer.                                                for the securities bid for, where the securities fail to
0) OJ No L 100, 17. 4. 1980, p. 1.                                  (2) OJ No L 65, 14. 3. 1968, p. 8.
 ---pagebreak--- 14. 3. 89                              Official Journal of the European Communities                              No C 64/13
obtain an official stock exchange listing as the offerer         panied, where appropriate, by the expert's report as
intended;                                                        referred to in paragraph 2, may be attached to the offer
                                                                 document provided for in Article 10.
(d) where the necessary judicial or administrative auth-         5.     The provisions of this Article shall also apply to
     orization is not obtained for the acquisition of the        revisions of the bid and to competing bids.
     securities for which the bid is made, and in particular
    in the event of lack of authorization of the
     acquisition by the merger control authorities;                                        Article 15
                                                                                        Revision of bids
(e) where a condition of the bid announced in the offer
     document in accordance with Article 10 (1) (i) and           1.    At any time before the last week of the period for
     approved by the competent supervisory authority is          acceptance announced in accordance with Article
     not fulfilled;                                               10 (1) (j), the offerer may revise the terms of the bid.
                                                                 Article 7 (I) shall apply as regards the. public
                                                                 announcement of the offerer's intention to revise the bid.
(f) in exceptional circumstances and with the authori-
    zation of the supervisory authority, giving reasons,         2.     Where a bid is revised, the previous period for
    where the bid cannot be put into effect for reasons          acceptance shall be automatically extended by one week.
    beyond the control of the parties to the bid.
                                                                  3.    The offerer shall draw up a document setting out
                                                                 the amendments to the offer document and making it
2.    The withdrawal of the bid shall be made public by          public by the means provided for in Article 11 (1).
the means provided for in Article 11 (1) and
communicated to the competent supervisory authority.
                                                                  4.    Member States shall ensure that persons who have
                                                                  already accepted the previous bid by the offerer may
                                                                  accept the revised bid.
                          Article 14
                                                                  5.    The periods provided for in paragraphs 1 and 2
            Report of board of offeree company                    may be modified with the authorization of the competent
                                                                  supervisory authority, which must set out the reasons on
                                                                 which it is based.
1.    The board of the offeree company shall draw up a
detailed report giving its views on the bid and setting out
the arguments for and against acceptance. The report                                       Article 16
shall state whether the board is in agreement with the
offerer on the bid and specify any agreements on the                                   Automatic revision
exercise of the voting rights attached to the securities of
the offeree company.                                              The acquisition by the offerer, by persons acting in
                                                                  concert with him or by persons acting in their own name
                                                                  but on behalf of the offerer, during the acceptance
                                                                  period, of securities in respect of which the bid is made
2.     Where the consideration offered             comprises
                                                                  at a price higher than that established in the offer
securities for which at the time of the bid no official
                                                                  document or one of its revisions, will itself be considered
stock exchange listing has been applied for, the board's
                                                                  as a revision of the bid and have the effect of increasing
report shall be accompanied by the report of an expert
                                                                  the consideration offered to those who have accepted
independent of the parties to the bid appointed or
                                                                  previously.
approved by the competent supervisory authority. This
report shall in all cases state whether, in the expert's
opinion, the consideration offered is fair and reasonable                                  Article 17
and shall give the expert's views on the basis of valuation
used to determine the consideration.                                 Provision of information to the supervisory authority
                                                                  1.    Throughout the period for acceptance of the bid
 3.    The reports shall, in good time before the expiry of       the offerer shall provide the competent supervisory
the period for acceptance, be made public by the means            authority at any time on request with information as to
provided for in Article 11 (1) and filed with the                 the number of acceptances received to date.
competent supervisory authority.
                                                                  2.    From the time a bid is publicly announced in
                                                                  accordance with Article 7(1), the offerer or any holder
 4.    Where the board of the offeree company is in               of 1 % or more of the voting rights of the offeree
 agreement with the offerer, the board's report, accom-           company, of the offerer company if the offerer is a
 ---pagebreak---  No C 64/14                            Official Journal of the European Communities                                  14. 3. 89
 company, or of any other company whose securities are            made public by the means provided for in Article 11 (1)
 offered by way of consideration, shall declare to the            and communicated to the competent supervisory
 competent supervisory authority all acquisitions of              authority.
 securities of the said companies by the offerer or the
 holder, persons acting in concert with them or persons                                    Article 21
 acting in their own name but for their account, and the
 purchase price of such securities.                                                   Contact committee
                          Article 18                              1.    A contact committee shall be set up under the
                                                                  auspices of the Commission. Its function shall be:
                 Publication of result of bid
                                                                  (a) without prejudice to the provisions of Articles 169
 Once the period for acceptance has expired, the result of            and 170 of the Treaty, to facilitate the uniform
 the bid shall be made public by the means provided for               application of this Directive through regular consul-
 in Article 11 (1) and shall be communicated to the                   tations on, in particular, practical problems arising in
 competent supervisory authority by the offerer.                      its implementation;
                                                                  (b) to ensure concerted action upon the policies
                          Article 19                                  followed by the Member States in order to obtain
                                                                      reciprocal treatment for Community nationals and
 Information for representatives of employees of the                  companies as regards the acquisition of securities of
                       target company                                 a company by means of a takeover bid;
The board of the offeree company shall communicate to             (c) to advise the Commission, if necessary, on additions
 its workers' representatives, as designated by national              or amendments to this Directive.
legislation or customary practice in Member States, the
offer document and, where appropriate, the documents             2.     The contact committee shall be composed of repre-
referred to in Article 10 (3) and (4), as well as its own        sentatives of the Member States and representatives of
report as referred to in Article 14 and, if appropriate, the     the Commission. The chairman shall be a representative
expert's report as referred to in Article 14 (2).                of the Commission. Secretarial services shall be provided
                                                                 by the Commission.
                          Article 20
                                                                 3.     The committee shall be convened by the chairman
                       Competing bids                            either on his own initiative or at the request of one of its
                                                                 members.
 1.    Where competing bids are made for the securities
of the offeree company, this Directive shall apply to each                                 Article 22
such bid.
                                                                                Transposition of the Directive
2.     Competing bids shall be publicly announced in
accordance with Article 7(1). The offerer shall draw up          1.     Member States shall adopt before . . . . the laws,
an offer document in accordance with Article 10 and              regulations and administrative provisions necessary to
shall make it public by the means provided for in Article        comply with this Directive. They shall forthwith inform
 11 (1) before the period for acceptance of the initial bid      the Commission thereof.
expires.
                                                                 2.     Member States shall fix the date of entry into force
3.     Except with the authorization of the competent            of these provisions in any case at the latest by . . . .
supervisory authority, which must set out the reasons on
which it is based, persons acting in concert with the            3.     Member States shall communicate to the
offerer or acting in their own name but for the account          Commission the texts of the main provisions of national
of the offerer may not make a bid competing with the             law which they adopt in the field covered by this
initial bid.                                                     Directive.
4.     Where there are competing bids and the initial                                      Article 23
offerer does not withdraw its bid, the period for
acceptance of the initial bid shall be extended auto-                            Addressees of the Directive
matically to the date of expiry of the period for
acceptance of the competing bid. The extension shall be          This Directive is addressed to the Member States.