The Takeover Directive sets out minimum requirements for the conduct of takeover bids for individual Member States, including disclosure, involving securities with voting rights of companies governed by the laws of Member States, where all or some of these shares are admitted to trading on a regulated market.

Main points of the Takeover Directive

The framework means that supervisory agencies are appointed to review and approve the proposed takeovers. Each Member State is expected to use the Takeover Directive when establishing their own laws regarding takeovers. It also contains rules about the equal treatment of shareholders. The Directive declares that the bids must be conducted in a timeframe that is long enough to allow people to reach informed decisions, and it requires companies that offer to make takeovers to provide projections on how the process will affect employment.” The main aims of the Takeover Bids Directive are legal certainty during the procedure regarding takeover bids and community-wide clarity and transparency in respect of takeover bids. Other purposes of the Directive include the protection of the interests of shareholders, in particular minority shareholders, employees, and other stakeholders when a company is subject to a takeover bid or change of control; facilitation of takeover bids by strengthening the freedom to deal in and vote on securities of companies; and the prevention of operations which could frustrate a bid.

Critics on Takeover Directive

The Directive faced a substantial amount of criticism afterwards. Some critics accused the Takeover Directive of including protectionist language and of actually hindering takeovers. Others felt that the directive did not clarify enough the terms and protections for people involved in takeovers. “The conflict between these sides is illustrative of the results of the compromise negotiations used in developing the directive”.

Many Member States faced difficulties when implementing the Takeover Directive. In some cases, in order to meet the terms of the Directive some reorganizations and reforms have been needed within a nation’s financial regulatory system, and this has required substantial negotiations and discussions.

The final form the Directive was a product of political compromise. Eventually, the Takeover Directive was adopted on 21 April 2004. It came into force on 20 May 2004 and had to be implemented into national law by all Member States until 20 May 2006. The Directive laid down rules, the purpose of which was to protect the shareholders against the related increase in opportunism of leadership, and to protect minority shareholders against controlling shareholder opportunism.