Do you consider that the 13th Company Law Directive is the right instrument to achieve an effective pan-European market for corporate control and to facilitate cross-border takeovers?

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The EC’s 13th Company Law Directive formally known as EC Directive 2004/25/EC was adopted on the 21st April, 2004.1 The directive aims at governing takeover bids.2 Cross-border acquisitions particularly those involving hostile takeovers reflect one of the more intense…

Introduction

The Commission perceived that the Directive on takeovers was necessary for pan-European corporate control via the reconstruction of common rules and procedures applicable to the single market and minority shareholder protection in takeovers.4
It has been a long standing goal of the EC to harmonize company laws among the Member States, an area of EC law plagued by diversity.5 The question for consideration, is whether or not the 13th Company Law Directive is able to contribute to achieving this goal and thereby serve as the right instrument for pan-European market for corporate control and at the same time facilitate cross-border takeovers. It will be argued that the 13th Company Law Directive does not live up to its mandate since it fails to provide for harmonization of anti-takeover defenses by allowing Member States to opt out.6 Other residual threats to harmonization and by extension, threats to a pan-European market for corporate control, and the facilitation of cross-border takeovers will be explored.
Article 8 of EC Directive 2004/24/EC presents an obvious problem for pan-European corporate control and the facilitation of takeovers. Article 8 provides that Member States are required to regulate that the targeted company’s board:
“…at the latest after receiving the information (on an unsolicited bid) and until the bid is made public or the bid lapses, …should abstain from completing any action other than seeking alternative bids which may result in the frustration of the offer, and notably from issuing any shares which may result in a lasting impediment to the offer or to obtain control over the offeree company, unless it has the prior authorization of the general meeting of shareholders given for this purpose, during the period of acceptance of the bid.”7
It is important to note that from a transborder perspective, Article 8 is fraught with difficulties since it ...
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