Brussels / Luxembourg, 06/06/2001 (Agence Europe) - Tuesday evening, the Council and European Parliament finally reached agreement on the proposal for a directive harmonizing rules applicable to takeover bids. This agreement must be adopted by an absolute majority in Parliament in July, and by a qualified majority in Council, thereby completing the legislative process began twelve years ago.
Parliament won its case over worker consultation who, in a takeover bid, must by informed in time by the purchasing company and the company targeted by the bid. It did not, however, secure an amendment to Article 9 of the draft directive, concerning protective measures that a company board may take faced with a hostile bid. On the basis of the Lehne Report, adopted last December, the EP called for the board to be able to take these protective measures (so-called "anti-poison measures") without the approval of the assembly of shareholders, from the time the latter have accepted the principle of a capital increase in the 18 months preceding the bid. On the basis of a compromise presented by the European Commission, however, the EP secured a five-year stay of execution for the application of the legislation: the directive will only take effect four years after its formal adoption (or towards 2005) and Member States so wishing will be able to freeze application of Article 9 for a further one year.
The Commissioner for the internal market, Frits Bolkestein made a written undertaking to set up a group of experts in company law that, in March 2002, will submit a report on three questions raised by the EP: 1) the definition of "equitable price" that must be proposed in case of a mandatory bid; 2) the right of the majority of shareholders to acquire the shares of minority shareholders ("squeeze out"); 3) the equal treatment of shareholders in Member States ("level playing field"). Under the pressure of the Germans, Parliament obtained that the Commission should stipulate that it would study the relationship between these three issues and Article 9 of the takeover bid directive.
On the basis of this report, "the Commission will present measures if it regards it necessary, and it observes that there are problems, for example, concerning disproportionate voting rights given to certain categories of shareholders", Jonathan Todd, spokesman for the Commissioner on the internal market, declared on Wednesday, stipulating that the Commission was not held to present a directive if it considered that the three points analyzed did not raise any problems. The Commission, moreover, undertook to regularly present a report on the latest bids made in the year and on the respect of the new directive.
The agreement was only approved within the Parliamentary delegation in the Conciliation Committee by a majority of 8 votes against 6. Voted against: - within the EPP: Germans Ingo Fridrich (Parliament Vice-President) and klaus-Heiner Lehne (rapporteur), and Italian Francesco Fiori (Forza Italia); within the Socialist Group: Spanish Manuel Medina Ortega and Luis Berenguer Fuster, and German Evelyne Gebhardt. Voted in favour: - among the members of the PES: Renzo Imbeni (one of the Italian Vice-Presidents of the EP), and Britain's Arlene Mc Carthy: among the members of the EPP: Britain's James Provan (EP Vice-President and head of the EP delegation in the Conciliation Committee) and Lord Inglewood, and Sweden's Charlotte Cederschiold; - for the other groups: Diana Wallis (British Liberal), NeilMac Cormick (Greens/Efa, Scottish) and Luis Quiero (Portuguese UEN).
The Head of the EP delegation, James Provan, stressed before the press "that it is now up to Parliament to vote in plenary session", refusing to predict the outcome of the vote. He regretted that the Commission should not have immediately agreed to clarify the definition of an "equitable price" that will be assessed by the committee of experts. The rapporteur, Klaus-Heiner Lehner explained that he had voted against the compromise presented, regretting that this "outcome only presents a small difference with the common position" adopted by the Council in June 2000 and, in particular, that the ability of company boards to take protective measures against bids should not have been strengthened. For Renzo Imbeni, the agreement "does not go along the lines as the European Parliament would have wished, but it is an important result as the compromise renders the adoption of a fundamental directive for the European economy possible".