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Brussels, 27 February 2007

Corporate governance: Member States reluctant to give a greater say to shareholders in the context of takeover bids, says Commission report

The European Commission has published a report on Member States' implementation into national law of the Directive on takeover bids (2004/25/EC). The Directive allows Member States to opt out of certain key provisions and to exempt companies from those provisions if the bidder is not subject to the same obligations. The Commission's report shows that in many cases Member States have made use of these options and exemptions. The report concludes that this could bring about new barriers in the EU takeover market, rather than eliminate existing ones.

Internal Market and Services Commissioner Charlie McCreevy said: "Too many Member States are reluctant to lift existing barriers, and some are even giving companies yet more power to thwart bids. The protectionist attitude of a few seems to have had a knock-on effect on others. If this trend continues, then there is a real risk that companies launching a takeover bid will face more barriers, not fewer. That goes completely against the whole idea of the Directive."

The Directive on takeover bids aims to create favourable regulatory conditions for takeovers and to boost corporate restructuring within the EU.

However, the Directive's main provisions, which would restrict the possibilities for companies to defend themselves against bidders – for example by subjecting "poison pills" to shareholder approval or by making share transfer restrictions unenforceable against the bidder – are not mandatory. Furthermore, the Directive allows Member States to exempt their companies from applying these provisions if the bidder is not subject to the same obligations.

A large number of Member States have used these options and exemptions, and some have even strengthened the role of the management with regard to using takeover defences against a bidder. The Commission intends to closely monitor the way in which the Directive works in practice.

The report is available at:

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