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Brussels, 11th September 2001

Commissioner Bolkestein discusses takeovers with Parliament's Legal Affairs Committee

Internal Market Commissioner Frits Bolkestein briefed the European Parliament's Legal Affairs Committee in Brussels on 10th September concerning the Commission's plans to introduce a new proposal for a Directive on takeover bids. He emphasised that everyone agreed a Directive was needed as soon as possible and that he had told Finance Ministers earlier in July that he intended to put forward a revised proposal early next year. As a first step, a Group of High Level Experts was recently set up to advise on issues of concern (see IP/01/1237) and their report is expected by the end of 2001.

Mr Bolkestein said "We share the belief that an EU Takeover Directive is needed. The European economy needs it, to assure employment and prosperity and to assure that workers are properly consulted. The current state of affairs is not a satisfactory one". He added that the urgency of a Directive had been underlined by various people, including the European Parliament's rapporteur Mr. Lehne. European Finance Ministers in general shared the view that a Directive was urgently needed. "I think the fresh start has to be inclusive, has to be a process of close co-operation and mutual understanding. In this process time is a factor because the issue is pressing" he said.

Mr Bolkestein told the Committee that a Group of High Level Experts was set up in September to advise on various issues related to pan-EU takeover rules, in particular the creation of a level playing field for shareholder rights throughout the EU, the definition of an equitable price and the introduction of a "squeeze-out" procedure:

  • The most difficult issue to resolve is that of the level playing field for shareholder rights throughout the EU. In 1990, the Commission came forward with a proposal that was aimed at introducing shareholder democracy and at removing a number of voting restrictions. This proposal was included as an amendment to the Proposed Fifth Company Law Directive dealing with the structure of the public company. Various aspects in this matter are closely related, for example the existence of "golden shares" which have the ability to protect certain companies and the asymmetry of market opening in several Member States, which causes dissatisfaction and irritation;

  • There is no ready solution for the definition of the equitable price to be paid in the case of a takeover bid. During the discussions with Member States, it proved difficult to agree on one single definition;

  • Finally, the squeeze-out procedure allows a majority shareholder to buy out the minority. This is a useful mechanism to help companies to restructure themselves. As such, there is a lot to say in favour of the introduction of such a procedure and by doing so providing minority shareholders with proper guarantees. However, the procedure itself is not necessarily related to takeover bids. The Commission would therefore have to see how it could integrate this procedure into the Directive without limiting its scope.

Mr Bolkestein said we would look at these issues with the experts with an open mind and encouraged interested parties, and in particular members of this Committee, to contribute to the discussion and to provide input as a matter of urgency. "I am sure we do not need to renegotiate the whole Directive from scratch. But what we clearly have to do is work harder to find common ground, consider all views and overcome the misunderstandings that abound. This will not be easy". He added that "we would also have to tackle the issue of information rights for employees without unbalancing the nature of the Directive".

The company law experts have started their work and their report is expected at the end of this year. Then the Commission will present a revised proposal as soon as possible. In a spirit of co-operation, the Commission will be seeking early consultations with both the Parliament and the Council in order to have the proposal adopted as quickly as possible, within the timeframe of the Financial Services Action Plan.

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