Company takeover bids
SUMMARY OF:
Directive 2004/25/EC on takeover bids
WHAT IS THE AIM OF THE DIRECTIVE?
It lays down measures to coordinate EU countries’ laws, regulations, administrative rules, codes of practice and other arrangements for takeover bids*.
KEY POINTS
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EU governments must ensure compliance with the following principles:
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All holders of securities* of an offeree company* of the same class must be treated equally.
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They must have sufficient time and information to reach a properly informed decision on the bid.
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The board of an offeree company must act in the interests of the company as a whole.
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Behaviour which makes the securities at stake rise or fall artificially in price is not allowed.
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The offeror may only announce a bid if they have sufficient financial resources.
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An offeree company must not be hindered in its activities for longer than is reasonable.
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EU countries must designate an authority, or authorities, to supervise takeover bids. They also decide which judicial or other authority should handle any disputes or irregularities in a bid.
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The offeree company determines which national supervisory authority should judge the bid if its securities are traded in more than one EU country.
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To protect minority shareholders, anyone gaining control of a company must make a bid at an equitable price at the earliest opportunity to all holders of securities.
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The equitable price is the highest price the offeror paid for the securities during a 6- to 12-month period prior to the bid. In specific circumstances, national supervisory authorities may adjust this price.
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A decision to launch a bid should be made public as soon as possible and ensure market transparency and integrity of offeree company securities.
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The offer document containing a bid must provide basic information such as the terms involved and identity of the company or person launching the initiative and of persons acting together.
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National authorities determine the time allowed to accept a bid. This runs between 2 and 10 weeks.
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Before engaging in actions that could block the bid, the board of the offeree company must (subject to an EU country opt-out) obtain prior authorisation from a general shareholders’ meeting.
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Employee representatives must be informed of any takeover bid.
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National rules exist for issues such as the lapsing or revision of bids or disclosure of the result of a planned takeover.
FROM WHEN DOES THE DIRECTIVE APPLY?
It has applied since 20 May 2004. EU countries had to incorporate it into national law by 20 May 2006.
* KEY TERMS
Takeover bid: a public offer to acquire all or part of the securities of a company.
Securities: transferable shares which give the owner voting rights in a company.
Offeree company: a company subject to a bid.
MAIN DOCUMENT
European Parliament and Council Directive 2004/25/EC of 21 April 2004 on takeover bids (OJ L 142, 30.4.2004, pp. 12–23)
Successive amendments to Directive 2004/25/EC have been incorporated into the original text. This consolidated version is of documentary value only.
last update 16.11.2016
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