Takeover of companies
Directive 2004/25/EC states that a takeover bid represents a ‘public offer (other than by the offeree company itself) made to holders of the securities of a company to acquire all or some of those securities, whether mandatory or voluntary, which follows or has as its objective the acquisition of control of the offeree company in accordance with national law’. Two important terms in this context are ‘offeree’ and ‘offeror’, which designate respectively companies subject to a bid and companies making a bid.
A number of highly publicised hostile takeover bids in recent years, most notably Vodafone's protracted courting of Mannesmann, have helped to make this a very topical and controversial issue. Following thirty years of discussion bolstered by the Council’s commitment to integrate the EU’s financial markets, the European Union passed Directive 2004/25/EC on takeover bids in 2004. With this new legal base now in place, the Commission expects that the corporate restructuring process will be smoother and with this the promotion of competition will occur – both factors considered essential in the creation of more and better jobs aimed at by the Lisbon Strategy.
Before it was finally enacted on 21 April 2004, the Directive went through various stages of discussion, rejection and subsequent revision. In 2001, a takeover bid proposal was rejected by the Parliament, its concern related mainly to the obligation of company boards to seek shareholder approval before undertaking measures to oppose a hostile bid, as well as the poor provisions provided for informing employees. To ensure that the issue did not disappear from EU legislator’s agenda, Commissioner Bolkestein set up a high-powered task force of company law experts to review the potential for ‘modernising company law and enhancing corporate governance in the EU’. The committee was chaired by Professor Japp Winter and its report came up with numerous proposals designed to address the obstacles faced in 2001. Incorporated into the Commission’s Communication (COM (2003) 284 final) as well as the eventual legislation on takeover bids, the Commission reasserted its commitment to reform key aspects of company law and corporate governance.
Although the Directive’s 23 Articles are predominantly designed to protect the interests of shareholders (particularly minority shareholders) and help to further competition, passages exist within the legislation that directly refer to both the rights but also the obligations of employees. Article 14 states that employees of both the offeror and the offeree companies have to be instructed about a takeover bid. To assist this process, the Act underlines the need to adhere to both national provisions and EU legislation relating to the information and consultation of employees. In the case of EU law, three pieces of legislation are relevant. These include the 98/59/EC Directive on collective redundancy, the 94/45/EC Directive on European Works Councils, and the 2002/14/EC Directive on the information and consultation of employees.
Concerning employee obligations, the Commission uses Article 4.3 covering ‘supervisory authority and applicable law’ to regulate the issue of employee secrecy. In addition to outlining the relevant authorities designated to oversee such a bid, Article 4.3 states that ‘all employed persons or formerly employed by their supervisory authorities are bound to professional secrecy’. This aspect of the legislation is not only directed at senior management but employee representatives who have access to sensitive information through extensive co-determination rights. The takeover directive 2004/25/EC had to be transposed by the Member States into national legislation by 20 May 2006.