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Takeover bids are important for the internal market because they contribute to
market integration and to business consolidation in accordance with the
European Community Treaty provisions on the freedom of establishment. The
Takeover Bid Directive of 2004 is designed not only to protect the interests
of the holders of securities of companies (in particular, those with minority
holdings), but also, to promote European Union- (EU) wide clarity and
transparency with respect to legal issues to be settled in the event of
takeover bids and to prevent patterns of corporate restructuring from being
distorted by arbitrary differences in governance and management cultures.
Analysing the Takeover Bid Directive in light of EU Law, this important
monograph examines the extent to which the Directive facilitates the exercise
of the fundamental freedom of establishment and the free movement of capital
in the internal market.
The analysis begins with a discussion of the fundamental freedom of
establishment of companies, as well as of the legal bases for the
harmonization of company law and capital markets law at the EU level.
Additionally, the significance of corporate mobility and of the freedom of
establishment case law of the European Court of Justice for the takeover
process is analysed. The author shows that, far from achieving market
integration in the field of EU company law, the Takeover Bid Directive is a
compromise resulting from the very different legal and policy approaches of
the Member States in the field of takeover regulation. Although some
provisions of the Directive are obligatory for all Member States, two key
provisions have been made optional: the non-frustration rule, which requires a
board of directors to obtain the prior authorization of a general meeting of
shareholders before taking any action that could result in the frustration of
the bid; and the breakthrough rule, which restricts significant transfer and
voting rights during the time allowed for acceptance of the bid.
Other relevant legal issues covered in the course of the analysis include the
• the right of establishment as a right of legal persons;
• vertical versus horizontal direct effect;
• regulatory competence to harmonize the internal market;
• the Financial Services Action Plan and the Company Law Action Plan;
• the effect of the principle of subsidiarity;
• the Takeover Report of the High-Level Group of Company Law Experts;
• the mandatory bid rule;
• squeeze-out and sell-out rights;
• the non-frustration/board neutrality rule; and
• the reciprocity rule.
Speech by Jacques Delors
About the Author
Foreword by Derrick Wyatt
Foreword by Mads Andenas and Philip R Wood
Chapter 1 The Fundamental Freedom of Establishment of Companies.
Chapter 2 Legal Bases for the Harmonization of Company Law and Capital
Market Law at the EU Level.
Chapter 3 Aspects of EU Company Law Harmonization.
Chapter 4 The Permissible Limits of Harmonization: Subsidiarity Issues
Chapter 5 Weaknesses and Difficulties in Harmonization Efforts in the
Field of EU Company Law.
Chapter 6 Establishing an Internal Market for Companies: Market
Integration in the Area of EU Company Law.
Chapter 7 The Relationship between the Treaty Provisions on Freedom of
Establishment of Companies and Takeover Bids.
Chapter 8 The Significance of the Corporate Mobility Case Law for the
Chapter 9 The EU Takeover Bid Directive: An EU Company Law Instrument
with Strong Links to EU Capital Market Law.
Chapter 10 Market in Corporate Control: Essential Definitions.
Chapter 11 An Overview of the Takeover Bid Directive in the Context of
the Internal Market.
Chapter 12 The Direct Effect of the Fundamental Freedoms in EU Law.
Chapter 13 Horizontality after Viking and Mangold..
Chapter 14 The Extent to Which Conduct of the Board and Articles in the
Corporate Constitution Might be Said to Constitute Restrictions on the Freedom
of Establishment and on the Free Movement of Capital.
Chapter 15 Conclusion.