9. During the period 1992-95 the future of the
Directive was extensively considered as part of a general review
of proposals to be amended or withdrawn in application of the
principle of subsidiarity. A majority of Member States took the
view that some harmonisation on takeover bids was desirable and
most of those thought that a framework directive would be the
right approach. The Commission's 1996 text was the Commission's
response.
—the issue of the "level playing
field" for shareholders (ie the problems created by
the existence in Member States of differential voting and control
structures, such as shares with multiple voting rights or restrictions
on transfer of shares or voting rights);
—the definition of the "equitable
price" to be paid to shareholders by a takeover bidder; and
—the right of a majority shareholder to
buy out minority shareholders following a successful takeover.
11. To address the "level playing field"
issue, the Group proposed[9]:
—rigorous disclosure provisions, so that
differential voting and control structures were fully transparent
to the market; and
—a "breakthrough" procedure,
whereby any takeover bidder acquiring 75 per cent or more of the
risk-bearing capital (in UK terms, the "equity" or "ordinary"
shares) of a company would be able to override any defence structures
that prevented it acquiring effective control of the target company
(for instance, the right to dismiss the board of directors).
As will be seen, these proposals are developed in
Articles 10 and 11 of the Directive respectively.
12. On the other two issues, the Group proposed
that:
—a harmonised approach to equitable price be
adopted across the EU based on the highest price paid by the bidder
in a period of up to 12 months prior to the bid; and
—provisions be included to deal with the problems
of, and for, residual minority shareholders following a bid ("squeeze-out"
and "sell-out" rights).
These recommendations have formed the basis for Articles
5, 14 and 15 of the Commission's text.
