Restructure of European Takeover Regulation

• Author: Erisa Kaçupi
• Position: Faculty of law, University of Tirana
• Pages: 80-83

IIPCCL Publishing, Tirana-Albania

Academic Journal of Business, Administration, Law and Social Sciences Vol. 1 No. 3

November 2015

ISSN 2410-3918

Acces online at www.iipccl.org

80

Restructure of European Takeover Regulation

LLM. Erisa Kaçupi

Faculty of law, University of Tirana

Abstract

This paper will discuss mainly about the Takeover Directive in Europe and the endeavor of

the latter in order to create a general regulatory when dealing with the takeovers of companies

that operate in each Member State. This Article focuses in determining an equivalent transaction

for all this companies due to the protection given to minority shareholders and to the bidder

as well. Additionally, this approach will be fulfilled by the incorporation of mandatory bid

rule and squeeze-out directive by each Member State as this will make possible the protection

of the interest of a target company shareholder and the interest of the bidder as well.

Keywords: Takeover Directive, Member State, Mandatory Bid Rule, Squeeze-out rule, bid.

Introduction

It was advocated that Takeover Directive is designed to show the European effort in

terms of a common regulatory for takeovers (Moloney, 2008, 136). It refers to an equal

treatment by offering more protection to minority shareholders and the bidder as

well. Hence, two of the most important components of this Directive are mandatory

bid rule (MBR) and squeeze-out right. Thus, if a Member State implement both of

this rules it will be helpful, in case of a takeover, since by adopting Mandatory Bid

Rule, the interests of a target company shareholder will be protected and on the other

hand, by adopting squeeze out rule, the interest of the bidder will be protected as

well. This will arise as a conclusion firstly by analyzing mandatory bid rule, secondly

squeeze out rule and thirdly by stating the benefits of these two rules.

Mandatory Bid Rule

Mandatory bid rule is the rule applied to listed companies in Member States that has

adopted the Takeover Directive and it may be referred to as a substitute for minority

shareholder protection. As Schuster refers to mandatory bid rule, it occur when an

acquirer of a controlling stake in a listed company makes an offers to other

shareholders, to buy out the minority stakes they held, with the same price as the

consideration that was received by the incumbent controller (Schuster, 2013, 529-

563). Additionally, even the Commission’s current draft directive held for an obligation

from the party who has acquired control to make an offer to all remaining shareholders

at an “equitable price”. Indeed, the recommendations of the Winter Report1, now

defines the equitable price as the highest price paid by the bidder during the 6 or 12

preceding months. Consequently, the “price rule’ as some scholars state is the key

________________________________________

1 Winter Report, Article 5(4).