Restructure of European Takeover Regulation

AuthorErisa Kaçupi
PositionFaculty of law, University of Tirana
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
Restructure of European Takeover Regulation
LLM. Erisa Kaçupi
Faculty of law, University of Tirana
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.
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).

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