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Directive on Takeover Bids (2004/25/EC)

The 13th Company Law Directive (2004/25/EC, adopted 21.04.2004) regulates bids to take over companies listed on a stock markets. The main goal of the directive is to encourage takeovers in Europe by creating a legal framework for takeover bids, while at the same time providing minimum standards of protection for minority shareholders, and in theory other parties, such as employees.

The assumption underlying the directive is that most takeovers lead to improvements in operating efficiency by companies. Therefore takeovers should be encouraged in the interests of creating a more efficient and competitive European economy. However, the bulk of research questions this assumption, as most mergers do not actually create additional employment and value.

The directive’s main implications for employees are the board’s duty to inform the employees about all the companies involved in the takeover bid, and the right of the employees or their representatives to draft an opinion on it. Consultation of the employees must take place on the basis of the relevant national provisions, especially those deriving from other Council directives, for example, the European works council directive, the Collective redundancies directive, the SE directive and the framework directive on consultation and information. However, significant room remains to strengthening employee rights during the takeover process. An external implementation study carried out for the European Commission, which was published in 2012, also supports this conclusion.

Links and Documents:

EU Takeover Directive Study and Commission Report Published

The European Commission has released the study on the functioning of the Takeover Bids Directive, which was undertaken by Marccus Partners and the Centre for European Policy Studies (CEPS).

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EP debates Takeover Bids Directive

The implementation of the Takeover Bids Directive was discussed again in the EP committee on legal affairs on 18 December 2012.

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Study on the application of Directive 2004/25/EC on takeover bids

The European Commission has commissioned Marccus Partners and the Centre on European Policy Studies to carry out a study on the functioning of the Takeover Directive. Questionnaires have been sent to experts and different groups, including worker representatives.

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