EU Takeover Regulation: One Size Can't Fit All

Abstract

The failure of the EU Takeover Directive to meet the European Commission’s goal of harmonising takeover laws as a means of monitoring corporate performance is a fact. As the Directive’s revision date in 2011 is approaching, it is current and essential to identify the reasons that have made the Directive the subject of such debate and outline the variables that affect its effective implementation. As national divergence in this field remains a problem, it is important to shed some light on why the ‘one size fits all’ approach introduced by the Commission is not a viable option. A historical overview of the Directive and its deficiencies as a harmonising instrument will be provided. The board neutrality rule of article nine and the ‘breakthrough’ rule of article 11 will be the two main provisions discussed. The paper will refer to the significance of takeover activity and refer to practical problems that arise from the takeover’s ambiguous nature. It will suggest that studies linking owner identity to company objectives and performance may provide innovative information that will lead the takeover regulation reform debate in a positive direction.

Keywords: EU Takeover Directive, Company Objectives, European Corporate Law, Corporate Governance, Breakthrough Rule, Board Neutrality Rule