Letter from the CBI
Many thanks for your letter of 13 March and
for the Commission's revised draft text of the Directive.
In general terms we are very happy with most
of the proposed amendments, particularly since amongst them they
seek to address one of the principal changes the CBI sought to
the Directive when we gave evidence in February, namely inclusion
of multiple voting rights within the ambit of Articles 9 and 11.
We therefore support the proposed amendments
regarding multiple voting rights.
We also support the other proposed changes highlighted
in the textin particular those referred to in Article 5.5
on mandatory bids and the equitable price; Article 10.3 on information
to shareholders (which was made in an earlier revised proposal
and is not highlighted in this version); and Article 14 on the
squeeze out right.
However, we do have concerns with the proposed
periods of time referred to in Articles 18 and 19. We consider
the periods of time referred to should be kept as short as possible.
As Article 18 is presently drafted in the amended
text, it will be more than ten years before the reviews proposed
under that Article take place. That seems far too long.
Most review periods in EU Directives are generally
set at five years, and this is the period to aim for. It is complicated
in this case because the Commission propose an option for Member
States to defer implementation of Articles 9 and 11 under Article
19, for which the Commission also proposes a period of five years.
We know that the provisions of Article 11, and
Article 9 as proposed to be amended, are controversial for some
States, and indeed some commentators consider that the provisions
of Article 11 may be difficult to implement in practice because
of legal difficulties over contractual rights. Accordingly, subject
to getting a workable Article 11 with any further necessary changes,
we understand why the Commission may feel the need to offer some
concession in order to seek to secure agreement and adoption of
However we would like to think that the period
in Article 19 could be kept to not longer than three years as
in the original proposal last October, if it is necessary to offer
this concession. In which event would like to see the period in
Article 18 also reduced to three years, making a six year period
in all rather than ten years.
Another issue briefly flagged in my oral evidence
in February is regarding Article 13, which makes reference to
various existing Directives, including the Information and Consultation
Directive. There is a need to ensure that the Information and
Consultation Directive is not, and the way it is implemented in
Member States, is not inconsistent with the provisions and objectives
of the Takeovers Directive. The issue relates to the timing of
the requirements to inform the employees of the bid.
There is significant concern that the provisions
of the Information and Consultation Directive could require employees
to be informed before the offeror is ready to go public and launch
its bid. Issues of market abuse, insider information and false
markets and the like arise. Although the Government has now issued
its proposals for implementing the Information and Consultation
Directive in the UK, having read them we are not at all clear
as to their affect, if any, on Takeovers. The DTI position has
been that the Takeover Directive makes it clear that Takeovers
are not to be taken as any exemption to whether information or
consultation might be necessary under the Information and Consultation
Directive, so we are concerned now that the UK implementation
has been published we get distinctly better information on how
the ground lies. Your Committee may want to do the samewe
have raised with the FSA who had not previously seen as an issue
but are now somewhat concerned. So are the Takeover Panel.
We also understand that some MEPs in the debates
in the European Parliament may also seek to reinforce the rights
of employees in takeovers, which could make the Directive unworkable.
I hope these comments will assist the Committee.
27 March 2003