FRIDAY 4 JULY 2003
LORDS WARN THAT UK'S EFFICIENT TAKEOVER WATCHDOG RISKS DISRUPTION UNDER PROPOSED EU RULES
The work of the UK's Takeover Panel could be hampered if proposed common EU rules on takeovers are introduced.
This concern is identified in a new report on the contentious European Union Takeover Directive, which continues to divide Member States.
Lord Scott of Foscote, who chaired the all-party inquiry, said:
"Thousands of takeovers have in the past 35 years been well policed by the Takeover Panel applying the City Code. The system's flexibility enables it to act promptly and there is little scope for obstructive litigation.
"This could change under the Directive, which would require the self-regulated Takeover Panel to be put on a statutory basis and for the Panel and the Code to comply with rules in the Directive.
"This could open up new grounds to challenge the Panel's decisions and increase the risk of litigation being used as a tactic to delay or obstruct bids."
The Report concludes, however, that the revised Directive could offer advantages for UK companies and individuals wishing to invest in other EU States.
The Committee recommend the UK Government to push the EU for the:
Removal of the proposed split-jurisdiction rule. Supervision should be the responsibility of the authorities in the State of incorporation.
Retention and strengthening of Articles 9 and 11 (dealing with shareholder control of defensive measures and the breakthrough rule).
If these provisions are not included, the UK should firmly reject the proposal.
NOTES FOR EDITORS:
1. The members of European Union Sub-Committee E (Law and Institutions) who conducted this inquiry were:
Lord Fraser of Carmyllie
Lord Lester of Herne Hill
Lord Mayhew of Twysden
Lord Neill of Bladen
Lord Plant of Highfield
Lord Scott of Foscote (Chairman)
Baroness Thomas of Walliswood
Lord Thomas of Monifieth
2. The report is published by the Stationery Office:
If at First you Don't Succeed
Takeover Bids Again, House of Lords Select Committee on the European Union, 28th Report, Session 2002-03, HL Paper 128, ISBN 010 442432 X, price £11.50. The full text of the report will be available on the internet via
www.parliament.uk shortly after publication.
3. The basis of the Committee's inquiry included 12846/02 Proposal for a Directive of the European Parliament and of the Council on Takeover Bids. The Takeover Directive is part of a plan to create a single EU financial services market by 2005.
4. The Takeover Panel is the supervisory authority for takeover bids in the UK. It has handled some 10,000 takeover bids since it was set up in 1968.
5. The City Code referred to is The City Code on Takeovers and Mergers and The Rules Governing Substantial Acquisition of Shares.
6. In July 2001, the previous proposal for a Directive on Takeover Bids was rejected by one vote in the European Parliament.
Further information from:
- Clerk of the Committee, on 020 7219 4930
For embargoed copies of the report contact:
- Press and Publicity Officer (Committees), on 020 7219 8659