Abstract
This paper argues that the failed attempt to introduce a mandatory board neutrality rule into EU takeover law was an object lesson that it is difficult to enact rules that are contrary to the corporate law cultures of the majority of the Member States. It provides an account of key factors that prevented enacting a mandatory board neutrality rule in the EU: varying takeover laws and practices; conflicting management and shareholder interests; divide between exhaustive and minimum harmonisation; and varying market orientation models. It argues that as long as there are varied national corporate laws, most EU corporate law rules are bound to remain categorised as optional, unimportant, or avoidable.
Highlights
The board neutrality rule neutralises the power of the board of the offeree company during takeover bids by prohibiting such board from taking any action that would result in the frustration of the takeover bid.1 The rule, due to its controversial history, was adopted in the Takeover Directive as an optional provision
This paper argues that the failed attempt to introduce a mandatory board neutrality rule into EU takeover law was an object lesson that it is difficult to enact rules that are contrary to the corporate law cultures of the majority of the Member States
It has examined varying takeover laws and practices that prevailed in the 1970s when the Commission first began the process of adopting EU law on takeovers, leading up to the adoption of the Takeover Directive
Summary
The board neutrality rule neutralises the power of the board of the offeree company during takeover bids by prohibiting such board from taking any action that would result in the frustration of the takeover bid. The rule, due to its controversial history, was adopted in the Takeover Directive as an optional provision. It provides an account of key factors that prevented enacting a mandatory board neutrality rule in the EU: varying takeover laws and practices; conflicting management and shareholder interests; divide between exhaustive and minimum harmonisation; and varying market orientation models.
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