Project Summary

In 2004, after many years of negotiations
and drafting, the Takeover Bids Directive was finally adopted by the European Union (EU). Subsequently, the Cross-border Mergers Directive was adopted in 2005. The legal basis of these directives was the EU fundamental freedom of establishment (Article 49 TFEU). Hence, the Takeover Bids Directive and the Cross-border Mergers Directive aim at facilitating the exercise of this fundamental freedom and at contributing to market integration and to business consolidation. However, the Takeover Bids Directive is a compromise and a watered down version of a proposal which the Commission envisaged would lead to a more effective pan-European takeover regime than that which actually proved possible. The need for compromise was the result of the very different legal and policy approaches of the Member States in the field of takeover regulation.

The aim of this project is to provide a comprehensive analysis of the European Union's legal framework in the area of takeovers and mergers and of its contribution to the internal market of the EU and to Cypriot and Greek company
law.

This project will discuss the possible amendment of the Takeover Bids Directive. In 2012, the European Commission conducted a study and adopted a Report on the application of the Directive on takeover bids. This Report would be scrutinized closely. The minimu harmonization technique adopted by the European legislature, the optionality, the reciprocity and the various other substantive deficiencies of the Takeover
Bids Directive would be criticized. Furthermore, various aspects of the implementation of the Takeover Bids Directive into Cyprus and Greek company law will be discussed. A comparative study between the EU harmonized regime and the takeover rules of other non-EU jurisdictions will also take place.

This project will scrutinize the impact of Takeover Bids Directive. It will examine what the Takeover Bids Directive achieved and what it did not. It will analyze the contribution of the Directive to the fundamental freedom of establishment of companies and to the EU
corporate mobility. The free movement of capital and the golden shares case law of the Court of Justice of the EU (CJEU) will be discussed. Furthermore, emphasis will be given on the case law of the CJEU and of the EFTA Court, which examines various aspects of the Takeover Bids Directive (Case C-101/08 Audiolux [2009] ECR I-9823 and Case E-1/10 Periscopus AS [2011] OJ C 141,
13–13). I will look very closely into the protection of minority shareholders, in the context of takeovers. Additionally, the project will examine the various substantive deficiencies of the Takeover Bids Directive. For example, the mandatory bid rule is characterized by many deficiencies. A careful examination of the various provisions (mandatory bid rule, non-frustration rule, breakthrough rule, provisions on disclosure of information) would demonstrate if these provisions serve the objectives that the Takeover Bids Directive was supposed to pursue, as indicated by the Takeover Bids Directive Assessment Report : a) Legal certainty on the conduct of takeover bids and community-wide clarity and transparency in respect of takeover bids, b) Protection of the interests of shareholders, in particular minority shareholders, and of employees and other stakeholders, c) Facilitation of takeover bids, through reinforcement of the freedom to deal in and vote on securities of companies and prevention of operations which could frustrate a bid; d) Reinforcing the single market, by enabling free movement of capital
throughout the EU, e) establishment of safeguards in the context of Cypriot and Greek company law.

Furthermore, this project will scrutinize the Cross-border Mergers Directive. More specifically, it will examine the possible amendment of the Cross-border Mergers Directive. Any potential need for changes in the current rules will be discussed. The Study on Cross-border Merger Directive prepared by Bech-Bruun and Lexidale for the European Commission will be scrutinized. This project will also focus on the implementation of the Cross-border Mergers Directive into Cyprus and Greek company law.

The findings of the project will offer significant insights to both academics and practitioners alike with regard to regulation of takeovers and mergers, at EU and national level. This project is based on a bibliographical research.