On Wednesday, 1 July 2010, the event series “Forum Unternehmensrecht” of the Center for Business and Corporate Law discussed, welcoming renowned speakers, the following, late-breaking topic:

“Five Years of Takeover Directive – Achievements and failures“

This time, the “Forum Unternehmensrecht” received two internationally renowned speakers, both with tremendous practical and academic backgrounds.

At first, Allen & Overy Professor of Corporate Law and Professorial Fellow of Jesus College of the University of Oxford, Paul Davies gave a general overview from the first proposal of the Takeover Directive within the European Commission to its implementation in Member State’s takeover rules. In an ongoing second part of his lecture, he was reporting on current themes with respect to the so-called board neutrality rule which is – still – one of the most controversial issues of the Takeover Directive and its implementations in the national jurisdictions.

Prof. Davies focused especially on the Board Neutrality Rule (BNR). He followed the question, if the option for Member States to make BNR mandatory and the option to allow companies to adopt a reciprocity-clause for BNR were in practice used as protectionist tool despite the initial goals of the European Commission to facilitate cross-border mergers. Assessing the changes in national legislation Prof. Davies illustrated a significant actual tendency in favour of the “anti-bidder-movement”, especially because of member states with mandatory BNR introducing the reciprocity-clause. As this clause disproportionally hits foreign bidders because domestic bidders are bound to the mandatory BNR and therefore are never affected by the clause, a protectionist effect was concluded. Elaborating on the actual choices of companies, options for the companies showed to be futile in most member states: in companies without mandatory BNR the shareholders had no need or no will to opt for BNR; in companies with mandatory BNR and option for reciprocity the domestic law provided for much more effective tools for defence with the one exception of France, where reciprocity was actually used.
For further information please notice Prof. Davies paper "The Takeover Directive as a Protectionist Tool?" on SSRN.com.

After Davies presented his key points of achievements and failures and how to resolve them to the audience, the lawyer and partner of Hengeler Mueller, Dr. Maximilian Schiessl, LL.M. (Harvard) complemented the presentation on European and national issues of the Takeover Directive by giving an extensive view and experience of professionals and practitioners. Dr. Schiessl questioned a decisive importance of BNR to constrain defensive measures of potential targets and stressed the importance of other protectionist tools and the European Commission’s enforcement against these as well as the rather less protectionist overall picture in Germany despite no mandatory BNR. Among other issues he pointed out the importance of a broader stakeholder concept in Germany instead of pure shareholder value. Answering on this comment Prof. Davies acknowledged the importance of other factors and rejected the idea of a uniform introduction of mandatory BNR because of the differences between the economic and legal systems of the member states. He argued for improving the optionality for companies. The resulting discussion elaborated further on the differences between the systems, especially the ongoing UK discussion on takeover-rules.

On Wednesday, 1 July 2010, the event series “Forum Unternehmensrecht” of the Center for Business and Corporate Law discussed, welcoming renowned speakers, the following, late-breaking topic:

“Five Years of Takeover Directive – Achievements and failures“

This time, the “Forum Unternehmensrecht” received two internationally renowned speakers, both with tremendous practical and academic backgrounds.

At first, Allen & Overy Professor of Corporate Law and Professorial Fellow of Jesus College of the University of Oxford, Paul Davies gave a general overview from the first proposal of the Takeover Directive within the European Commission to its implementation in Member State’s takeover rules. In an ongoing second part of his lecture, he was reporting on current themes with respect to the so-called board neutrality rule which is – still – one of the most controversial issues of the Takeover Directive and its implementations in the national jurisdictions.

Prof. Davies focused especially on the Board Neutrality Rule (BNR). He followed the question, if the option for Member States to make BNR mandatory and the option to allow companies to adopt a reciprocity-clause for BNR were in practice used as protectionist tool despite the initial goals of the European Commission to facilitate cross-border mergers. Assessing the changes in national legislation Prof. Davies illustrated a significant actual tendency in favour of the “anti-bidder-movement”, especially because of member states with mandatory BNR introducing the reciprocity-clause. As this clause disproportionally hits foreign bidders because domestic bidders are bound to the mandatory BNR and therefore are never affected by the clause, a protectionist effect was concluded. Elaborating on the actual choices of companies, options for the companies showed to be futile in most member states: in companies without mandatory BNR the shareholders had no need or no will to opt for BNR; in companies with mandatory BNR and option for reciprocity the domestic law provided for much more effective tools for defence with the one exception of France, where reciprocity was actually used.
For further information please notice Prof. Davies paper "The Takeover Directive as a Protectionist Tool?" on SSRN.com.

After Davies presented his key points of achievements and failures and how to resolve them to the audience, the lawyer and partner of Hengeler Mueller, Dr. Maximilian Schiessl, LL.M. (Harvard) complemented the presentation on European and national issues of the Takeover Directive by giving an extensive view and experience of professionals and practitioners. Dr. Schiessl questioned a decisive importance of BNR to constrain defensive measures of potential targets and stressed the importance of other protectionist tools and the European Commission’s enforcement against these as well as the rather less protectionist overall picture in Germany despite no mandatory BNR. Among other issues he pointed out the importance of a broader stakeholder concept in Germany instead of pure shareholder value. Answering on this comment Prof. Davies acknowledged the importance of other factors and rejected the idea of a uniform introduction of mandatory BNR because of the differences between the economic and legal systems of the member states. He argued for improving the optionality for companies. The resulting discussion elaborated further on the differences between the systems, especially the ongoing UK discussion on takeover-rules.