UK sidelines Union panel on take-overs

Date: 04/12/1997

By Chris Johnstone

EUROPEAN moves to give all shareholders minimum rights during take-overs are set to be sidelined by the UK during its six-month stint at the Union helm, after a turn around in policy by the Labour government.

Before taking power, the Labour Party supported moves to put the UK's non-statutory take-over panel - which vets the acceptability of mergers and take-overs - on a more stable footing.

But, since winning office in May, the Labour government has sprung to the panel's defence against any interference from the European Commission which could threaten its informal approach .

UK officials admit the draft directive on take-overs drawn up by Internal Market Commissioner Mario Monti will not be a priority during its EU presidency. Other issues - such as the European Company Statute - will come higher up the agenda in the area of company law.

The first and only meeting this week of national experts on the take-over proposal under the Luxembourg presidency does not appear to have significantly strengthened its position in the pecking order.

Interest in the Commission proposal was balanced by serious misgivings in many member states about how it would work in practice. The Netherlands, Sweden and Germany are said to be alongside the UK in expressing serious reservations about EU rules which could conflict with their existing take-over laws.

The Netherlands has little enthusiasm for the proposals. Dutch barriers to hostile take-overs, such as privileged shares with extra voting rights and the freedom to create new shares, are written into the statutes of most major companies and the government is not keen on any Commission involvement in this.

Insiders say France and Italy are the most enthusiastic supporters of EU action.

The proposed rules aim to ensure all shareholders benefit from a take-over bid by forcing a bidder to make a general offer to purchase shares.

In addition, employees would have to be kept up to date about a take-over and the company board would have to act in the interests of all shareholders.

UK will sideline draft Directive on takeovers during its EU Presidency.