Dutch deflate argument on take-over procedures

Date: 30/01/1997

THE Dutch appear to be intent on sidestepping a row over EU take-over rules by putting the contentious issue at the bottom of their list of presidency priorities.

European Commission insiders say Dutch officials have so far shown no enthusiasm for pushing forward the proposal on take-overs, with no Council of Ministers' working parties scheduled to discuss the issue so far.

The European Parliament's legal affairs committee postponed an initial debate on the Commission proposal this week, but is expected to return to the issue some time in February.

The delay will please the UK government, which has furiously opposed the take-over proposal. And although the Dutch are not saying so, it may also fit in well with their stand on the issue.

The Netherlands has traditionally lined up against any European moves which might call into question its national rules, which discourage take-overs by allowing companies to have two types of voting and non-voting shares. Voting shares are often held by a few long-established shareholders.

The UK, traditionally in favour of anything which would bring the rest of Europe into line with its take-over culture, is ironically the biggest opponent of the latest Commission proposal.

London says the proposed directive would destroy its existing informal take-over rules by putting a regulatory straightjacket on them and opening them up to a wave of litigation. The UK's take-over panel has been furiously lobbying selected MEPs and believes it can persuade them to block the Commission plan, on which the Parliament shares decision-making power with the Council of Ministers.

The main aim of the Commission's proposed framework directive is to ensure that minority shareholders get a fair deal.

Its latest suggestion sets broad-brush rules to govern take-over bids such as the equal treatment of all shareholders in a target company and a ban on share dealing aimed at artificially manipulating the share prices of the companies concerned.

Its main focus is to force firms targeted for a take-over to win the support of a shareholders' meeting before taking defensive measures in a bid to fend off the challenge. Existing defences against hostile take-overs would thus be left untouched.

This modest proposal is weaker than earlier Commission versions which would have attempted to even out EU procedures by banning barriers to take-overs such as 'poison pills' and shares carrying extra voting power.