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The EU Takeover Bids Directive was passed twenty years ago with the main objective of promoting a single European takeover market. The primary mechanism provided by the Directive intended to ensure that minority shareholders’ interests are protected on a change of control is the mandatory bid rule. The rule as such is a minimum harmonization provision. It leaves it to the Member States to set the control threshold, to define more precisely what the equitable price is, and to define which parties are to be deemed to be acting in concert for purposes of the rule.

Member States may provide derogations from their national rules on mandatory bids, provided that the general principles of the Directive are respected.  Member States have made use of their derogative powers in very different ways. The Directive also leaves it to the Member States to define what the substantive meaning of a derogation is. None of this is a bad thing as long as the Member States use the flexibility afforded by the Directive in a loyal way, duly taking into account the overall purpose of the Directive and the purpose of the mandatory bid rule, and apply the rules so as to make sense in the context of local corporate governance models, the structure of the local stock markets, and local protections afforded by general corporate law.

The appetite among the Member States for amendments to the Directive is likely to be very limited to say the least. When it comes to the regime for derogations from the mandatory bid rule (provided that one accepts the premises for the existence of the mandatory bid rule in the first place), we do not see any pressing regulatory concerns that would argue in favour of trying to improve this appetite.

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