Volume 23 (2012) / Issue 5
This article evaluates the Takeover Bids Directive's board neutrality rule, in light of the European Commission's option to propose the revision of the Directive and a recent suggestion put forward by some commentators to make the rule, which is optional, harder to opt-out. It does so by reassessing the two rationales behind the Commission's original intentions for the rule to be mandatory: (i) disciplining the management of listed companies with dispersed ownership, and (ii) wealth creation. It finds that the first rationale continues to lack relevance to European 'coordinated market economies', whilst empirical evidence is not conclusive that hostile takeovers are more wealth creating than friendly ones, but could be particularly damaging for European coordinated market economies. Arguments that have been put against a more permissive approach to board defences are also contested.
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