The article presents the interplay between the mandatory bid rule and (European or national) company law. This rule is explained with reference to both the protection of investors' expectations as to the shareholding structure of the company and the promotion of the market's allocative efficiency. In accordance with the recent Audiolux judgment of the ECJ, the mandatory bid cannot be regarded as a manifestation of an overarching equal treatment principle in European company law.
Some recourse to company law is in any case necessary to discern the limits of the mandatory bid. Indeed, the mandatory bid rule puts a heavy burden on collective shareholder action, and thus tips the balance of power between shareholders and management in favour of the latter. This is to be taken into account when determining the scope of application of the rule to joint activities of shareholders. This is also a matter of the internal structure of the company, which is only regulated in national, rather than European, company law. Thus, national company law becomes relevant in the interpretation of the mandatory bid rule in each jurisdiction, while the effet utile of the Takeover Directive must be preserved.
© Copyright 2010 by the European Company and Financial Law Review (ECFR)