Implementing the Takeover Directive in the UK

The removal of barriers to takeover activities has been the driving force behind the Directive since its initial draft appeared in 1974. The Directive was adopted in April 2004, and implemented in the UK on 20 May 2006. The main objectives of the Directive are twofold: first, to protect investors, and secondly, to harmonise takeover regulation in Europe. These objectives are fundamentally aimed at reinforcing free movement of capital. Whether and how the Directive achieves its driving force and objectives is the subject of this thesis. At the heart of this thesis are three arguments. The first is that the Directive is unlikely to have a significant impact on how takeovers are regulated in the UK. This is because the Directive, as implemented by the Companies Act 2006, essentially maintains the regulatory status quo under the Panel and the Code. Despite changing from self-regulation to statutory regulation, the Panel remains the maker, interpreter and judge of its own takeover rules. The second argument is that the Directive is unlikely to harmonise takeover regulations in Europe. The Directive is not detailed; it gives leeway to Member States to impose stringent rules beyond the minimum standards, and it allows Member States to opt out/into the core provisions contained therein, which in turn defeats any harmonisation effect. The third argument is that, whereas the Directive was watered down by compromises that made its core provisions optional, and to that extent it is hardly a triumph, its strength can be revived by reading it to conform with free movement of capital under the EC Treaty. To the extent that the Directive is read to conform to the EC Treaty, it is likely to be revived to fulfil its driving force of removing barriers to takeover activities. However, a legalistic approach amid a rather politically volatile regulatory framework of takeovers, is problematic.