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ESMA statement on shareholder cooperation and acting in concert



United Kingdom

The European Securities and Markets Authority (ESMA) has published a statement on practices governed by the Takeover Bid Directive.

Market reCap February 2014 edition 


The European Securities and Markets Authority (ESMA) has published a statement on practices governed by the Takeover Bid Directive (Directive) focused on shareholder cooperation issues and the appointment of board members.

The statement was published in response to a request by the European Commission for clarity on these issues, following its 2012 report on the application of the Directive.  It is based on information collected about the Directive’s application and common practices across the European Economic Area.  The statement was prepared by the Takeover Bids Network (TBN), a permanent working group, under ESMA’s auspices, that promotes the exchange of information on practices and the application of the Directive across the European Economic Area.  The public statement represents the collective view of the members of the TBN, who stand behind it.

The statement contains a "White List" of activities that shareholders can undertake without triggering the presumption of acting in concert.

National competent authorities will have regard to the White List when determining whether shareholders are persons acting in concert under national takeover rules, but will also take into account all other relevant factors in making their decisions.  If there are facts, in addition to the fact of the shareholders’ engagement in any activity on the White List on a particular occasion, which indicate that the shareholders should be regarded as persons acting in concert, then the national competent authority will take those facts into account in making its determination.  There might, for example, be facts about the relationship between the shareholders, their objectives, their actions or the results of their actions, which suggest that their cooperation in relation to an activity on the White List is not merely an expression of a common approach on the particular matter concerned but one element of a broader agreement or understanding to acquire or exercise control over the company.

When shareholders cooperate to engage in any of the activities listed below, that cooperation will not, in and of itself, lead to a conclusion that the shareholders are acting in concert:

1. entering into discussions with each other about possible matters to be raised with the company’s board;

2. making representations to the company’s board about company policies, practices or particular actions that the company might consider taking;

3. other than in relation to the appointment of board members, exercising shareholders’ statutory rights to:

(a) add items to the agenda of a general meeting;

(b) table draft resolutions for items included or to be included on the agenda of a general meeting; or

(c) call a general meeting other than the annual general meeting;

4. other than in relation to a resolution for the appointment of board members and insofar as such a resolution is provided for under national company law, agreeing to vote the same way on a particular resolution put to a general meeting, in order, for example:

(a) to approve or reject:

(i) a proposal relating to directors’ remuneration;

(ii) an acquisition or disposal of assets;

(iii) a reduction of capital and/or share buy-back;

(iv) a capital increase;

(v) a dividend distribution;

(vi) the appointment, removal or remuneration of auditors;

(vii)the appointment of a special investigator;

(viii) the company’s accounts; or

(ix) the company’s policy in relation to the environment or any other matter relating to social responsibility or compliance with recognised standards or codes of conduct; or

(b) to reject a related party transaction.

If shareholders cooperate to engage in an activity which is not included on the White List, that fact will not, in and of itself, mean that those shareholders will be regarded as persons acting in concert.  Each case will be determined on its own particular facts.

The statement also contains information on how shareholders may cooperate in order to secure board member appointments by setting out factors that national authorities may take into account when considering whether shareholders are acting in concert.


Amerjit Kalirai is a Partner in the Corporate Group of Field Fisher Waterhouse LLP in London.

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